Top Online Forex Brokers of 2019
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So you fancy the idea of FX trading, but don’t have a clue where to start. Don’t be embarrassed to confess to your lack of knowledge, because some of the most experienced Forex traders started off as beginners. And there is a wealth of information available, either at your local library, bookstore, or online, to bring even the most inexperienced to a certain level of understanding. We hope that you find everything you need here on this site, as it’s very convenient to have a place of reference where all the necessary information is close at hand.
As well as introducing you to the world of Forex and all it entails, we’ll also be bringing you details of the best Forex brokers. Without the best Forex broker by your side, you’ll struggle to take advantage of this popular form of investment.
So let’s start with a brief explanation of the form of investment known as Forex trading.
What is Forex trading and how the top Forex brokers can help you trading?
Have you ever travelled to a foreign country? It’s very likely the country you visited used a different currency than the one you use in your everyday life. Which meant you had to find a currency exchange booth at the airport, or visit your local bank, and change your spending money into the currency of the country you were visiting. When it was your turn to be served you would have been faced with a long list displaying different exchange rates for different currencies. When exchanging one currency for another you are participating in the most basic form of FX trading, via the Forex market.
When it’s time to return home after a restful vacation, the exchange happens in reverse. You’ll also notice that the exchange rate has changed, and this is what allows investors to make money in the foreign exchange market.
The foreign exchange market is one of the largest financial markets in the world, with a trade volume of more than $5.3 trillion per day. When you compare this with the trade volume of the New York Stock Exchange, currently just $22.4 billion per day, you can understand the enormity of the FX market. However, the figures can be deceiving. The huge $5 trillion figure relates to a market which happens on a global scale. The numbers are actually much smaller when you break it down. Retail FX trading, which is what you’ll be doing, is a mere $1.49 billion. Which is still a big number, but not as big as many would have you believe.
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There are a lot of different names bandied around, in connection with Forex trading. The FX market, currency market, foreign exchange market, foreign currency market, and plenty more. But they all refer to a form of investment that is undertaken by banks, business, governments, individuals and traders who exchange and speculate on various currencies. It is open 24 hours a day, 5 days a week. And there are trading centers located in many major cities worldwide. Such as New York, London, Tokyo, Frankfurt, Zurich, Hong Kong and Paris. There is no central marketplace, which is the case for stock market trading. Forex trading is said to take place ‘over the counter’. Forex prices are quoted by all the major banks, but not all will have exactly the same price. The man on the street, such as you and I, will have to trade via a top Forex broker. And the rates they use will be an average of a number of bank rates.
There are a variety of participants in the FX market?
There are a number of different people, organisations, and top FX brokers who participate in the FX trading market.
- Banks – Trading between various banks makes up the biggest percentage of commercial Forex transactions. Many of the largest banks will trade billions of dollars everyday. The trading takes place on behalf of customers, but the majority is done by the bank itself.
- Companies – Companies use the FX market to pay for goods and services from other countries. And also to sell goods and services in other countries. This is actually a very important part of the daily FX market.
- Central banks/ Governments – Governments and central banks are able to effect an increase or decrease in their own currencies value, and as such play a very important role in foreign exchange markets. They are also able to stabilize the market by using their large foreign exchange reserves.
- Hedge funds – More than three quarters of foreign exchange transactions are speculative. The people buying or selling the different currencies have no real intention of taking actual delivery. The sole purpose of making a FX transaction would be to speculate on whether the price of a currency is going to go up or down. Large hedge funds have a huge part to play in the currency markets, because they control and speculate with billions of dollars every day.
- Individuals – When travelling to a foreign country, individuals are participating in the foreign exchange market, when they change up their vacation money.
- Investors – If an investment firm manages large portfolios on behalf of their clients, the FX market is used because it allows them to buy and sell foreign securities.
- Retail Forex traders – Retail forex traders refers to people like you. This particular section of the industry is growing each and every day, as more and more people learn about the top online Forex brokers, and get a taste for the excitement and opportunities it brings. There are also a number of Forex trading platforms that allow the market to be easily accessible via the internet. To access the currency markets, retail FX traders use the services of a Forex broker, or a bank. There are two types of FX broker – dealers and brokers. Top Forex brokers act as an agent for the retail trader. They try to find the best possible price and execute trades on behalf of their customers. Dealers, on the other hand, act as the counterparty to a retail traders transaction. The price they quote is the one they are willing to deal at, and they make their money through the difference between the buying and selling price (spread). Forex dealers are also known as market makers, because they make the market for the trader.
