An Extensive Guideline to Choose the Best Forex Broker in 2024
Out of the hundreds of brokers in the world, finding the best forex broker is challenging. As the trading involves exchanging one currency in terms of another currency, one has to be careful while trading. When looking for the top forex brokers, both experts and new traders should consider the platforms, leverage, offered currency pairs, and customer service. Besides, some other factors should be taken into consideration too. Through extensive research with effective methodology, we have suggested a detailed guideline to choose the best forex brokers for beginners and experts. Read on to find out those.
What is a Forex Broker?
To trade something, you must need a place/platform to buy or sell in the real world. In the currency trading market, forex brokers work like that platform. Usually, a forex broker is a firm that allows traders to use their platform to buy or sell currencies worldwide. For your information, the whole process is done virtually. However, not all the broker acts the same.
What is the Role of the Best Forex Broker?
The broker works as a middleman between you and other buyers or sellers. They create a virtual place and let you trade your currencies. However, during the process, they charge a fee or commission, which is their earning source.
Types of Forex Broker
Top forex brokers are divided into two basic categories. They are-
- Dealing Desk Brokers (DD)
They work as direct liquidity providers to their clients.
- Non-Dealing Desk Brokers (NDD)
On the other hand, NDD brokers connect their clients to other available liquidity providers in the market. Through, NDD work in two ways-
- Straight Through Processing (STP) brokers
- Electronic Communication Network + Straight Through Processing (ECN + STP)
At this point, you know some basics of the top forex brokers. But, if you want to trade, those basic will not get you the best forex broker. Let’s find ways to get a legit broker.
Criteria to Find the Best Forex Broker
Out of hundreds of brokers available worldwide, you have to look for some criteria to get the best forex broker. The following are the benchmarks you should look for.
- Safety and Reliability
When you are investing money, security should be one of the main concerns. Checking the credibility of a forex broker is not that tough. There are regulatory bodies in different countries.
- Regulatory Bodies
Before putting your money into a broker, check for yourself, if the broker is a member of the regulatory body for the respective country it works for. You will find their membership on their websites. Additionally, you may crosscheck with country-specific regulatory body’ listing.
- Account Registration
The best forex brokers for beginners will keep their account opening procedure simple and light. If they seek any unusual info, you should avoid it.
- Transaction Costs
Every time you trade through a broker, you will have to pay a commission or spread. However, trading with the best forex broker is always affordable and cheapest. However, sometimes you have to sacrifice a bit higher transaction cost for a reliable broker.
- Deposit and Withdrawal
The best forex broker will keep the deposit and withdrawal hassle-free.
- Trading Platform
Best forex brokers for beginners will feature a user-friendly and stable trading platform. So, you should check the trading platform in detail before deciding to start trading.
Under the normal market condition, no matter what, the broker should fills you at the best possible price when you order. Besides, they should also offer micro pips for your transaction.
- Market Coverage
The best forex broker will let you trade on the fx pair or your preferred product.
- Demo Account
Best forex brokers for beginners always provide a demo account to practice before you start the real trading. Whether you are an experienced or beginner, you should be able to get the demo account.
- Education support
A good broker always provides education support to their clients. The support could be the video tutorial, e-books, blogs, newsletters, etc.
- Customer Support
Though you will trade online with software, you may face problems. On the other hand, if the broker doesn’t help you in your need, there is no point to trade with them.
Top forex brokers always offer 24/7 customer support. However, some good brokers may offer 24/5 live support, such as FP Markets.
We have also explained some of the important criteria in detail later on in this informative article.
How to Find the Best Forex Brokers for Beginners?
As a beginner, find the best forex broker is a real challenge as they start with zero experience. We will suggest newbies to make a list of some forex broker, you know. After that, follow the points we mentioned below for each broker you have chosen.
- Company History
Brief research on your forex broker will give you an idea at a glance regarding that broker. Check out everything about that broker, such as year of establishment, location, etc.
- Check for the Membership of Respective Regulatory Body
Top forex brokers should be the member of corresponding regulatory agencies, which ensures the security of your fund. If they intend to do business in multiple countries, they must get approval from those country-specific regulatory agencies. The following list consists of the countries with their corresponding regulatory bodies and makes sure you check your broker’s credibility.
- UK: Prudential Regulation Authority (PRA) and Financial Conduct Authority (FCA)
- USA: and Commodity Futures Trading Commission (CFTC) and National Futures Association (NFA)
- Canada: Investment Information Regulatory Organization of Canada (IIROC)
- Australia: Australian Securities and Investment Commission (ASIC)
- Germany: Bundesanstalt für Finanzdienstleistungsaufsicht (BaFIN)
- Switzerland: Swiss Federal Banking Commission (SFBC)
- France: Autorité des Marchés Financiers (AMF)
Look for Forex Broker Reviews
Search on Google about those brokers. Look for every possible detail available on the internet, including pros and cons. Besides, don’t rely on a single source and read reviews from different sources. That’s how you can realize which one is the best forex broker.
