The modern forex market’s origins can be traced back to the early 1970s, as it was then that forex officially switched to a free-floating system. The market as a whole was still different compared to currency trading as we know it today, however, since retail trading was practically no-existent. Hedge funds, banks, and large entities as a whole were the only players who could take part in forex trading.
The 90s marked retail investors’ official welcome into the foreign exchange market, seeing as this was when the very first online brokers were introduced. This sparked a demand for more brokers that would offer their services on the world wide web, which, over time, resulted in investors having an array of websites to choose from. Although forex is still largely dominated by large entities, retail traders now make up a small but evident portion of the participants in FX trading.
How Forex Trading Works for Traders and Brokers
The forex market is characterised by its unmatched liquidity. What is also notable is the lack of a physical exchange. Forex trading is done electronically, which designates it as an over-the-counter market.
When you trade a currency pair, what you are doing is exchanging the quoted currency for the base currency, and there are several key components to forex trading that novice investors should be well-acquainted with.
Knowing what the bid (sell) price and the ask (buy) price are goes a long way to understanding the spread. The former is the price for selling the base currency, while the latter shows the price of buying it. The difference between the two is what we refer to as the spread. Instead of charging a commission for forex trades, brokers tend to incorporate the fee into the spread itself. The wider the spread, the more expensive trading an instrument is, which is what makes low spreads appealing to investors.The spread is measured in pips.
Lots are the unit of measurement investors use when they trade currency pairs. Each lot contains a set number of currency units, and there are several lot types in terms of size, each comprising a specific number of units. The first and most common lot is the one referred to as Standard, and it contains 100,000 units. Next is the Mini lot, which is smaller at 10,000 units. Finally, the lot size that is typically the smallest is the Micro lot, as it contains just 1,000 units.
Pips express the value change of a pair. The term stands for percentage in point, and the pip is typically the fourth decimal place of a price quote. If the pip count of a pairing’s spread is small, this suggests minimum volatility and that trading the instrument in question is not expensive.
Leverage is a major component of forex trading, seeing as it is very difficult to make a significant profit without it. It involves using money you borrowed from your broker in order to invest more funds than you have available for the trade in question. This has its own pros and cons.
On the one hand, the amount by which leverage can amplify how much money you make in the FX market is significant. This, however, also means that leverage can have you lose far more money than you would otherwise.
Volatility is similar when it comes to the risk factor, as it, too, can be a double-edged sword for unsuspecting investors. Volatility describes the fluctuation of a currency’s value. It provides numerous opportunities for making a profit off of trading a forex pair, but it can also lead to unpredictability if a sudden upswing or downswing occurs.
Top Forex Trading Brokers
The spread of a pair is one of the most important aspects of a broker. The lower the spreads, the cheaper it is to trade, seeing as the spread incorporates the fee you pay to a broker for using their platform.
Other characteristics of a great broker can include an extensive library of educational resources, a catalogue of different forex pairs along with other trading instruments such as indices and stocks, various payment solutions, the broker’s reputability, and more. Keeping track of all of this while looking for your broker of choice is easier said than done, especially for an aspiring investor. You can, therefore, use the following list in order to find the broker that boasts competitive spreads and best suits your preferences.
- Min Deposit$0Fees
- Fusion Markets will not charge you for depositing or withdrawals
- There is no inactivity fee
CommissionsZERO account:- USD: $4.50 round turn
- EUR: €4.05 round turn
- GBP: £3.55 round turn
SpreadClassic:- the minimum spreads start at 0.8 pips
- EUR/USD: 0.02
- GBP/USD: 0.09
- USD/JPY: 0.03
Leverage EU- Majors: 30:1
- Minors: 20:1
Leverage non-EU- Majors: 30:1
- Minors: 20:1
Gleneagle Asset Management Limited (ABN 29 103 162 278) trading as Fusion Markets, is the issuer of the Fusion Markets Products described in this communication. Trading in Fusion Markets Products involves the potential for profit as well as the risk of loss which may vastly exceed the amount of your initial deposit and is not suitable for all investors. You should read all of these Financial Product Service Terms, the Product Disclosure Statement (PDS) and the Financial Services Guide (available on our website) carefully, consider your own financial situation, needs and objectives for investing in these Fusion Markets Products and obtain independent financial advice.Fusion Markets is an ASIC-regulated online broker which offers products such as forex, precious metals, equity indices, and more. You can pick between MetaTrader 4 and MetaTrader 5 when it comes to the platform. If you go with the former, you will not be able to download a desktop client as the platform is available in its Web Trader version at Fusion Markets. You can download the platform’s mobile version on iOS devices, however, as well as phones that run Android. If you choose MT5, there is no Web Trader version available for it, but you can use this platform’s desktop client. Just like MT4, the fifth iteration of MetaTrader is available to iPhone and Android phone users.