The benefits of trading the Forex market
As with any form of investment there are disadvantages and advantages of participating. First we’ll look at the benefits.
- Forex trading online means you are free to trade anywhere in the world, provided of course you have a reliable internet connection
- Low charges and fees, compared with trading stocks and commodities
- There are fewer currency pairs to concentrate on, than the large numbers of stocks and shares
- Access is easy and usually only requires a couple of hundred dollars to get started
- Opening hours are Sunday 5pm EST, to Friday 4pm EST, which means you can trade whenever you want
- Forex is a volatile market, and traders have the opportunity to make a profit whether the market is rising or falling
Before we carry on any further, we’ve decided to introduce some of the common words and phrases used in the FX market. As it is important to understand the jargon.
Understanding the basic Forex jargon
We’ve already given you a brief introduction to the world of Forex trading, and now it’s time to discover some of the unusual and unique terms you are certain to encounter. Without this knowledge you won’t be able to fully understand everything you read about the industry, and it’ll certainly help when it comes to looking for top online Forex brokers. And it also means we won’t have to keep going back and explaining some of the terms we choose to use here.
- Exchange rate – This is the value of one currency expressed in terms of another. For example EUR/USD is 1.1121, which means that one Euro is worth US$1.1121.
- Pip – This is a measurement of the movement a currency can make, and one pip is the smallest movement possible. It is also called a point or points.
- Margin – This refers to the amount required to keep a position or foreign trade open. There are two types: a used margin and a free margin. The used margin is the amount being used to keep an open position, while the free margin is the amount available to open a new position. Let’s give you an example so you have a better understanding. Say, for example, a trader has a £1,000 margin balance in their trading account, and there is a 1% margin requirement to open a position. This trader can buy or sell a position worth up to £100,000. This gives the trader a leverage ratio of 100:1. Should a trader’s account fall below the minimum required to keep a position open, they will receive a ‘margin call’. This means more money needs to be added to the trading account, or the open position has to be closed. Even top Forex brokers could decide to automatically close a trade when the margin balance falls below the minimum requirement. The minimum amount will vary between broker, but it could be as much as 50%.
- Leverage – Leverage allows a trader to gear their account into a position greater than their total account margin. In the example above, the leverage was 100:1. Let’s look at another example. Say, for example, a $300,000 position is opened with a £1,000 margin in the trader’s account. Leverage in this case would be 300 times, or 300:1. We should mention that leverage can increase gains, but it can also increase losses.
- Spread – This refers to the difference between the bid and offer price, or the buy and sell quote.
- Bid and ask price – The bid is the price the market or broker quotes for buying a specific currency pair. The ask price is the price the market or broker quotes for selling a specific pair. The difference between these two prices is called the spread, and varies from broker to broker.
Now you have a little bit more knowledge regarding some of the most important Forex terms, let’s take a look at the most common currency pairs and help you to understand a quote.
Understanding FX currency pair quotes
The major Forex currency pairs and their nicknames are:
| USD – US Dollar | |
| EUR – Euro | EUR/USD – “Euro” |
| JPY – Japanese Yen | USD/JPY – “Dollar Yen” |
| GBP – British Pound | GBP/USD – “Cable” or “Sterling” |
| CHF – Swiss Franc | USD/CHF – “Swissey” |
| CAD – Canadian Dollar | USD/CAD – “Dollar Canada” |
| AUD – Australian Dollar | AUD/USD – “Aussie Dollar” |
| NZD – New Zealand Dollar | NZD/USD – “Kiwi” |
It’s vital to understand how to read a currency pair quote before you start trading, so let’s help with a brief explanation.
The best online Forex brokers quote the exchange rate of two currencies in a pair. This is because in any Forex trading transaction, one currency is being bought, while another is being sold. This never changes.
Here is an example of a quote relating to the Euro and US Dollars:
EUR/USD – 1.1121
The first currency in the quote is the Euro and is called the base currency. While the second currency, the US Dollar, is the counter or quote currency. If you decide to buy this particular currency pair, it clearly indicates how much of the quote currency (USD) is required to buy one unit of the base currency (EUR). In the above example, 1.1121 US Dollars are required to buy 1 Euro. If you sell the currency pair, you will receive 1.1121 US Dollars for each Euro sold.
