Trading with the right broker remains essential but finding the best one among thousands on offer can be a tough challenge. That is why we have done intensive research to compile a must-read list for you below of the best Forex brokers for beginners.
To create the list of the best forex brokers for beginners, we evaluated the following criteria:
- The availability of the demo account
- The approach to trader education
- The protections in place for the safety of the trader
- The minimum deposit required for opening a real account
- The availability of micro accounts
- The general quality of services offered.
|OctaFX||yes||up to 50%||50||OctaFX Review||9|
|BlackBull Markets||yes||200||BlackBull Markets Review||9|
|LiteFinance||yes||30% + 15%||10||LiteFinance Review||8|
|XM||yes||$30 no deposit||5||XM Review||8|
|InstaForex||yes||$100 No Deposit Bonus||1||InstaForex Review||7|
|FxPro||yes||up to $1,000||100||FxPro Review||5|
What is forex trading?
Forex trading is the process of exchanging one currency for another — known as buying or selling currency pairs — based on prevailing exchange rates from the forex market. The forex market is the largest global market, with nearly $6.59 trillion in currency traded on average per day.
What is a forex broker?
When trading foreign currencies, you use a forex broker (also known as a currency trading broker) to place your trades. When you trade forex, you buy or sell in currency pairs, such as the “EUR / USD” (euro / U.S. dollar). You open an account, deposit funds, then use the broker’s trading platform to buy and sell currency using margin. The forex markets are open 24 hours a day, five days a week.
How Much Money Do You Need to Trade Forex?
One of the most frequent questions of beginner traders is “How Much Money Do I Need to Start Trading Forex?” While the answer depends on individual circumstances, new traders should consider no less than $100 and only trade micro-lots. One micro-lot equals 0.01 lots or 1,000 currency units in a standard Forex trading account and is usually the minimum trade size at most brokers. A $100 portfolio suffices for beginner traders to learn how to trade in a live trading environment and presents tremendous educational value.
What Are the Most Popular Currency Pairs?
The most liquid currency pair is the EUR/USD. Other major currency pairs include the EUR/JPY, the EUR/GBP, the EUR/CHF, the GBP/USD, the USD/JPY, the USD/CHF, the USD/CAD, the AUD/USD, and the NZD/USD. Per the latest Triennial Survey by the Bank for International Settlements (BIS), 88% of all Forex traders include the US dollar. The Chinese yuan (CNY) is the eighth most traded currency globally, positioned to become more dominant moving forward. Other emerging currencies to monitor are the Russian ruble, the Mexican peso, the Indian rupee, the Brazilian real and the South African rand.
Before all else, the first thing every beginner trader must check when looking for a trusted and reliable broker is to see if the broker is regulated. As the forex market is an unregulated market, having a forex broker that is regulated ensures the broker will operate with transparency and fairness. It is important to note that regulatory oversight for a forex broker is only applicable for the jurisdiction that the broker is based in. For example in the U.S, a forex broker is required to be a member of the National Futures Association (NFA) and be registered with the US Commodity Futures Trading Commission (CFTC). For forex brokers that are based in the UK, they are required to be registered with the Financial Conduct Authority (FCA). These regulatory agencies main functions are to protect the interest of investors as well to develop the rules that dictate how forex brokers should conduct their operations.
Most important of all, regulatory agencies constantly monitor the conduct of the brokers under their jurisdictions to prevent any kind of abusive practices, fraud and manipulation on the part of the brokers. By doing so, these regulatory agencies help to promote competition and instill trust in the forex market. So before you decided to open a trading account with a forex broker, ensure that it is regulated by one of the regulatory agencies listed below:
- Australia: Australian Securities and Investment Commission (ASIC)
- Canada: Autorité des Marchés Financiers (AMF)
- Cyprus: Cyprus Securities and Exchange Commission (CySEC)
- France: Autorité des Marchés Financiers (AMF)
- Germany: Bundesanstalt für Finanzdienstleistungsaufsicht (BaFIN)
- Switzerland: Swiss Federal Banking Commission (SFBC)
- United Kingdom: Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA)
- United States: National Futures Association (NFA) and Commodity Futures Trading Commission (CFTC)
Finally many regulators offer an investor compensation scheme which protects the investors deposits up to a certain level should the broker become insolvent and become overly exposed to the markets.