Fusion Markets enables its users to partake in copy trading, a strategy with which you can automatically copy the moves of other investors. Here, the solution on offer is Myfxbook AutoTrade, a social trading platform that only showcases the portfolios of live accounts, which ensures that you can accurately judge the performance of other investors.
The spreads you can use will depend on the type of account you settle on. If you wish to remain a classic user, the minimum is 0.8 pips. Those who opt for going ZERO, however, will have spreads that start at just 0 pips and that, for example, average out at 0.02 for the EUR/USD.
- 2. PepperstoneMin Deposit$0Fees
- No inactivity fee
- Pepperstone does not charge its clients for deposits or withdrawals
CommissionsMT4 and MT5 Razor commission per 1 lot:- USD: $3.50 ($7 round turn)
- EUR: €2.60 (€5.20 round turn)
- GBP: £2.25 (£4.50 round turn)
SpreadAverage spread:- EUR/USD: 0.77
- GBP/USD: 1.19
- AUD/USD: 0.84
Leverage EU- Majors: 30:1
- Minors: 20:1
Leverage non-EU- Majors: 30:1
- Minors: 20:1
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75.9% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.Founded in 200, Pepperstone is an online forex broker that is based in Australia. It offers its services to investors from across the globe. The broker is regulated by entities the likes of the Financial Conduct Authority in the UK, as well as the Australian Securities and Investments Commission and the Dubai Financial Services Authority.
Customer support can be contacted 24 hours a day regardless of which day of the week it is, making it one of the few online brokers which offer 24/7 customer service. As for how you can get in touch with a Pepperstone representative, telephone and email are two of the available methods. Additionally, live chat is another option.
Pepperstone features a notable amount of educational content. There is an array of articles that focus on the different aspects of trading in the forex market, such as pip value, risk management, technical analysis, fundamental analysis and the like. There is also a forex trading course that has a ton of information in video form. Speaking of trading videos, those who do not have much experience with the fourth iteration of the Meta Trader platform can also learn the ins and outs of the software in the MT4 video course. In addition, the broker streams weekly webinars.
Pepperstone is known for its relatively competitive spreads. The EUR/USD spread, for instance, averages out at around 0.77 pips. The GBP/USD has a 1.19-pip count, while the USD/JPY and AUD/USD’s spread are both around 0.8 pips.
- 3. XM GroupMin Deposit$5FeesInactivity fee of $5 a month after 90 days of inactivityCommissions
- Standard and Micro accounts: none
- XM Zero per $100,000: $3.5
SpreadAverage Spreads:- EUR/USD: 1.7
- GBP/USD: 2.1
- AUD/USD: 1.8
Leverage EU- Majors: 30:1
- Minors: 20:1
Leverage non-EU- Majors: 30:1
- Minors: 20:1
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 74.89% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.XM is a broker that is available globally, and it is thus regulated by numerous regulatory bodies depending on each jurisdiction. Its European services are, for instance, regulated by the Cyprus Securities and Exchange Commission, while the Financial Conduct Authority is the entity which oversees XM in the United Kingdom. In addition, the broker is authorised to operate by local entities of the following European countries: Germany, Spain, Hungary, Italy, France, Finland, Poland, the Netherlands, and Sweden.
Customer support is available in over 25 languages, including, but not limited to, English, Bahasa Indonesia, French, Spanish, Hindi, Tagalog, and Serbian. This ensures that a large portion of XM’s clients will be able to get assistance in their native language. As for the communication methods, clients have several choices. The first one is live chat, while sending an email is also possible. Finally, you can get in touch with an XM customer service representative via phone.
The spreads will depend on the account type one settles on, and Micro and Standard spreads, in particular, start at 1 pip. In terms of the average spreads of instruments, the EUR/USD’s spread is 1.7 pips, while a 2.1 pip-count is what GBP/USD traders can work with on average.
Individuals new to trading currencies can consult XM’s FAQ page if they have questions, or, as previously stated, contacting customer support is also possible. In addition, XM features a great number of informative resources, such as articles, guides, and the option to take part in XM’s live education services.