If you want an easy way to remember the principle think of the base currency as the basis for the trade. Whether you are buying or selling a currency pair the base currency is always the same. In other words, it is always based on the first currency in the pair.
The whole point behind Forex trading, is to buy a currency pair if you consider the base currency will increase in value (appreciate), in relation to the quote currency. If you think the base currency will decrease (depreciate) in value in relation to the quote currency, then you should choose to sell the pair.
Forex Brokers By Countries
The history of Forex trading and the Forex market
Some of you reading this will find this section a little boring. We appreciate that not everyone will want to know about the history. But we consider it an important part of your Forex journey. It’s good to know at least a little about why Forex markets exist and how it all began. So here goes.
The foreign exchange market, or Forex, FX, or currency market, as it now often known, refers to a global decentralized market in which currencies are traded. Under this heading are all aspects of buying, selling, and exchanging different currencies at a current or predetermined price. Currencies have been traded across the globe for centuries, but one of the most important events in the history of the Forex market happened in the 1800s, when the gold standard was introduced. Before its introduction it would generally have been gold and silver that were used for international payment. However, this wasn’t a particularly good method of payment. The value of these two metals was very much up and down. And were affected by global supply and demand. If a new gold mine was discovered it would drive the price of gold down.
The gold standard was introduced so that governments could guarantee the conversion of a currency into a specified amount of gold, and vice versa. A currencythat would be backed by gold, and should have stabilized world currencies, sounds a pretty good idea in theory. In real life, however, it didn’t quite work out so well and tended to create patterns of boom and bust. The gold standard was dropped, but gold as a precious metal never lost its importance as a form of monetary value.
Towards the end of World War II, Allied nations found there was a need for a monetary system to fill the void left by the loss of the gold standard. 700 representatives from the Allied countries gathered together in Bretton Woods, New Hampshire. The reason for the gathering was to iron out the details of a new international monetary system. They decided to call it the Bretton Woods system. The main part of this new system was for the US dollar to replace gold as the standard used for converting world currencies. It also led to the US dollar being the only world currency backed by gold, at that time. It also created three agencies that would oversee economic activity across the globe. These were the IMF (International Monetary Fund), International Bank for Reconstruction, and the General Agreement on Tariffs and Trade (GATT).
However, this system suffered a number of problems. These included the US Treasury running low on its gold reserves, and not having enough gold to cover all the US dollars foreign central banks had in their reserves. Bretton Woods came to an end in 1971, when President Richard Nixon closed the gold window and refused to exchange US dollars for gold. While Bretton Woods didn’t last it did leave an important legacy that still affects the market today. And that is the three international agencies that were created and still exist today, albeit in a slightly different form.
Nowadays, currencies are allowed to float freely against one another, which has led to the value of various currencies varying, and in turn this led to the need for foreign exchange services. The services were provided by commercial and investment banks on behalf of their clients. But it wasn’t until the introduction of Forex trading online that the FX world was opened up to everyone. It has also led to Forex trading being used as a speculative form of investment.
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The skills you’ll need to become a successful participant in the world of Forex trading online
The world of Forex offers amazing opportunities for people to make money. However, we should point out that there are also amazing opportunities for people to lose money too. As with any form of investment prices can go down as well as up. There are ways to increase the chance of winning big, but there is no sure fire way for 100% success. There are a number of skills required that will help anybody considering trading Forex online. We’ll give you the list, but then you have to decide whether you’ve got them.
- Be able to accept a loss without getting emotional
- Be confident in your own ability and your trading strategy, and to not be afraid
- Forex trading requires dedication
- A successful trader is one who can remain calm and unemotional, even when the market is really tempting
- The ability to concentrate and not be led off track is vital
- A certain level of objectivity and straight forward thinking is vital
- FX traders need to be well organized in order to forge and reinforce good habits
- Patience is required
- You should be a realist and not think that FX trading is going to be the answer to your financial woes, or make you a millionaire overnight
- A certain amount of knowledge is required in order to take advantage of a trading edge when it arises, as well as keeping abreast of what is happening in the FX market
- You should be in control of all your trading decisions, at all times, and avoid over-leveraging your trading account
We think it’s time to look at the first and most important step to take, as you should now have enough basic information to start your Forex journey.
