With new forex brokers coming online every day, choosing the best broker for you often requires a lot of research and patience. However even though it is the largest market in the world, there is no central exchange for it. Consequently, forex traders have to rely on the services of a forex broker to help them execute a trade.
That is why it is so important to choose the best trading partner for you. So what do you need to consider when choosing a broker? Before all else, the first thing every beginner trader must check when looking for a trusted and reliable broker is to see if the broker is regulated.
As the forex market is an unregulated market, having a forex broker that is regulated ensures the broker will operate with transparency and fairness. It is important to note that regulatory oversight for a forex broker is only applicable for the jurisdiction that the broker is based in.
For example in the U. These regulatory agencies main functions are to protect the interest of investors as well to develop the rules that dictate how forex brokers should conduct their operations. Most important of all, regulatory agencies constantly monitor the conduct of the brokers under their jurisdictions to prevent any kind of abusive practices, fraud and manipulation on the part of the brokers. By doing so, these regulatory agencies help to promote competition and instill trust in the forex market.
So before you decided to open a trading account with a forex broker, ensure that it is regulated by one of the regulatory agencies listed below:. Finally many regulators offer an investor compensation scheme which protects the investors deposits up to a certain level should the broker become insolvent and become overly exposed to the markets.
The next thing that you have to evaluate in a beginners forex broker is their trading platform or software. It must also have a wide range of trading tools which you can use to help in the analysis of the market. Most useful tools for beginners are clear charts, a streaming news source and even an economic calendar, giving upcoming economic events. In addition, you must also ensure that trade entries and exits can be done effortlessly. This means that the interface of the trading platform must be well designed with all the functionalities clearly labeled and strategically placed.
A trading platform with a poorly designed user interface can actually impede trading which can lead to costly mistakes. For example instead of closing a position, a poorly designed trading platform can cause you to add to a position.
Or it can cause you to go long on a position when you really intended to go short. At the end of the day, all these mistakes will just cause you more frustration and drain you emotionally.
Make sure that the broker offers you a reliable trading platform such as the MetaTrader 4 platform or the Sirix WebTrader. As a beginner trader is also important to know that brokers usually offer mobile versions of their platforms. This is great when you are on the go, as you never need to lose trading opportunities.
All forex brokers make their money through the commissions or the spreads which they charge their clients. For commission based trades, the commission is usually a fixed amount per lot traded or a percentage of the total volume traded. For spread based trades, the forex broker generally markup a few pips in the difference between the Bid and Ask price. It should be noted that the spread can be fixed or floating. Take note that the wider the spread, the more difficult it is for you to make a profit.
All leading forex brokers offer their clients a selection of trading accounts for their clients to choose from. These accounts are typically differentiated by the benefits which they offer the account holder but they vary between the different brokers.
For example, a micro or mini account which allows a trader to trade in an amount that is less than a standard lot usually comes with a low minimum deposit requirement. These trading accounts are designed for beginner traders and have higher leverage. But they also often come with higher spreads. Sometimes, the broker might limit the number of currency pairs which a trader can trade with a micro or mini account. Trading accounts can also vary according to the type of spreads which a trader has to pay.
Some trading accounts have fixed spreads whereas others have variable spreads. Or they can be commission based trading accounts as well. Usually the trading accounts that are geared for experienced traders are ECN type accounts which allow the account to access the raw spreads provided by the liquidity providers. Another factor which you must take into account when evaluating the different types of trading accounts is the deposit and withdrawal methods supported by the broker. Every forex broker in the industry has their own policies on how they handle deposits and withdrawals.
Some brokers may require their clients to fund their trading accounts by direct bank deposit whereas others may be more flexible and support a variety of payment methods. Regardless of the payment methods that are supported, always choose a broker which can provide you with a convenient and cheap payment method. The forex industry a 24 hours market where trading activities never ceases.
Because of this, it is possible for a forex trader to trade the market continuously. This means you can encounter a problem which requires the assistance of the customer support team at any time. Hence, it is essential that the support services are available on a 24 hours basis throughout the entire trading week as there is nothing more frustrating than not being able to get assistance when you need it most. Check the methods which are available to contact the support team with eg. In addition, review the response time of the customer support representative.
The reason is fairly obvious as the telephone charges that you rake up when calling the support lines can easily build up to a substantial amount. Below we have compiled a definitive list of the absolute best brokers for beginner Forex traders. We have considered all of the below points.
Best Forex Brokers for Beginners With new forex brokers coming online every day, choosing the best broker for you often requires a lot of research and patience. Best Brokers for Beginners Your capital is at risk.
All trading involves risk. Your capital might be at risk. How to choose a forex broker? Regulatory Oversight Before all else, the first thing every beginner trader must check when looking for a trusted and reliable broker is to see if the broker is regulated. So before you decided to open a trading account with a forex broker, ensure that it is regulated by one of the regulatory agencies listed below: National Futures Association NFA and Commodity Futures Trading Commission CFTC Finally many regulators offer an investor compensation scheme which protects the investors deposits up to a certain level should the broker become insolvent and become overly exposed to the markets.
With floating spreads, the spread that is payable depends on the market volatility. Account Types All leading forex brokers offer their clients a selection of trading accounts for their clients to choose from. Deposits and Withdrawals Another factor which you must take into account when evaluating the different types of trading accounts is the deposit and withdrawal methods supported by the broker.
Customer Service The forex industry a 24 hours market where trading activities never ceases. Our 10 Tips for the Beginner Trader Below we have compiled a definitive list of the absolute best brokers for beginner Forex traders. Sometimes, a forex broker can be regulated in several jurisdictions.
The more jurisdictions the broker is regulated in, the most committed the broker is towards earning the trust of potential clients. On trading platforms, the more choices of trading platforms that are provided by the broker, the better it is for you as a trader. To evaluate how the trading platform is able to perform, always try out the demo account provided by the broker.
This will help give you an idea of the performance of the trading platform. Some brokers offer a demo account that works only for a limited period whereas some brokers offer an unlimited demo account.
Of course an unlimited demo account is better since you will still be able to use the demo account to back test your trading strategies. For trading costs, we check to see if the broker offers a rebate on the commissions that you pay.
In other words, the more the trader trades, the more he will get back in terms of rebates. On the issue of withdrawals, we check to see if the broker has any restrictions or specific requirements.
Some brokers require a minimum amount to be withdrawn before the withdrawal request is processed. In addition, some brokers may also charge their clients a fee on each withdrawal made. On customer support, we check to see if the support services can also be accessed through social media or through internet telephony. The more methods which the broker can support, the better it is for you as a client. We check the quality of their training academy.
This is important for beginner traders as you want to learn as much as you can before you take the plunge risking your money in the forex market. Some brokers in their bid to differentiate their services from other brokers also offer value added services such as free market signals. These free signals can prove useful to you as a trading aid as well as an educational aid.
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