- 4. eToroMin Deposit$10 - $10,000Fees
- $10 monthly fee after one year of inactivity
- eToro will not charge for deposits and withdrawals if they are done in USD
CommissionsN/ASpread- EUR/USD: 1
- GBP/USD: 2
- USD/JPY: 1
Leverage EUUp to 30:1Leverage non-EUUp to 30:1CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.The products you can trade at eToro range from cryptocurrency trading and stocks to trading on the forex market. There are currently over 40 currency pairs at eToro, and this encompasses major pairs such as the EUR/USD, commodities such as the USD/CAD and AUD/USD, and pairs the likes of the EUR/JPY, which are considered minor. The spread for trading the EUR/USD is 1 pip, and the same can be said about pairs such as the USD/JPY and the Aussie.
eToro offers a lot in terms of educational content. There are dozens of video guides as well as educational articles, and you can easily filter the content you are looking for. There are also courses such as Investing 101 and Forex 101. Additionally, podcasts and webinars are available. Once you feel more confident in your forex knowledge, you can give trading a try by making an eToro demo account that will provide you with $100,000 virtual funds to practise with.
Once you are ready to move on to live trading, eToro offers its own proprietary platform. The first version is a Web Trader, which eliminates the need to download and install software on your computer. In addition, a mobile app can be installed on smartphones that run either iOS or the Android operating system.
- 5. AdmiralsMin Deposit$100FeesDeposit fees:
- Bank Wire, VISA and MasterCard, Klarna: free
- Skrill: 0,9%, min. 1 EUR / USD
- 1 free withdrawal request every month for bank wire, VISA, MasterCard and Skrill
- €10 per month inactivity fee after two years of inactivity
CommissionsN/ASpread- Minimum spreads: 0.1
- EUR/USD: 0.6
- GBP/USD: 1
- USD/CAD: 1.6
Leverage EU- Majors: 30:1
- Minors: 20:1
Leverage non-EU- Majors: 30:1
- Minors: 20:1
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 81% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.Admirals is a broker that, until a recent rebranding, was known as Admiral Markets, and it is based in Estonia. It offers its services across the globe, and its forex library consists of 50 currency pairs. This includes majors like the EUR/USD and the GBP/USD, commodity currencies like AUD/USD and NZD/USD, and minors like EUR/NZD and CHF/JPY. The spreads for all forex pairs start at 0.1 pips, although the average does vary. EUR/USD, for instance, has a 0.6-pip spread on average, while the GBP/USD routinely reaches 1 pip.
Admirals has a lot to offer in terms of analytics. A forex calendar allows you to keep up with economic events that can affect the markets. In addition, Admirals’ Global Markets page offers live updates on market changes and world events, and it has an Economic Comparison feature that allows you to check how individual currencies are doing in different locations.
In terms of security, Admirals has allowed its users to enable two-set verification. Once you have enabled 2FA, you will, from then on, receive an SMS with a confirmation code each time you log in to your account. This ensures that third parties will be unable to access your account and data, even if they happen to know your password.
The entities responsible for regulating Admirals include the Cyprus Securities and Exchange Commission and the Financial Conduct Authority. In addition, the broker holds a licence from the Australian Securities & Investments Commission.
- 6. CMC MarketsMin Deposit$0Fees
- No deposit or withdrawal fee
- £10 a month inactivity fee after one year of inactivity
CommissionsN/ASpreadMinimum spread:- EUR/USD: 0.7
- GBP/USD: 0.9
- USD/CAD: 1.3
Leverage EU- Majors: 30:1
- Minors: 20:1
Leverage non-EU- Majors: 30:1
- Minors: 20:1
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 78% of retail investor accounts lose money when spread betting and/or trading CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money.CMC offers its own proprietary Next Generation platform. It features tools the likes of client sentiments, which show the popularity of a specific product among other users. Investors who like to jump from market to market as opposed to sticking to a single instrument will also find Next Generation’s multiple layouts convenient because they enable a streamlined workflow. Another feature that sticks out is the pattern recognition scanner, which can aid you in keeping up with trading patterns. Finally, the price projection box and the module linking features are also available.If this happens to be overwhelming and you already have experience with using MetaTrader 4, you can rest assured that this proven platform is available too.
The spreads for the major pairings tend to hover below 1 pip, with EUR/USD having a 0.7 pip count, while the GBP/USD instrument’s spread is 0.9 pips. The leverage of major pairs is 30:1 for retail investors. If a retail investor wishes to trade minor pairs, then the leverage they can work with is 20:1.