Tips on finding the best FX brokers
You should have realized by now that being a novice isn’t something to be ashamed of. There are thousands of people starting their own Forex journey the same as you. Unlike many other kinds of investment market there are a huge amount of free learning tools and resources to help you on your way. All the best Forex brokers offer free demo accounts, and there are also mentoring services, online tutorials, and heaps of online and printed resources, charts, and signals. In fact, there is so much to choose from that it can be rather daunting. So let’s help to guide you with taking your first and possibly most important step.
Selecting the best Forex broker isn’t going to be easy. That is if you want to pick one in an objective and scientific way. Of course there is always an easy way, but you shouldn’t be tricked by various clever promises. You are going to be bombarded with eyecatching ads online, in magazines, and on TV, put there to catch the blissfully unaware, but we hope that you aren’t going to be one of them.
You’re going to be using a strategy when it comes to Forex trading, so why not make one when choosing the best online Forex brokers. Let’s look at some of the features you should be taking into account.
- Decide on the best Forex trading platform – We’ve put this first in the list of things to consider because it is what you’ll use, and it’s where all the action happens. There are a number of questions you should be asking yourself first. Would you prefer to use an online trading platform or a downloaded version? Would you like to be part of the online Forex community? Are you looking for heaps of features and options, or would you prefer an interface that is clean and easy to use? We hope to be looking at the various Forex trading platforms a little later, which will help you to understand the advantages and disadvantages of the most popular.
- Top quality customer support is a must have – Finding a Forex broker offering excellent customer support is only going to make your Forex trading experience a better one. We all like being treated well, and it is equally important when choosing your Forex broker. Picking a top Forex broker is also going to have an affect on your trading success. If you ever find yourself in a situation when the trading platform has frozen, without an immediate channel of communication to resolve the problem, you could make significant losses. It’s not all that easy to check the level of customer support, without getting in touch with them directly, and getting a feel for their level of service. But it is possible, especially if the broker has a live chat option. You might also want to try the phone line and see how long they take to respond, as well as sending an email and checking how long it takes to reply.
Forex Brokers By Regulation Authority
- Check the FX broker is regulated – You should always check whether the broker is registered with a particular regulating authority. If the FX broker is based in the USA, you can check with the National Futures Association (NFA), or the Commodity Futures Trading Commission (CFTC). If the FX broker is based in the UK, you can check with the Financial Service Authority (FSA). There are plenty of FX brokers who aren’t registered with a regulatory body, but you might want to think twice before opening an account with one of them. As your level protection will be severely dented.
- A wide range of leverage amounts are on offer – All the best online FX brokers have their own different range of accounts to offer their clients. There are also a range of different leverage amounts to choose from. It could be 50:1, 200:1, or possibly even greater. Leverage can work to a trader’s advantage, as it increases the potential for bigger profits. However, there is a very big downside. It can quickly destroy your trading account too. As not only is your potential for profit increased, but equally your potential for losses.
- How much is it all going to cost? – Even the best FX brokers are in the business to make money, and it is done through commissions and spreads. If a FX broker uses commissions, it is generally charged at a fixed percentage of the spread. There are, however, a number of FX brokers who advertise that they charge no commissions. But don’t think this means they are in the business for love not money, They make their money with wider spreads.
- How much is the initial deposit? – Minimum deposit requirements vary considerably, and not just between individual FX brokers. The best Forex brokers will also have a variety of different accounts, each with its own individual requirements and benefits. Some accounts require relatively small amounts to open, which is why Forex trading is so very popular for beginners and new investors.
- How easy can you get to your money? – Hopefully, there will come a time when you need to withdraw some of your winnings. Each FX broker will have its own withdrawal and funding policies, so you’d be wise to check the small print and the terms and conditions of the broker’s site. There will be a number of methods you can use, but there may also be a fee that is charged, depending on the amount being withdrawn.
- Does the Forex broker offer the currency pairs you’re interested in? – The majority of FX brokers will offer the major pairs, which as USD/JPY, EUR/USD, USD/CHF, and GBP/USD. There will also be a number of other pairs, but the most important ones are those you’re interested in personally.
