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.

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.


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.

Broker Best For Commissions Account Minimum Choose your platform
  • Forex traders located in the United States
  • MetaTrader 4 users
  • Beginner forex traders
  • Active forex traders
Spreads start as low as $1 But vary based on trading volume $250
Get started securely through’s website
1 Minute Review

One of the few forex brokers to provide MetaTrader support for U.S. clients, has an impressive array of pairs to trade and three different accounts to choose from. Its educational materials are spot-on, but the margin requirements aren’t as accommodating as some competing forex brokers.

  • MetaTrader and NinjaTrader support
  • Lots of education materials
  • Direct market access accounts
  • Over 80 forex pairs to trade
  • Maximum leverage on only three pairs
  • No MetaTrader on spread or DMA accounts
Current Promotion

  • Beginners
  • Cost-conscious traders
  • Traders who keep a low account balance
$5 per 100,000 base currency traded $0
Get started securely through Oanda’s website
1 Minute Review

Since 1996, Oanda has dominated the currency trading industry. A leading provider of forex and CFD trading instruments on both a retail and business level, Oanda is highly regulated and flexible, with competitive spreads across the board. Best of all, you won’t unearth any extra commissions. Its max leverage of 1:50 will also allow you to experience a high level of safety (and therefore breathe a sigh of relief) once you’re actively trading on the financial markets.

  • Highly regulated
  • Accepts U.S. clients
  • No minimum deposit
  • No minimum trade size
  • Premium accounts
  • Fast order execution
  • Four trading platforms + MT4
  • Inactivity fee
  • Only forex and CFD
  • Not listed on any stock exchange
  • Educational opportunities are limited
Current Promotion

Interactive Brokers
  • Forex traders
  • Professional traders
  • Frequent traders with a thirst for different order types (63!)
$0.005 per share minimum $1 and maximum 0.5% of trade value; volume discount available $0
Get started securely through Interactive Brokers’s website
1 Minute Review

If you consider yourself a sure-footed professional trader, Interactive Brokers might be a major possibility for you, particularly if you’re adept at navigating tricky trading platforms (can you say 124 option indicators?) or have done more than just dipped your toe a “coupla times” into the complex world of international markets.

  • If you’re into trading on margin, you’re in luck. Interactive Brokers offers the lowest rates in the industry.
  • Low pay-per-share commissions on stock trades (up to 1,000 shares) and on options trades (up to 20 contracts)
  • Vast order types options for professional traders
  • Interactive Brokers charges account fees (including annual, transfer, closing an inactivity fees) and offers an extremely complex trading platform
Current Promotion

Lower minimum activity requirements ($3/month) and opening account minimum requirement ($3,000) for clients 25 and younger.

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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