- Forex Forums
Visit some forex forums to get a better idea from real users. Additionally, you will get to know honest things about your desired broker. As a result, you can sort out the list of best forex brokers for beginners.
- Free Demo Trading
Some forex brokers provide a demo free demo after deposit. However, top forex brokers never ask a deposit for demo trading. When you have found a broker with a free demo account, sign up and try to trade.
Besides those, you have to know some other stuff to find out the best forex broker. Without further ado, let’s dig more about some elements of forex trading.
Broker’s Range of Instrument
There are a vast number of currencies available for trading in the top forex brokers platform. However, only a few currencies get traded as they have the highest profitable volatility. The most usual currency pairs are EUR/USD, USD/JPY, USD/CHF. Although there are more currencies that are profitable. The best forex broker will offer you more than hundreds of different pairs to trade from.
The Cost of Trading: Spreads, Commissions, and Leverage
All the forex broker has a variety of account offerings with various spreads and leverage. However, the leverage offering depends on the country and the broker’s limitation. On the other hand, best forex brokers for beginners usually offer a wide range of leverage amounts on various account types. For the retail account, it could be 1:30, and for the professional accounts, 1:500.
Spreads and commission are other significant offers that affect a trading position. It is an important criterion to check before selecting a broker because brokers make money from commission.
However, best forex broker may charge less commission as they have many active clients in their list.
Nonetheless, most of the FX brokers say that they don’t charge any commission, and instead, they make money through spreads. It is the bid and asks price for a currency pair, for instance, if the spread is wider, the charge will be higher. In some cases, the spread could be fixed up to three pips. Besides, a broker may also offer variable spread depending on the market volatility.
Usually, low spread brokers are popular among the trader as they take commissions on trading only through rollover or swap. Being said that, let’s know more about rollover.
If you keep your forex position open overnight, it will incur an extra fee. The difference in the interest rate of base currency and the quote currency is considered as rollover rate.
Types of Forex Trading Account
The number of lots and trades are correlated to determine the types of trading account. Depending on the trading size, they fall under the standard, mini and micro-accounts.
- Standard: It consists of 1000,000 units of lots of a base currency
- Mini: When you trade 10,000 units, it is called mini lots.
- Micro: 1,000 units are fell under micro-accounts.
With the advancement of technology and traders, a new kind of lots has emerged. These days, newbie-friendly best forex brokers for beginners allow trading as low as 100 units, which are called nano lots.
Trading Platform for Best Forex Broker
The trading platform is the most valuable and crucial part of a broker. As such, traders will deposit and trade through the designated platform. So, you have to make sure that the platform and trading software is user-friendly. Besides, the platform should also have fundamental and technical analysis tools.
However, top forex brokers use third-party software such as MetaTrader 4 and MetaTrader 5.
MetaTrader 4 is reliable and trusted by most of the forex traders as it is highly customizable. Besides, it can automate your trading too, which can open and close trades even when you are not logged in. It was made especially for forex trading.
On the other hand, MetaTrader 5 was developed to grab non-forex traders, such as stocks and commodities. However, it also has a forex trading option.
Deposit and Withdrawals
Best forex brokers for beginners always provide an easy process to deposit and withdraw. Besides, you also have to consider the minimum deposit amounts as well as withdrawal time. Best forex broker doesn’t want a huge amount of deposit to start. However, it doesn’t mean that high deposit seekers are not worthy.
Some best forex broker will let you trade from as low as $100, which helps you to understand the market. Besides, they also offer easy withdrawal quickly so that your fund will not be stuck forever.
Top forex brokers keep their payment method easy. Commonly they release their payment through Visa, Master Card, and Bank wire along with Neteller and Skrill. However, bitcoin and Paypal payment options very rare.
A trader should gain knowledge about the pair, which is also known as the currency pair. It is simply the quotation of two currencies, where the value of a specific currency is quoted against the other currencies. However, as a beginner, you might not have enough knowledge about the pairs. For that reason, best forex brokers for beginners educate their traders on pairs and suggest a profitable one.
Which Forex Pair to Trade?
In the forex market, there could be hundreds of pairs available. They are categorized in terms of traded volume on a daily basis. However, all of them are not highly profitable. Forex pairs can be divided into two parts.
- Major Currency Pairs
For beginners as well as experts, EUR/USD is the most liquid currency pair. Besides, USD/JPY is also one of the most popular pair in the world. Other major currency pairs include USD/CHF, USD/CAD, GBP/USD, and AUD/USD.
