If you’re new to forex, you may not know that the forex market is an over-the-counter market in which banks, brokers, institutions, investors, and traders buy and sell currencies. A 24-hour market, it functions five days a week.
Quick Look: Our favorite forex brokers for beginners
Best Overall: Forex.com
Best Regulated: Forex.com
Best Platform/Ease of Use: Forex.com
Best In Terms of Educational Resources Offered: Ally Invest, Forex.com, TD Ameritrade
Best Affordability (Lowest Fees & Commissions): Oanda
Best Customer Support: Forex.com
What’s a forex broker?
A forex broker is an intermediary which facilitates buying and selling of currencies for a commission, or, in other words, executes orders on behalf of clients.
The broker supplies clients with information on the market price of a currency pair, finds a matching order to fulfill clients’ requests, sends the trading order to the market, and, after processing the order, gets back to the client with the status of the order.
Factors to consider when finding the best forex broker
If you’re on the hunt for a forex broker, the options may be overwhelming. But, you should be able to narrow down your search based on the following.
- Credibility/reputation: Fully check the broker’s credentials. Look for brokers listed under the National Futures Association and the U.S. Commodities Futures Trading Commission.
- Trading platform: A user-friendly and simple trading platform is essential. Feature-rich platforms, while handy for an advanced trader, might be too much for a beginner.
- Efficiency of execution: In order to ensure the best possible price for placed orders, execution, or the speed at which the orders are filled, should happen in nanoseconds, as forex moves are dynamic and volatile.
- Customer service: A broker should be easy to contact and offer quick resolution of issues.
- Affordable fees and commissions: In forex trading, fees and commissions will include a fixed spread, variable spread or a commission based on a percentage of the spread. Spread is the difference between the bid price (the price which the market is prepared to pay you for buying the currency) and the ask price (the price at which he is prepared to sell you the currency).
Picks for the best forex broker
Based on these characteristics, the best forex brokers for beginners are below. Before you open an account, consider which features matter most to you as a currency trader.
Best overall: Forex.com
Best For
- Traders of all skill levels
- If you need a great mobile experience
- Those who like easy-to-consume data and research
The top honors for a well-rounded brokerage catering to the needs of a beginner goes to Forex.com. This broker promises stability, security, and strength. It offers more than one trading platform, including an in-house option and also provides trading on desktop, web, and mobile.
You’ll be able to trade over 80+ currencies pairs through Forex.com.
Forex.com also offers expert market analysis and trade ideas and also offers cash rebates through its Active Trader program. Its $5,000, 30-day risk-free practice trading account is also an added attraction.
Read Benzinga’s full Forex.com Review
Best regulation: Forex.com
Forex.com, owned by Gain Capital Holdings, Inc. (NYSE: GCAP) is the best when it comes to regulation, as it is under the regulatory purview of multiple agencies (including overseas agencies).
Quick notes:
- Oanda is also regulated by both NFA and CFTC.
- Interactive Brokers, another active forex trader, as well as Nadex, are regulated by the CFTC.
- TD Ameritrade’s TD Ameritrade Futures and Forex is a member of the NFA.
The advantages of trading with a regulated broker include transparency of operations, compensation or insurance payout (in case the brokerage fails) and anti-money laundering guarantees.
However, most are unregulated. (FXCM claims that by being unregulated, it’s able to offer a wider and more diverse range of products and promotions demanded by its client base.)
Best for trading platform/ease of use: Forex.com
Forex.com provides clients with advanced platforms such as Metatrader 4 and has an in-house platform called FOREXTrader. Forex.com also offers a web platform, desktop and mobile app.
- Ally Invest Forex offers ease of use and flexibility as well as a full suite of professional charting and order management tools.
- On the contrary, trading platforms such as TD Ameritrade’s thinkorswim platform, which offers advanced charting and analysis tools, may not be best for forex newcomers.
Best for educational resources: Forex.com, Ally Invest & TD Ameritrade
TD Ameritrade’s thinkorswim platform offer educational materials, tutorials, real-time data, third-party research and more and therefore qualifies as the broker with the best educational resources.
Forex.com, with its videos, webinars, and guides, is a great bet as well. It even offers curated content based on the type of the investor you are, which is deduced based on a quiz. Apart from providing content on trading fundamentals and technicals, it offers tutorials for its Forex.com platform as well as the MetaTrader platform.
Ally Invest is right on par in terms of the educational resources offered. The firm offers excellent resources to help beginners understand forex trading. Some brokers offer a practice account to help beginners understand trading nuances. Forex.com and Ally Invest offer a $50,000 risk-free demo account, valid for 30 days.
Best for low fees: Oanda
A broker’s compensation is usually the spread between the bid and ask price. The dealer acting as principal in a transaction marks up the bid price, widening the bid-ask spread. The difference between the market spread and the dealer’s marked-up spread is the profit, as the broker buys and sells from its inventory.
Oanda scores over the rest in terms of the lowest spread. It also offers commission pricing, charging $50 per million units.
Best customer support: Forex.com
Since forex is a five-day, 24/7 market, most forex brokers offer customer service from 5 p.m. ET Sunday to 5 p.m. ET Friday. However, Forex.com’s customer support is available from 10 a.m. ET Sunday through 5 p.m. ET. Phone, live chat and email support is available.
Final thoughts
The time and resources you commit as you dive into the complex investing world calls for patience and study. As long as you have the resources to commit, and even when you do lose, it all teaches you how to be a better trader.
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