Choosing the Best Forex Broker

best forex broker

Want to trade forex? You’re going to need an online forex broker, and that broker should offer a reasonable investment minimum, high-quality trading tools, robust access to
customer service and no hidden account fees.

As with evaluating any vendor, to find a suitable online forex broker — whether you’re a new investor or a seasoned active trader - do your homework. Follow these 5 steps guide in order to find the best forex broker for your needs.  

What is a Forex Broker and how does it work

A forex broker is an entity that connects retail and professional forex traders with the foreign exchange market or forex. The forex market is traded on the "interbank" which is a different way of saying banks trade electronically with each other at various prices that may change from bank to bank.

A forex broker offers you a way to get into the mix with the banking network and purchase a currency pair to hold in an easy, cost-effective manner. Before there were forex brokers, people wishing to trade in foreign currency needed to have a large amount of money and a special relationship with a bank to buy foreign currencies.

Forex brokers make their money by taking a slice of the pie when you make a trade. The change in the relationship between two currencies in a pair is measured in pips. When you make a trade the forex broker charges you a few pips before actually putting your trade on the market. The market might be trading at 1.2100 EUR/USD as a buying price, and when you enter your trade, the broker may put you in at 1.2102. If you immediately close your trade, the forex broker collects the profit between the "market price" and the price you paid. This is called the bid-ask spread in forex.

You might wonder why the forex broker would pick such a small item to make money on. The easy answer is that most people don't think about a few forex pips of difference when they are trading. This makes the fee feel "transparent." The way a forex broker makes money is that they allow you access to leverage. When you use leverage in forex, you can control a larger amount on the market than what you have in your account. If you are trading 100:1, you can control $100.000 on the market with only $1.000 in your account. Not only does this increase your chance for profit (or loss), but it also makes each pip worth significantly more money, which makes the spread you pay worth more money...and forex brokers happy.

Whether you win or lose while trading, the forex broker will continue to make a profit on the difference between what you pay, and the actual "market price" that they are paying. The main job of a forex broker is to provide you easy access to get started with forex trading and make some money in the process. Many of them will even help you learn a bit about what is forex and how does it work. There are many recommended forex brokers, some big, some small, but they all work in a similar fashion. 

If you are looking to open a forex account you can start with AM Broker and other brokers (check out the list at the end of this article). Take your time, open a demo trade account or even better a no deposit bonus forex account with each forex broker you're interested in and try them out for a while. If you plan on continuously trading forex, you need a reliable forex broker to work with. To speed your search, we offer the following guidance.

no deposit bonus forex

Steps to Find the Best Forex Broker for your needs

Step 1 - Consider Your Trading Style

Your preferred forex technique can help you determine the best forex broker for you. What generally distinguishes your various trading methods is the amount of time you hold a position, trading frequency, and how trade entries and exits are timed. 

If you are a long-term forex investor who trades relatively infrequently, you might select a forex broker with a broad range of assets, tight swaps, and great information and educational offerings. You might not need to choose one with the tightest spreads since you won’t be trading that often.

On the other hand, very active short-term forex traders are far more sensitive to dealing spread widths. Also, if you plan to frequently use stop-loss orders, then order slippage can make a significant difference to your bottom line as an active trader. Choose forex company with guaranteed order fills to help prevent that issue.

Another trading style factor could involve choosing a forex broker with negative balance protection. If you intend to place your account at risk, avoid a situation where a negative balance could put you into debt if a trading position goes sharply against you.  

The most common trading styles are listed below.

  • Scalping -  this short term, active trading style involves rapidly entering and exiting the market to capture small profits. Scalpers need brokers that provide the tightest possible dealing spreads and fast execution, with less slippage.
  • Day Trading - this intraday style involves closing out all positions by the end of your trading day. Day traders benefit from a broker with tight dealing spreads. No overnight positions mean no swap worries.
  • Swing Trading - this momentum-based trading style involves buying low and selling high or selling high and buying low whether you need to hold a position overnight or close it out intraday. Swing traders do not require the narrowest possible dealing spreads from their broker but must be able to hold overnight positions.  
  • News Trading - this fundamentals-based trading strategy typically involves taking advantage of the volatility that news releases can create in the forex market. Most news trading positions are taken intraday immediately before and after news release events. Since order slippage can be an issue at such times, a broker that guarantees order levels can be beneficial for news traders. You’ll benefit from a broker that provides you with top-quality real-time news inside the platform. Alternatively, use the forex factory economic calendar.  
  • Position Trading - this style takes advantage of extended directional movements in currency markets and can yield impressive returns. Trend followers like to use trailing stops to protect their accumulated profits. Dealing spreads are rarely an issue for this type of trader since they only go in an out of a market occasionally.
  • Carry Trading - this long-term trading style involves capturing the interest rate differences between two currencies by going long a high-yield currency and short a lower-yielding currency. They also like to receive some exchange rate gains as well. This trading style is not very sensitive to bid-offer spreads but does require attractive rollover or forex swap points.
  • Copy Trading - this service enables traders in the financial markets to automatically copy positions opened and managed by a selected investor, usually in the context of a social trading network. Look for low management fees, low success fees, and other potential fees the brokerage and the money managers can charge.
     

