7 Best Forex Brokers in 2021.
Forex trading is arguably one of the easiest financial markets to begin trading in. To get started, you just need to open and fund an account with a regulated online broker. Choosing the best forex broker to trade forex does require some initial research to find the one most suitable for your trading needs and experience level.
The Best Forex Brokers.
Benzinga’s picks for the best forex brokers in 6 key categories appear below along with details about each broker and a screenshot of their trading platforms.
Best Forex Brokers Right Now:you w.
Best Overall Forex Broker: FOREX.com Best for Ultra-Low Spreads: CedarFX Best for Advanced Forex Traders: Interactive Brokers Best for Beginner Non-USvTraders: eToro Best for Commodities: AvaTrade Runner Up for Non-US Traders: Pepperstone Best Forex Platform: IG Markets.
1. Best Overall Forex Broker: FOREX.com.
FOREX.com is a subsidiary of StoneX (NASDAQ: SNEX) and ranks as the best overall forex broker.
This broker accepts U.S. clients and is regulated in the U.S. by the Commodities Futures Trading Commission (CFTC) and the National Futures Association (NFA). FOREX.com also has oversight from regulators in 6 major world jurisdictions through its subsidiaries.
You can check out Benzinga’s FOREX.com review for more information about this excellent broker.
2. Best for Ultra-Low Spreads: CedarFX.
CedarFX believes in combining the finest market conditions with excellent pricing and technology so clients can grow their accounts. A low spread generally indicates that volatility is low and liquidity is high and CedarFX prides itself.
CedarFX offers 2 account types: 0% commission accounts and eco accounts.
You get access to direct access to global financial markets, with over 170+ tradable assets available through MetaTrader4. Trade forex, crypto pairs, stocks, indices and commodities through a single platform!
You can practice your strategy and get familiar with the MT4 platform before trading using deposited funds through the free demo account.
3. Best for Advanced Forex Traders: Interactive Brokers.
Interactive Brokers offers some of the lowest costs in the business, including a $0 commission on U.S.-listed stocks and exchange-traded funds (ETFs). Because of Interactive’s world-class brokerage services in 33 countries that cover 134 markets worldwide, the company has oversight from most of the world’s largest financial regulators, including the U.S. SEC, CFTC and NFA. Interactive also submits to regulatory oversight in the U.K., Australia and Canada, and it has agencies in Japan, Hong Kong, India and Luxembourg.
Interactive Brokers offers trading in 23 different currencies and their pairs, and the broker requires a ,000 minimum margin deposit that is applied to commissions for the first 8 months, followed by a ,000 minimum starting on the 9th month.
Minimum commissions apply, as well as maintenance fees and charges for inactivity, so Interactive Brokers would be best for advanced, active and well-funded professional traders. Interactive’s proprietary trading platforms, including its Client Portal, Desktop Trader WorkStation (TWS) and mobile application have been rated as some of the best in the business.
4. Best for Beginner Non US Traders: eToro.
eToro specializes in social trading, which is ideal for beginners since you can follow the trades of expert traders with a proven track record. In addition to its world-class social trading network, eToro has excellent educational resources for forex beginners. eToro’s intuitive multi-asset trading and social trading platforms and apps can be used by anyone immediately. Unfortunately, eToro does not support the MetaTrader 4 and 5 (MT4 and MT5) trading platforms.
The broker lets you trade over 2,000 different assets and has a minimum deposit of $50. eToro currently accepts clients from most U.S. states where it is registered with the U.S. Financial Crimes Enforcement Network (FinCEN) as a Money Services Business, instead of with the NFA and CFTC as an online broker. The company is also regulated in Australia, the U.K. and Cyprus in the EU.
5. Best for Commodities: AvaTrade.
AvaTrade, one of the most secure brokers in the industry, carries 7 regulations across 6 continents (Europe, Australia, Japan, British Virgin Islands, UAE and South Africa). You’ll be pleasantly surprised by its asset availability, leading platforms and generous trading conditions (you can leverage your positions up to 400:1).
