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How to Choose a Forex Broker

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Whether you plan to trade forex or trade stocks on the stock market, remember that selecting a broker to partner with can impact your bottom line as a trader, so make sure your choice is as ideal for your needs as possible.

Note that traders based in the United States have a reduced selection compared to traders in other countries.

Commissions
$10 value per pip
Account Minimum
$0
Get started securely through IG Group’s website
Commissions
$10 value per pip
Account Minimum
$0
1 Minute Review

IG is a comprehensive forex broker that offers full access to the currency market and support for over 80 currency pairs. The broker only offers forex trading to its U.S.-based customers, the brokerage does it spectacularly well. Novice traders will love IG’s intuitive mobile and desktop platforms, while advanced traders will revel in the platform’s selection of indicators and charting tools. Though IG could work on its customer service and fees, the broker is an asset to new forex traders and those who prefer a more streamlined interface.  

Best For
  • New forex traders who are still learning the ropes
  • Traders who prefer a simple, clean interface
  • Forex traders who trade primarily on a tablet
Pros
  • Easy-to-navigate platform is easy for beginners to master
  • Mobile and tablet platforms offer full functionality of the desktop version
  • Margin rates are easy to understand and affordable
  • Access to over 80 currency pairs
Cons
  • U.S. traders can currently only trade forex
  • Customer service options are lacking
  • No 2-factor authentication on mobile
Account Minimum
100 of your selected base currency
Pairs Offered
80+
Get started securely through FOREX.com’s website
Account Minimum
100 of your selected base currency
Pairs Offered
80+
1 Minute Review

FOREX.com is a one-stop-shop for forex traders. With a massive range of tradable currencies, low account minimums and an impressive trading platform, FOREX.com is an excellent choice for brokers searching for a home base for their currency trading. New traders and seasoned veterans alike will love FOREX.com’s extensive education and research center that provides free, informative forex trading courses at multiple skill levels. While FOREX.com is impressive, remember that it isn’t a standard broker. You can’t invest in the stock or bond market through your FOREX.com and you cannot open an account with tax advantages. The confusing pricing and margin structures may also be overwhelming for new forex traders.

Best For
  • MetaTrader 4 users
  • Beginner forex traders
  • Active forex traders
Pros
  • Impressive, easy-to-navigate platform
  • Wide range of education and research tools
  • Access to over 80 currencies to buy and sell
  • Leverage available up to 50:1
Cons
  • Cannot buy and sell other securities (like stocks and bonds)
  • Confusing margin requirements that vary by currency
  • Limited customer support options
  • Cannot open an IRA or other retirement account
Account Minimum
$50 USD
Pairs Offered
47
Get started securely through eToro’s website
Account Minimum
$50 USD
Pairs Offered
47
1 Minute Review

Though Australian and British traders might know eToro for its easy stock and mobile trading, the broker is now expanding into the United States with cryptocurrency trading. U.S. traders can begin buying and selling both major cryptocurrencies (like Bitcoin and Ethereum) as well as smaller names (like Tron Coin and Stellar Lumens).

eToro offers traders the opportunity to invest their assets into premade portfolios or cryptocurrencies, similar to services offered by robo-advisors through traditional brokers. Though eToro isn’t a one-stop-shop for everything an investor needs, its easy-to-use platform and low spreads is a great way to enter the cryptocurrency market.

Best For
  • International Forex/CFD Traders
  • New cryptocurrency traders looking for an easy-to-use platform
  • Traders who want to buy and sell cryptocurrencies on-the-go
Pros
  • Simple platform that is easy to master
  • CopyTrader feature that allows new traders to copy the same strategies used by professionals
  • Virtual dummy account that gives you $100,000 to practice trades
Cons
  • U.S. traders currently limited to cryptocurrencies
  • Only 15 major coins available to trade
Account Minimum
$100 USD (or equivalent)
Pairs Offered
69
Get started securely through HYCM’s website
Account Minimum
$100 USD (or equivalent)
Pairs Offered
69
1 Minute Review

HYCM is 1 of the world’s leading forex brokers, offering investors access to over 69 unique currency pairs. However, forex isn’t the only thing the broker offers — HYCM also offers high rates of leverage, stock and ETF trading, commodity investing and much more. Getting started with HYCM is quick and easy, and most investors can open an account in as little as 10 minutes.

HYCM offers a varying fee structure, which allows investors to choose the spread option that’s best for them. A wide range of educational and investing tools are available, which can be equally beneficial to both experienced and novice traders. Though HYCM isn’t currently available in the United States, it can be a great choice for residents of the other 140 countries where it offers service. 