Is Forex Trading good for Beginners?
Forex trading can be good for Beginners, however is not suitable for everyone, learn about Forex risks and complete a comprehensive education course to start trading correctly. Moreover, it is much easier for beginners to trade with a cent account.
Who are Best Forex Brokers in USA and in UK for beginners?
Check Octafx, XM.com or Litefinance beginners accounts, these brokers provide forex webinars for beginners and good support with low costs. However Interactive Brokers US might be suitable for traders who tend to be professionals.
- First of all, fair forex fees.
- A lot of currency pairs.
- A great platform with advanced charting.
- Educational tools to guide you through the basics of trading.
If you’re a beginner, be careful with forex trading as forex products are complex and risky, therefore not suitable for everyone. You can easily lose all your invested money. If you don’t know how forex trading works, take a look at our forex education articles.
If you feel a bit more comfortable with forex trading, we suggest you also check out our overall list of the best forex brokers.
What is a Forex Broker?
Retail forex brokers are financial institutions that act as an intermediary between individual trader clients and the forex market. These forex brokers have an online presence in the form of an official website, and they target smaller traders who wish to operate in the forex market on a margin basis.
Online forex brokers generally allow traders to execute forex deals largely using their supported electronic trading platforms. In addition to offering their own proprietary trading software, many online forex brokers support popular 3rd party forex trading platforms like MetaTrader 4 and 5 (MT4/5) from MetaQuotes.
Some forex brokers also offer very useful educational information for beginners you can use to increase your knowledge about trading. They might also provide access to expert forex market analysis and financial news feeds to help you make better trading decisions.
Top 5 criteria for choosing a Forex broker
We have compiled a list of the best Forex Brokers for beginners based on the reliability and convenience to make it easy for traders who are starting in the Forex Market.
What is a reliable broker? For a broker to be classified as reliable we look at the length of time the broker has operated on the market, the required experience is at least 3-5 years, a well-known name and carries out activities based on their license issued by a regulator which is either a local regular in their country of operation or international.
A reliable Forex broker will give a beginner trader the confidence by offering the support that is necessary at the initial stage.
- For a beginner in the Forex market, you will look to register with brokers who offer favorable conditions for beginners and not those oriented to professional traders who have years of experience. You can identify this by the initial deposit. For example, AAATrade (minimum deposit $500), Swissquote Bank (minimum deposit $1000), LBLV (minimum deposit $5000).
- The second criterion is the available types of accounts. The more they have, the better it is, but again, a beginner doesn’t need every type of account.
- Once you have completed your research and analysis of the broker’s conditions, we recommend that you take the time to read the reviews of traders who have either used or are currently using the broker to learn about their experience with the broker and say about them. Because even under the most ideal and favorable conditions, working with a Forex broker can be uncomfortable: for example, it has an uncomfortable trading terminal, it delays the execution of orders a bit, technical support is available only at certain hours and slowly responds to calls.
- Among beginners, only few consider the speed of depositing/withdrawing funds. Meanwhile, this indicator is critically significant. For example, if you see a good moment for a large bid, and you need to deposit into your account quickly. You will need a broker with fast transaction capability. And if certain broker card replenishment takes 2-5 working days, you may not have time to invest as you wanted.
- Many beginners here make a critical mistake, believing that it makes sense to focus solely on the long-term advantages of working with the platform, and one-time bonuses are just a way for Forex broker to attract new customers. It is foolish to deny that in a sense it is so, but often the bonuses of Forex brokers are not just significant, but largely determining.
- Customer support service (often called technical support) is a special department of a broker company that advises traders on various issues. It seems to many that this is not so important – how quickly the support service will answer you.
Finding the perfect broker is not always easy, especially when you are a beginner trader and don’t really know what to look for. In order to help you out we have collated a list of the best Forex brokers for beginners, we hope it’s useful!