Forex brokers

Forex brokers are financial services companies that provide traders access to a platform for buying and selling foreign currencies. Typically, a forex broker will also give traders the opportunity to use derivatives to gain exposure to the fx market, e.g. Contracts for Difference (CFDs) based on fx pairs.

Forex brokers act as intermediaries between retail traders and the interbank market, where currencies are exchanged on a global scale. In the case of certain derivatives, such as the FX CFD, they will instead be the trader´s counterpart in the trade.

Choosing the right forex broker is crucial for a safe, smooth and successful trading experience, as brokers differ when it comes to points such as fees, markets, features, security, and reliability.

In this article, we will discuss some points to consider when choosing a forex broker and give some examples of popular brokers. It is important to always take your particular situation into account when selecting a broker. Just because a broker is included in our list below does not mean it is optimal or even suitable for your particular location, trading strategy, and preferences.

Examples of Factors to Consider When Choosing a Forex Broker

When choosing a forex broker, it’s important to consider factors such as regulation, trading platform, spreads, and customer service. Different brokers cater to different types of traders, so whether you’re a beginner looking for educational resources or an experienced trader seeking super tight spreads and high leverage, there’s a broker out there for you.

Always do your research, compare several brokers, and ensure the one you choose aligns with your trading goals and style. A broker that ideal for one trader and a certain trading strategy can be all wrong for someone else. In some cases, it can even be a good idea to open accounts with more than one broker and utilize each broker for a specific trading strategy. That way, you do not have to compromise.

Regulation

It is generally a good idea to pick a forex broker that is authorized to be active in your country, since this puts you in a better position if there is ever a legal issue. In some countries, it will also mean your account get government-backed insurance that will pay out (up to a certain amount) if the broker fails to adhere to their obligations due to insolvency.

Forex traders living in countries where there is no reputable financial authority in place to authorize and supervise forex brokers, and make sure they uphold strong trader protection routines, will sometimes pick a forex broker licensed in another country with a stricter financial authority. This can mean trading in a grey area, but it is sometimes the best solution all things considered.

Examples of well-known and highly regarded financial authorites:

  • FCA (United Kingdom) – Financial Conduct Authority
  • CySEC (Cyprus) – Cyprus Securities and Exchange Commission. Since Cyprus is a member of the European Union, a forex broker with a CySEC license is automatically authorized to be active in all membership countries.
  • ASIC (Australia) – Australian Securities and Investments Commission

Trading Platform

A user-friendly and reliable trading platform is essential for your trading experienced. In the fast-paced world of fx trading, you can´t afford to waste you time on a slow, clunky and buggy platform or with a user interface that is cumbersome and does not suit your trading style.

Some brokers offer their own custom-built platform or platforms, which may offer unique features or integrations. There a for instance a few brokers out there that have platforms specifically designed to make social trading and copy trading easier.

Other brokers will give you access to one or more of the independent third-party platforms that many different brokers utilize. Some of the most well-known in this market are cTrader, MetaTrader 4 (MT4) and MetaTrader 5 (MT5). All of three of them are popular among fx traders, but MT4 was developed more specifically (but not exclusively) for forex trading while the MT5 was designed to be a much broader platform. With that said, some fx traders appriciate that the MT5 has even more support for technical analysis. The MT4, MT5 and cTrader all come with advanced charting tools that is enough for most traders.

Costs

It is impotant that you take your own specific trading strategy into account when you compare costs, because a broker that is right for one strategy can be very expensive for another.

Forex brokers typically make the bulk of their money by charging commissions on trades and through the spread (the difference between the buy and sell price). Some brokers offer fixed spreads, while others have variable spreads. Generally speaking, you can expect tighter spreads for major pairs like USD/EUR and wider spreads for minors and exotics.

Commissions can be fixed, a percentage of the trade, or a combination of both.

It is important to also take a look at other fees, e.g. what it would cost to make deposits and withdrawals using your prefered transaction method with this broker.

Order Execution

Execution speed and reliability are critical, especially during periods of high market volatility. Forex brokers will typically offer several order types for you to use, e.g. filling an order right now at the market price or fill-or-kill (filling orders at the requested price or canceling them).

Look for brokers with minimal slippage and fast execution times. Of course, this can vary depending on which currency pairs you are trading. You can generally expect faster execution and less risk of slipage for major pairs.

Leverage

Leverage allows you to trade larger positions than your capital would otherwise allow. For instance, 1:30 leverage means you can control $30,000 worth of currency with just $1,000 from your trading account. While leverage will amplify profits, it also increases losses when the market goes against you. Make sure the broker offers appropriate leverage levels for your trading style and experience.

The financial authorites around the world that are known for being strict when it comes to trader protection are typically also authorites that have capped how much leverage a boker is permitted to give to non-professional traders (retail traders).

Customer Service

Good customer support is important, especially for beginners who might need some help to get started.

  • Consider brokers that offer 24/7 support via your prefered method, e.g. live chat, phone, or email. Another option is to go with a broker that have support available during the hours of the nychthemeron when you are most likely to trade.
  • Make sure support is available in a language you are okay with using.
  • If phone support is important to you, check what it would cost. Is there a local number, toll free number or call-back service available? Or will you need to make a potentially costly phone call to another country?
  • Does the support have a good reputation among other fx traders online?

Examples of Popular Forex Brokers (2024)

  1. IG Markets
    • Regulation: Regulated by FCA (UK), ASIC (Australia), and others.
    • Features: IG offers competitive spreads, an easy-to-use platform, and a wide range of currency pairs. It also provides extensive educational resources, making it suitable for beginners.
    • Trading Platforms: Offers its own platform along with MetaTrader 4.
    • Leverage: Up to 1:30 for retail traders in Europe, but it will be lower for certain forex pairs.
  2. XM
    • Regulation: Regulated by CySEC, ASIC, and IFSC.
    • Features: Known for its tight spreads, no-requote policy, and flexible leverage options. XM offers over 1,000 instruments including forex, stocks, and commodities.
    • Trading Platforms: Supports both MT4 and MT5, with fast execution times.
  3. Leverage: Up to 1:888 when there is no legal cap. Up to 1:30 for retail traders in Europe, but it will be lower for certain forex pairs.
  1. Pepperstone
    • Regulation: Regulated by FCA (UK), ASIC (Australia), and DFSA (Dubai).
    • Features: Pepperstone is known for its low spreads, fast execution speeds, and strong customer service. It’s an excellent option for both beginners and advanced traders.
    • Trading Platforms: Offers MetaTrader 4, MetaTrader 5, and cTrader.
  2. Leverage: Up to 1:500 when there is no cap, e.g. for professional clients and outside capped regions. Up to 1:30 for retail traders in Europe, but it will be lower for certain forex pairs.
  1. eToro
    • Regulation: Regulated by FCA, CySEC, and ASIC.
    • Features: Known for its social trading platform, where users can follow and copy the trades of successful traders. eToro is user-friendly, making it ideal for beginners, but lacks some advanced features for more experienced traders.
    • Trading Platforms: Proprietary platform.
  2. Leverage: Up to 1:30 for retail clients. In Europe, it will be lower than this for certain forex pairs.
  1. OANDA
    • Regulation: Regulated by FCA, NFA, ASIC, and IIROC (Canada).
    • Features: OANDA offers competitive spreads, reliable execution, and no minimum deposit requirement. It’s suitable for both beginner and advanced traders who seek a trusted platform.
    • Trading Platforms: Supports MT4 and its proprietary platform.
  2. Leverage: Up to 1:50 in the US. Up to 1:30 for retail traders in Europe, but it will be lower for certain forex pairs.