The boom in online forex broking is great news for new traders. Not only does competition keep the brokers honest in terms of fees, but educational and ‘how to trade’ style resources are offered to clients free of charge in an effort to drum up new business. The hardest thing for new traders is working out which one of the many top-grade services is a best-fit for them.
It’s possibly easier to start off by culling the brokers you ought not to use. Market risk, the price of your investment going up or down in value is one aspect, compliance risk is something else completely. There are unfortunately unscrupulous brokers out there who will try and defraud you.
To minimise that particular risk, always ensure you use a regulated broker. Preferably one that operates under license with a Tier-1 regulator like any of the below:
Other things to look out for in a disreputable forex broker is encouragement to wire funds to them. Regulated brokers, in contrast, have a feel of online banking. When you register for a Live or Demo account, you alone should be aware of your username and password.
A good forex broker will start off by offering you the option of testing the service using a Demo account. All of these brokers offer a free virtual trading experience: Pepperstone, eToro, Plus500, XM and IG. They also back that up with a range of support services such as webinars and videos all aimed at getting you into a position to start trading.
Even as a beginner, it will quickly become apparent that the trading platforms themselves are a happy mix of powerful software and intuitive functionality.
The broker XM sets the tone by offering an in-house option in the form of its Webtrader platform and also the MetaTrader 4 (MT4), and MetaTrader 5 (MT5) platforms. The MetaTrader platforms are something of an industry benchmark and if you are thinking of moving into systematic trading, you would do well to use a broker that offers MetaTrader.
The team at XM has set about to get the best out of the MT4 platform. XM’s version comes equipped with 50 indicators and charting tools, micro-lots so that beginners can start in small size and spreads as low as zero pips.
One of the criticisms of MT4 is the limited number of markets, but at XM, there are over 1,000 instruments including forex, CFDs and futures.
All of the top tier brokers cover the major, minor and exotic currency pairs, but if you’re looking to cover all bases, you’ll want to use a broker with an excess of 50 currency pairs.
Another sign of a good broker is the extent to which it willingly shares information. Transparency on costs and other T&Cs indicates that a broker is comfortable with its position in the market and is willing to treat clients with some respect.
A final factor to consider is the broker’s approach to mobile trading platforms. Trading ‘on the go’ is increasingly popular and firms have varying degrees of success at converting their desktop functionality to smaller screens.
These five forex brokers are all specialists in offering top-grade mobile trading platforms.
Having established the criteria that makes up a good forex broker, at this point, a lot of the decision making regarding the broker and platform comes down to personal preference. You could do worse than start your search with the following names.
Pepperstone is an Australian broker with a global outlook. Its Southern Hemisphere roots appear to have given it the confidence to do things its own way. The end result is a popular broker with a very strong core customer base. Aspects we particularly like about Pepperstone are:
XM has already been mentioned for the great choice of platforms the broker offers. There are many more neat features associated with this broker and they include:
AvaTrade is a well-regulated global broker that caters to beginners but has enough room for them to grow into intermediate and advanced level trading. Elements we particularly like about AvaTrade are:
eToro is very much pitched at beginners. It has millions of clients and a track record of giving those new to training everything they need to trade but not distracting them with anything more. What we like about this broker includes:
Plus500 continues to win award after award. The proprietary trading platform is a great example of how good the trading experience can be. It’s worth registering for a Demo account just to try it out. Other things we like about this broker include:
Ideally, you’ll find a broker that has an established track record in the sector but still with an appetite for taking on new technological advances. A broker that combines an extensive suite of educational and research resources with rock-bottom pricing and covers all the markets you want to trade is certainly favourable.
For many traders, that perfect broker doesn’t actually exist — there is usually at least one point to compromise on. The best approach is to run an honest evaluation of your aims and desires and use that to select the best for you and the one that suits you best.
There are a lot of exceptionally good brokers in the market and trial and error with virtual funds in Demo accounts can be time well spent. Not only will it expand your understanding of the respective brokers but will also improve your understanding of the markets at the same time.