AvaTrade offers an exceptionally user-oriented perspective, including a 24-hour multilingual support desk for a broad range of instruments, platforms and services for every level of trader. Instruments include:
Forex Stocks Commodities Cryptocurrencies Indices.
You’ll find a range of automated trading platforms, including desktop, tablet, mobile and web-based trading with MetaTrader 4, MetaTrader 5, its proprietary WebTrader, AvaOptions and the award-winning AvaTradeGO. Client funds are held in segregated accounts for increased security and fast profits withdrawal.
AvaTrade’s innovative technology and cutting-edge trading features also include 1-on-1 training sessions with a dedicated account manager.
6. Best for Intermediate Non US Traders: Pepperstone.
U.K.-based Pepperstone gets our vote for best broker for intermediate traders. It has regulatory oversight in the U.K. and Australia, although it does not currently accept U.S. clients. The broker lets you trade in 61 major, minor and exotic currency pairs and requires a minimum deposit of $200. Pepperstone provides support for the MetaTrader 4 and 5 and cTrader platforms.
In addition to forex, Pepperstone offers trading in cryptocurrencies, energy, metals, commodities and stock index contracts for difference (CFDs). Customer balances are maintained in segregated accounts for safety in the Australian National Bank and Barclays U.K.
7. Best Forex Platform: IG Markets.
IG Markets gives clients access to trade CFDs in more than 17,000 different markets including forex, shares, indices, commodities, bonds, ETFs, options and short-term interest rate CFDs. You can trade up to 80 different currency pairs through IG and the broker requires a $250 minimum deposit.
IG accepts U.S.-based clients due to oversight from the CFTC and NFA. IG holds your money in segregated accounts under trustee arrangements for added security. In addition to its proprietary trading platform, IG offers support for 3rd-party forex platforms such as MetaTrader 4 and ProRealTime. It also allows application programming interface (API) trading.
Forex Market Explained.
In the forex market, traders agree to exchange 1 currency for another to make a transaction in that currency pair at a particular level known as the exchange rate. Like stock prices, this exchange rate fluctuates based on supply and demand factors, as well as on the forex market’s overall expectations of future events.
Forex traders can make money on a currency transaction in 2 ways. First, if they buy or go long a currency and it goes up in value versus the sold currency, then they earn a profit. Second, if they sell or go short a currency and it goes down versus the bought currency, then they also profit.
Many currency pairs quoted in the forex market show substantial volatility or fluctuations, which can result in gains or losses for traders. The daily candlestick chart below shows changes in the exchange rate of the EUR/USD currency pair, which is the European Union’s euro quoted in terms of the U.S. dollar from November 2018 until April 2020.
Risk and Reward in Forex Trading.
Rewards are generated in forex trading when you take a long or short position in a currency pair that subsequently appreciates in value. The risk in doing a forex transaction is when the market doesn’t perform as expected once you have done a forex trade.
Many brokers allow traders to magnify the gains or losses they take on a position via the use of leverage. Leverage is typically expressed as the ratio of the size of a position you can control by placing one unit of base currency on deposit as margin. Hence, a 500:1 leverage ratio would mean that you can control a $500 position with a $1 margin deposit.
Furthermore, most successful traders have a minimum risk/reward ratio for a trade before they will consider taking it, such as 1:2 or 1:3. For example, if you think the chances of a trade making 20 pips is around the same as the chances of it losing 10 pips, then your risk/reward ratio of that trade is 1:2. If that meets your risk/reward ratio criteria, then you might consider that trade worthy of executing.
Choose Your Broker Wisely.
Since your forex broker will be your primary trading partner, you want to choose one carefully to make sure they are reputable and will fit your requirements as a trader. Open a demo account with an online broker you’re thinking of using to see whether it is a good fit. Demo account trading can also help prevent potentially costly errors that might arise from you being unfamiliar with the broker’s trading platform.
These top brokers were chosen for this review for various reasons depending on the specific category in which we felt they excelled. Baseline requirements included the strength of their regulatory environment, their generally good overall reputation with clients earned over an extended period and a substantial number of currency pairs available for trading.
7 Best Forex Brokers in 2021.