Step 2 - Make a List of Features You Need

A quick overview of the services provided by any subset of the companies that offer online brokerage services will convince you that not all forex brokers are equivalent.
Accordingly, make sure any forex broker you decide to partner with provides a safe place for your margin deposit and offers the specific services you require for your preferred trading style.

  • Broker Type, Commissions, and Spreads - market maker brokers tend to have wider spreads and no commissions, while ECN Brokers tend to have very tight forex spreads and charge a commission.
  • Regulatory Oversight - to help assure your deposit’s safety and that you are treated fairly by a forex company, they should be overseen by a major regulatory organization. 
  • Website and Customer Service - make sure the broker’s site is available in your preferred language and that its customer service department offers the sort of support you need. 
  • Market Analysis and Learning Materials - if you’re a newer trader, getting good quality educational material from your broker can be very worthwhile.
  • Online Forex Trading Platforms - be sure to look over a broker’s software to see if you can easily use it and that it fulfills all your requirements. You might look for the most popular one, the multi-awarded MetaTrader 5 platform.
     

Step 3 - Think About Your Budget

An important practical aspect of trading and choosing a forex company involves taking your budget into account.

For example, check to see if the dealing spreads, fees, and commissions (if any) charged by a forex broker are suitable for your preferred trading style. More active traders will want to go through the forex brokers reviews and choose those with lower transaction costs that can add up over time and adversely affect your bottom line.  

Furthermore, make sure you have sufficient funds to meet the minimum forex margin requirement of the broker you would most like to deal with or plan to choose another broker. Ask each forex broker about their minimum capital required to start forex trading so you can either budget for that amount or choose another forex company.  

Some forex companies will allow you to open starter accounts with small money deposited upfront, sometimes with as little as $100 minimum funds. Some brokers might require up to $1,000 to be deposited so you can use it as a margin to secure the trades you decide to make.  


Step 4 - Criteria to Consider a Forex Broker

Once you’ve seen some reviews and have a list of possible brokers, consider how they compare on the following criteria.

For example, for active traders, we note providers offering volume discounts on trade commissions and robust mobile trading platforms. For people venturing into investing for the first time, we call out brokers that provide educational support and on-call chat or phone support.

Overall good reviews 

While there are many forums you can find online, anyone can post anything to many of these, making them great spots for any loser seeking to vent frustration at a broker. Unhappy customers are more likely to post than satisfied ones. You may well do better sticking to websites like investing.com that do their own independent reviews. When visiting these sites, look for evidence credibility. Does the site reveal weaknesses as well as strengths, or do the reviews sound like they were written by the broker’s marketing writers? Also, take note if the same brokers that get to previews are running advertisements or have links on the site to open an account, which creates potential conflicts of interest. Check other sites and forums and try to pick up the overall level of satisfaction. Sites dedicated to industry news and can also be a source of who’s doing well and who’s in trouble.

Look for what traders and reviewers say in regard to information about:

  • Transaction costs: commissions (if any), spreads, rollover rates, quality of execution.
  • Trading platforms: Many offer a choice, from simple platforms to more advanced and complex ones.
  • Regulation: Where are they located and who regulates them?
  • Support: Customer service and trading support.


>> Get $200 for your first AM Broker review <<

The overall feel of the site

If the site lacks a professional look and feel, if it feels cheap, is hard to navigate, or behaves poorly, there’s no reason to expect that your impression will improve with time. Does it look more like a gambling site (gaudy animation, loaded with promises of returns that seem too good to be true, etc.) than a serious investing site?

Check out the “About” page

The longer the company has been in business, and the more impressive the management team (their profiles are often available at LinkedIn.com), the more likely they have a reputation and investment to protect.

Clear Links to Quality Analysis and Training

Content quality is key, and an excellent way to tell who the quality brokers are. Brokers that don’t offer a variety of quality analysis and training that actually helps you find and execute trades (versus just having generic news items) either don’t have the financial resources and stability to help you or don’t care enough to do so. These sites are probably run by gambling-site types. Their business model is to offer minimal content, just for show, while investing heavily in marketing campaigns to provide a needed steady supply of new suckers, gambler sheep, to be fleeced and slaughtered within a matter of months. Remember, unless they’re providing useful guidance that helps you survive and succeed, they’re probably assuming you’ll fail quickly. Move on.