Best For
  • Investors who want a customizable fee schedule
  • Traders comfortable using the MetaTrader platform
  • Islamic traders who need swap-free accounts that don’t build interest
Pros
  • Wide range of currency pairs available
  • Excellent selection of educational tools
  • $0 deposit and withdrawal fees
Cons
  • Not currently available to traders based in the U.S.
Account Minimum
100 EURO
Pairs Offered
50+
Get started securely through AvaTrade’s website
Account Minimum
100 EURO
Pairs Offered
50+
1 Minute Review

A fully regulated broker with a presence in Europe, South Africa, the Middle East, British Virgin Islands, Australia and Japan, Avatrade deals with mainly forex and CFDs on stocks, commodities, indexes, forex, cryptocurrencies, etc. This brokerage is headquartered in Dublin, Ireland and began offering its services in 2006. It offers multiple trading platforms and earns mainly through spreads.

Best For
  • Beginners
  • Advanced traders
  • Traders looking for a well-diversified portfolio
Pros
  • Controlled by regulatory agencies of multiple countries
  • Choice offered in terms of trading platforms
  • Support available in 14 languages and trading platforms in 20 languages
  • Practice/demo account available for trying out
  • Breadth of trading assets
Cons
  • Does not accept customers from the U.S. as it isn’t regulated in the U.S.
  • Transferring funds to the account may take up to five days; withdrawals could take up to 10 days

Step 1: Consider Your Trading Style

Your preferred trading style or strategy can help you determine the best broker for you. What generally distinguishes your various trading styles is the amount of time you hold a position, trading frequency and how trade entries and exits are timed. Trading styles also tend to fall into two broad categories: intraday or position trading.

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

On the other hand, very active short term 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 a broker with guaranteed order fills to help prevent that issue.

Another trading style factor could involve choosing a 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 very 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.

Day Trading

This intraday style involves closing out all positions by the end of your trading day. While this style can encompass a wide variety of strategies and trade plans, you avoid the extra risk of holding positions overnight.

Most active day traders benefit from a broker with tight dealing spreads.

Swing Trading

The aim of this momentum-based trading style is to buy low and sell high whether you need to hold a position overnight or close it out intraday.

Swing traders often use technical indicators like the relative strength index (RSI) to signal when exchange rates are oversold or overbought and may swing in the opposite direction.

They may also use support levels to buy ahead of and resistance levels to sell ahead of. Since they tend to trade less often, swing traders do not require the narrowest possible dealing spreads from their broker but must be able to hold overnight positions.  

News Trading

This set of 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 a top quality financial news feed so you get news as fast as possible.  

Trend Trading

You can take advantage of extended directional movements in currency markets and can yield impressive returns with trend trading.

Trend traders 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 swap pricing.

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 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 brokers who offer electronic communications network (ECN) access tend to have very tight spreads and charge a commission.

Regulatory Oversight

To help assure your deposit’s safety and that you are treated fairly by a broker, they should be overseen by a major regulatory organization. U.S.-based forex brokers should be regulated by the National Futures Association (NFA) and the Commodity Futures Trading Commission (CFTC).

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.

Most brokers provide access to support staff using phone, live chat and email.

Market Analysis and Learning Materials

If you’re a newer trader, getting good quality educational material from your broker can be very worthwhile.

Many traders of any skill level will also appreciate high-quality market analysis to give them fresh ideas.

Online Trading Platform

Interactive Brokers online trading platfor
The FX Trader online trading platform. Source: Interactive Brokers

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 popular MetaTrader 4 or 5 platforms from MetaQuotes.

An example of a proprietary forex trading platform is FXTrader provided by Interactive Brokers.

Step 3: Think About Your Budget

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

For example, check to see if the dealing spreads, fees and commissions (if any) charged by a broker are suitable for your preferred trading style. More active traders will want to choose brokers 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 margin deposit requirement of the broker you would most like to deal with or plan to choose another broker. Ask each broker about their minimum deposit so you can either budget for that amount or choose another broker.  

Some brokers will allow you to open starter accounts with minimal money deposited up front, sometimes with as little as $25. Some brokers might require up to $10,000 to be deposited so you can use it as margin to secure the trades you decide to make.  

Step 4: Choose Your Broker

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 an 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 start practicing 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 app installed on your smartphone or tablet.

The table below contains a list of three reputable online brokers that accept clients based in the United States for trading forex, as long as you meet their minimum deposit requirements.

Here are a few of our favorite forex brokers.

Commissions
$10 value per pip
Account Minimum
$0
Get started securely through IG Group’s website
Commissions
$10 value per pip
Account Minimum
$0
1 Minute Review

IG is a comprehensive forex broker that offers full access to the currency market and support for over 80 currency pairs. The broker only offers forex trading to its U.S.-based customers, the brokerage does it spectacularly well. Novice traders will love IG’s intuitive mobile and desktop platforms, while advanced traders will revel in the platform’s selection of indicators and charting tools. Though IG could work on its customer service and fees, the broker is an asset to new forex traders and those who prefer a more streamlined interface.  