- Minors and Exotic Pairs
Unlike major pairs, all the pairs are not associated with USD. So, the forex pairs that are not denominated with US dollars are called as minor pairs or crosses. Those pairs have a bit wider spreads. Besides, they are not liquid like the major pairs. Most common crosses are EUR/CHF, EUR/GBP and GBP/JPY.
When new pairs are introduced in the market, they are categorized as exotic currencies that are not that liquid, and spreads are much wider. For example, US dollars and Singapore dollars are emerging in the market. Top forex brokers don’t suggest to trade exotic pairs for a newbie trader.
Bonuses and Promotions
Bonuses and promotions sometimes play a major role in selecting a forex trader. These days, forex broker agencies are advanced and popular. Additionally, the best forex broker offers good trading conditions along with extra incentives.
To grab more clients, brokers offer special promotional packages for beginners and old traders. However, sometimes big depositors also get bonuses. Some top forex brokers who offer bonuses and promotions are FX Pro, Admiral Markets, etc.
So, before you sign up for a forex broker, evaluate their bonus and promotional activities too.
Trade Execution Policy for Top Forex Brokers
Some forex brokers offer a high level of leverage, which seems attractive. As a result, trades follow an aggressive strategy. High leverage can get you a great amount of profit, but it is risky too. If you are conservative traders with medium investment, you should look for moderate leverage offers. Those are less risky.
Anther policy you have to keep in mind that some brokers may offer fixed leverage on some currencies, while others offer adjusted leverage.
While choosing forex brokers for beginners, margin call policies should be kept in mind too. Besides, another detail you should watch out is company performance and how they carried the traders over the weekends.
Before depositing money and start real trading, you must evaluate all the trade execution policies.
Regulation and Licenses among the Best Forex Broker
Forex business doesn’t have a central regulation; it is regulated differently all over the world. As a result, different countries have different policies regarding forex. Furthermore, forex brokers must comply with the financial authorities of any particular country.
So, it is essential for a trader to choose a brokerage company that operates under financial authorities with proper authorities. Usually, newbies should see these carefully as they need to find top forex brokers to secure their investment.
However, we already mentioned all the regulatory bodies in how to find the best forex brokers for beginners part of this content. Regardless of your level, you need to have a clear understanding of the regulatory status.
Quality of Client Support
Customer support quality is another way to categories the top forex brokers. However, it is not possible to know the quality of customer support unless you practically use it. Still, you can take ideas through forums and reviews on google. You may ask what the benchmarks to check the customer support quality.
To search for the quality measurement, you may check their live customer support hours. Some may offer 24/7 support as forex markets never sleep. However, some of the brokers may offer five days a week support. Besides, the best forex broker provides a multilingual trading community with corresponding customer support preferences.
Education Support by the Best forex brokers for beginners
A new trader must need to learn the trading from a mentor. Though mentors are not always accessible. As a result, they need support from brokers. A beginner’s friendly broker always provide training or education support to its new clients.
Top forex brokers may provide video, books, blogs, forums, and other relevant tools to boost knowledge. It also includes a free demo account. So, new traders also need to check those out whether the desired broker offers education support.
What are pips in trading?
It is necessary to know about pips if you are a new trader. Usually, the change of the value in two currencies is called pip. For example, if EUR/USD moves from 1.1049 to 1.1050, which makes the USD .0001 rise. This .0001 rise is one pip, which means the last decimal place of a price quote.
Most pips go up to 4 decimal places. Sometime they may go out to two decimal places such as USD/JPY is .01
Order Entry Types in Top Forex Brokers
In forex trading order entry are categorized into two types, market order and pending order.
- Market Order: It is the process to execute an order instantly at the best price.
- Pending Order: It is the process to execute a transaction according to your specified price. However, the software will not complete the transaction until it meets the desired price.
Check out the Scams
As a beginner, you may become the victim of best forex brokers for beginners scam! There are a lot of brokers who try to scam the newbies. That’s why we have explained all the terms and requirements above. This guideline will help you out to stay away from scammers. Besides, check out if they violated someone’s privacy previously. Again, research yourself to stay safe.
Using this guideline, when you are done with the rough shaping of the top forex brokers, make a list of the brokers. Then, weigh all the positive and negative sides again to finalize your best forex broker.
Perhaps, for your review, you should check the following queries to yourself as well as to the broker.
- Are they a broker or a dealer? Try to find out the company types and their capitalization.
- Take a closer look at their trading platform.
- Check out the types of accounts, whether they invite traders from various skills and investment.
- Understand their fees and commission structure.
- Company standards are based on their leverage, margins, and regulatory body.
- How is their client support management?
- Finally, are they the best forex brokers for beginners?
Top Rated Online Best Forex Brokers 2024