Note: Often a broker will have a content site separate from the main site. As long as the content site is easy to access from the main site’s homepage and offers quality content, that’s fine. That content should ideally include:

  • The analysis that guides you to successful long- and short-term trades. Big picture fundamental and technical analysis over long and short terms (daily, weekly, and, ideally, quarterly outlooks).
  • Trader training: on the full gamut of topics covered in this article, aimed at a variety of levels. If the material is superficial, then it’s more likely serving as a way to fool the gullible into thinking they’re ready to succeed, when instead they’re just ready to be exploited.


forex trading masterclass


The range of assets offered to trade

The wider the variety, the greater your chances of finding a reliable trend in one or more of them.

When you’re a beginner investor, the right forex account can be so much more than simply a platform for placing trades. It can help you build a solid investing foundation — functioning as a teacher, advisor, and investment analyst — and serve as a lifelong portfolio co-pilot as your skills and strategy mature. 

Once you select the best forex broker for your particular needs, visit that broker’s official website and fill in an online form to get started. All brokers can perform identity and location verification for you before opening a forex account and accepting your initial margin deposit.

Completing that step can take a few days before you can start live trading. In the meantime, open up a demo account and then download and get started with forex using the broker’s trading platform if you do not already know how to operate it. You will also want to get the broker’s mobile trading app installed on your smartphone or tablet.

Step 5 - Choose Your Forex Broker

Suggested search terms to find broker reviews:

Search for reviews using the obvious combinations of keywords like:

  • “Forex brokers” AND (reviews OR comparisons)
  • “Forex trading” AND “recommended brokers”
  • “Online forex trading” AND “broker reviews”


If you’re curious about a specific broker, try searching for specific reviews about them. For example,


Once you select the best forex broker for your particular needs, visit that broker’s official website and fill in an online form to get started. All brokers can perform identity and location verification for you before opening a forex account and accepting your initial margin deposit.

Completing that step can take a few days before you can start live trading. In the meantime, open up a demo account and then download and get started with forex using the broker’s trading platform if you do not already know how to operate it. You will also want to get the broker’s mobile trading app installed on your smartphone or tablet.

More guidance to help you pick the right forex broker

How much money do I need to get started forex trading?

Not much. Note that many of the forex brokers have no account minimums for standard forex accounts. Once you open an account, all it takes to get started is enough money to cover the cost of a single trade. However, to increase the odds of success avoid starting with less than $1.000.

Shouldn’t I just choose the cheapest forex broker?

Trading costs definitely matter to active and high-volume traders. If you’re a high-volume trader — buying bundles of 100 to 500 lots at a time, for example — brokers offering an ECN Account with zero spread are cost-effective options. Spreads are less of a factor for buy-and-hold traders, a strategy we recommend for the investors.

Most brokers do not charge a commission per trade, spread and swap are the only costs. But other factors — access to a range of investments or training tools — may be more valuable than saving a few bucks when you buy shares.

Is my money insured? What kind of forex account? How quickly can I start forex trading? The short answers are:

  • Your money is indeed insured, but only against the unlikely event, a brokerage firm goes under. A broker’s coverage doesn’t cover any loss in the value of your investments.
  • Usually, you have to choose between a standard or retail, professional, and institutional account. Our guide to brokerage accounts goes into more detail about what’s involved in setting up a forex trading account.
  • After you’ve opened the account, you’ll need to initiate a deposit or funds transfer, which can take anywhere from a few minutes to a day. Once that is complete, it’s off to the trading races! And by that, we mean taking a thoughtful and disciplined approach to investing your money! ​


How to Become an Introducing Forex Broker

An introducing forex broker or Forex IB refers to a person who introduces futures business to a brokerage firm and is compensated for the business or transactions generated by these referrals. 

Since the mid-‘90s, the term has become a lot more popular in the spot Forex market because of the rapid growth that foreign exchange (or “FX”) has experienced. Since that time, many individuals and organizations have tried their luck at the IB business — and crashed and burned in the process. Many thought that because Forex was the “sexy” market to be in, their success was guaranteed. It’s really not that simple. Becoming a Forex Introducing Broker is easy, but running a successful IB business takes prudent planning and good execution. It’s very important that you follow the recommendations laid out in this Forex Introducing Broker guide — that is if your goal is to experience ongoing and long term success.

>> Sign up to receive The Success Manual for Introducing Brokers (recommended by Market Watch)

forex introducing broker

Forex Brokers Reviews

 

How to choose a forex broker summed up:
  • A forex broker is an entity that connects retail and professional forex traders with the foreign exchange market or forex.
  • Your preferred forex technique can help you determine the best forex broker for you.
  • Make a list of features you need, not all forex brokers are equivalent.
  • An important practical aspect of trading and choosing a forex company involves taking your budget into account.
  • Once you’ve seen some reviews and have a list of possible brokers, consider how they compare on the mentioned criteria.
  • Once you select the best forex broker for your particular needs, visit that broker’s official website and fill in an online form to get started.

Choose a Reliable Forex Broker

Sign up with AM Broker and experience the best of trading

Sign up


How to Get Started with AM Broker

Categories:  Forex