Best For
  • New forex traders who are still learning the ropes
  • Traders who prefer a simple, clean interface
  • Forex traders who trade primarily on a tablet
Pros
  • Easy-to-navigate platform is easy for beginners to master
  • Mobile and tablet platforms offer full functionality of the desktop version
  • Margin rates are easy to understand and affordable
  • Access to over 80 currency pairs
Cons
  • U.S. traders can currently only trade forex
  • Customer service options are lacking
  • No 2-factor authentication on mobile
Account Minimum
100 of your selected base currency
Pairs Offered
80+
Get started securely through FOREX.com’s website
Account Minimum
100 of your selected base currency
Pairs Offered
80+
1 Minute Review

FOREX.com is a one-stop-shop for forex traders. With a massive range of tradable currencies, low account minimums and an impressive trading platform, FOREX.com is an excellent choice for brokers searching for a home base for their currency trading. New traders and seasoned veterans alike will love FOREX.com’s extensive education and research center that provides free, informative forex trading courses at multiple skill levels. While FOREX.com is impressive, remember that it isn’t a standard broker. You can’t invest in the stock or bond market through your FOREX.com and you cannot open an account with tax advantages. The confusing pricing and margin structures may also be overwhelming for new forex traders.

Best For
  • MetaTrader 4 users
  • Beginner forex traders
  • Active forex traders
Pros
  • Impressive, easy-to-navigate platform
  • Wide range of education and research tools
  • Access to over 80 currencies to buy and sell
  • Leverage available up to 50:1
Cons
  • Cannot buy and sell other securities (like stocks and bonds)
  • Confusing margin requirements that vary by currency
  • Limited customer support options
  • Cannot open an IRA or other retirement account
Account Minimum
$50 USD
Pairs Offered
47
Get started securely through eToro’s website
Account Minimum
$50 USD
Pairs Offered
47
1 Minute Review

Though Australian and British traders might know eToro for its easy stock and mobile trading, the broker is now expanding into the United States with cryptocurrency trading. U.S. traders can begin buying and selling both major cryptocurrencies (like Bitcoin and Ethereum) as well as smaller names (like Tron Coin and Stellar Lumens).

eToro offers traders the opportunity to invest their assets into premade portfolios or cryptocurrencies, similar to services offered by robo-advisors through traditional brokers. Though eToro isn’t a one-stop-shop for everything an investor needs, its easy-to-use platform and low spreads is a great way to enter the cryptocurrency market.

Best For
  • International Forex/CFD Traders
  • New cryptocurrency traders looking for an easy-to-use platform
  • Traders who want to buy and sell cryptocurrencies on-the-go
Pros
  • Simple platform that is easy to master
  • CopyTrader feature that allows new traders to copy the same strategies used by professionals
  • Virtual dummy account that gives you $100,000 to practice trades
Cons
  • U.S. traders currently limited to cryptocurrencies
  • Only 15 major coins available to trade
Account Minimum
$100 USD (or equivalent)
Pairs Offered
69
Get started securely through HYCM’s website
Account Minimum
$100 USD (or equivalent)
Pairs Offered
69
1 Minute Review

HYCM is 1 of the world’s leading forex brokers, offering investors access to over 69 unique currency pairs. However, forex isn’t the only thing the broker offers — HYCM also offers high rates of leverage, stock and ETF trading, commodity investing and much more. Getting started with HYCM is quick and easy, and most investors can open an account in as little as 10 minutes.

HYCM offers a varying fee structure, which allows investors to choose the spread option that’s best for them. A wide range of educational and investing tools are available, which can be equally beneficial to both experienced and novice traders. Though HYCM isn’t currently available in the United States, it can be a great choice for residents of the other 140 countries where it offers service. 

Best For
  • Investors who want a customizable fee schedule
  • Traders comfortable using the MetaTrader platform
  • Islamic traders who need swap-free accounts that don’t build interest
Pros
  • Wide range of currency pairs available
  • Excellent selection of educational tools
  • $0 deposit and withdrawal fees
Cons
  • Not currently available to traders based in the U.S.
Account Minimum
100 EURO
Pairs Offered
50+
Get started securely through AvaTrade’s website
Account Minimum
100 EURO
Pairs Offered
50+
1 Minute Review

A fully regulated broker with a presence in Europe, South Africa, the Middle East, British Virgin Islands, Australia and Japan, Avatrade deals with mainly forex and CFDs on stocks, commodities, indexes, forex, cryptocurrencies, etc. This brokerage is headquartered in Dublin, Ireland and began offering its services in 2006. It offers multiple trading platforms and earns mainly through spreads.

Best For
  • Beginners
  • Advanced traders
  • Traders looking for a well-diversified portfolio
Pros
  • Controlled by regulatory agencies of multiple countries
  • Choice offered in terms of trading platforms
  • Support available in 14 languages and trading platforms in 20 languages
  • Practice/demo account available for trying out
  • Breadth of trading assets
Cons
  • Does not accept customers from the U.S. as it isn’t regulated in the U.S.
  • Transferring funds to the account may take up to five days; withdrawals could take up to 10 days

Final Thoughts

Choosing an online forex broker for trading currency pairs is relatively easy these days given the many choices now available, although U.S.-based traders have a smaller selection due to local regulatory protections. Once you’ve decided on a reputable broker, contact the broker directly to open an account.

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