- Choose a broker that offers a free demo account – With a free demo account a trader can try out different FX trading platforms, before opening an account with real money. It will also provide the opportunity for testing a particular strategy, as well as gain an understanding of the broker’s level of service. The trading platforms used for demo accounts are very similar to live trading platforms, but not identical. There are often different in execution, slippage, and reliability, but it does give a trader the opportunity to check a platform out for size, before risking real money.
When it comes to choosing the best Forex broker for your needs, there is a lot to be said for checking out sites that offer Forex broker comparison.
Tips on becoming a successful Forex trader
Once you’ve checked out the various Forex broker comparison sites, you’re going to be well on the way to finding the best Forex brokers for your needs. Time to think about sharing some information on the importance of keeping to your own set of rules, and those that have guided countless successful Forex traders. And it doesn’t matter whether a trader is a complete novice or an expert, or how big the size of their account, all of the following rules are important especially when allowed to work together.
- Have a trading plan and stick with it – Your trading plan will define your entry, exit and money management rules. However, this set of rules can’t be written overnight. Once a plan has been developed it should be backtested, as this will determine whether the trading plan is viable. Using a demo account provides the perfect opportunity to test a plan, without risking any real money. Once is has been developed and backtested, it is vital to stick to the plan. Even if a trade turns out to be a winner, if it is outside the trading plan it is considered to be poor trading.
- Don’t treat it like a hobby or job – The correct approach to Forex trading is to treat it like a full or part-time business. There will be a lack of commitment to learning if its treated like a hobby, which could turn out to be very expensive. It’s not advisable to treat it like a job, as there is no regular paycheck to rely upon. Trading Forex makes a trader a small business owner, with all the expenses, losses, taxes, stress, and uncertainty having a business brings. In order to maximize the potential of your business you will have to do your research, keep up with the latest economic news and develop strategies.
- Technology is all around you so use it – Even if you aren’t, you can bet your bottom dollar the person sitting on the other side of a trade has likely taken full advantage of technology. Charting platforms, backtesting, and market updates, are there for the taking. And more often than not it’s all completely free. Even something we take for granted, such as a high speed internet connection, can increase your trading performance. Technology is a big advantage, and keeping abreast of all the latest advances can be fun and rewarding too.
- Trading capital should be protected – You’ve probably worked hard to find the money to fund your trading account, so you’d be mad not to do everything you can to protect it. And we’re not referring to losing trades here, because that’s all part of the thrill of Forex trading. To protect your capital you should be taking no unnecessary risks, and doing everything to preserve your trading business.
- Trading Forex means being prepared to keep learning – Understanding the markets and all their tiny details is an ongoing process. Even the most experienced traders are continually learning. By doing the right kind of research a trader can gain instinct and learn all the nuances. Thereby understanding how the various economic reports affect the market. There are so many variables and the market environment is dynamic. World events, politics, economics, and believe it or not, even the weather can have an impact on the market. Understanding past and current markets means you can be better prepared for the future.
- Don’t risk any more than you can afford to lose – Before you start trading you should be sure that the money in your trading account is expendable. It shouldn’t be for paying the mortgage, or paying for the kids college tuition. You should be prepared to lose all the money in your trading account, without endangering your important obligations and financial responsibilities.
- Know when to stop – There are two factors that could be the reason to stop trading. It could a trading plan that just isn’t working, or a trader that just isn’t effective. If your trading plan isn’t working don’t be disappointed. Just pick yourself up and reevaluate the plan and make the necessary changes, or develop a completely new one. If it’s the trader who is the problem there are a number of factors which can affect performance. It could be stress, poor health, lack of physical activity. But whatever the reason, seriously consider taking a break to deal with personal problems. Once these are dealt with a trader should be able to get back to business.
- Be realistic – When participating in Forex trading it is important to keep things real, while also focusing on the bigger picture. Don’t be disheartened by a losing trade, as this is all part and parcel of your journey. And don’t expect one winning trade to be the answer to your prayers. Cumulative profit are what make the difference. Accept there will be ups as well as downs and emotion will have a lesser effect on trading performance. It’s also important to be realistic in setting goals. If a trade account is small then it’s not going to bring in huge bucks in profit.
All of these trading rules are important, and understanding how they work together will help you to develop a viable Forex trading business. It’s not going to be easy. In fact it’s going to be hard work. But as long as you stay disciplined and are patient it’s more likely your journey will be a success.
We’re here to help you with your journey, and we hope you’ll keep our site as one of your favorites. Because we’ve got so much more to share.
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