CMC Markets is excellent not just for those who stick to trading forex, but for individuals who like to dabble in different trading markets as well. This is evident in the product selection of CMC. Indices, cryptocurrencies, shares, and treasuries are just some of the markets you can go for when you fancy a change of routine.
- 7. TickmillMin Deposit$100Fees
- No deposit or withdrawal fees
- No inactivity fee
CommissionsPro: 2 currency units per side per lotSpreadTypical spread:- EUR/USD: 0.1
- GBP/USD: 0.3
- USD/JPY: 0.1
Leverage EU- Majors: 30:1
- Minors: 20:1
Leverage non-EU- Majors: 30:1
- Minors: 20:1
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 71% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd. You should consider whether you understand how CFDs or our other products work and whether you can afford to take the high risk of losing your money.Creating an account at Tickmill is no difficult task. All you need to do is provide your information and go through the relatively quick verification process, and you can then fund your account if you wish.
The minimum deposit you can make at Tickmill is $100. In terms of deposit methods, you can choose between bank transfer, Sofort, DotPay, or a credit or debit card like MasterCard and VISA. Additionally, digital wallets such as Neteller, Skrill and Paypal are available as well. Those fond of utilising vouchers can go with Paysafecard. Regardless, Tickmill will not charge you anything for funding our account, and the same can be said for withdrawing. We were also pleased to find that investors who prefer to take lengthy breaks from trading will not be forced to pay an inactivity fee if they happen to leave their account dormant for an extended period of time.
If you like to keep up with the FX market while you are out and about, this is possible thanks to the MetaTrader 4 and 5 mobile applications. They are both available to download from the Google Play Store and the App Store.
Tickmill’s typical spreads tend to be sharp. Trading the EUR/USD pair involves a spread of 0.1 pips, while the GBP/USD pair has a 0.3-pip spread. Pairs such as USD/JPY and AUD/USD also have 0.1 pips for a spread, and the USD/CAD’s pip count is 0.2.
- 8. IC MarketsMin Deposit$200Fees
- IC Markets does not charge fees for funding or withdrawing money
- No inactivity fee
CommissionsN/ASpreadStandard Account Average Spreads:- EUR/USD: 0.62
- GBP/USD: 0.83
- AUD/USD: 0.77
Leverage EU1:1 minimum leverageLeverage non-EUUp to 500:1Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76.27% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.There are two options you can pick between when it comes to your IC Markets platform, the first of which is cTrader. IC Markets accounts that use cTrader boast sharp spreads and fast order execution. Furthermore, cTrader features real-time forex quotes, numerous deposit and withdrawal methods, order types, one-click trading, and more. If you fancy a more traditional trading experience, however, MetaTrader 4 is the second platform one could choose at IC Markets.
If you find yourself in need of assistance while creating your account, or you run into any problems, contacting customer support can be done 24/7. Phone, email and live chat are all methods you could go for. Regardless, IC Markert’s support team is known to be helpful and quick to respond, which ensures that it will not take long for you to get help. You could also try looking for a solution within IC Markets’ help centre, which is the broker’s FAQ section.
If you are a beginner to forex, it is essential you first create a demo account at IC Markets before you start trading with real money. Demo accounts allow you to invest with the use of virtual funds, eliminating all risks of losing your actual money. This means that all the mistakes you are bound to make as a beginner will not actually harm you financially. This lack of risk also ensures that you will be free to practise and experiment as you see fit, allowing you to easily find techniques and strategies that suit your preferences.
- 9. Capital.comMin Deposit$20Fees
- Capital.com covers all deposit and withdrawal costs
- The broker charges overnight fees
- Long position: -0.0063%
- Short position: -0.0011%
CommissionsN/ASpread- EUR/USD: 0.6
- GBP/USD: 1.3
- USD/CAD: 2
Leverage EU- Majors: 30:1
- Minors: 20:1
Leverage non-EU- Majors: 30:1
- Minors: 20:1
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 83.45% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.Capital.com is a Cyprus-based broker that was founded in 2016. It is regulated by several entities, including the UK’s Financial Conduct Authority and the Financial Services Authority Seychelles. The Australian Securities and Investments Commission supervises Capital.com’s operations in Australia, while it is the Cyprus Securities and Exchange Commission that regulates this broker in Europe.
You can deposit a minimum of $20, and you have a handful of funding methods at your disposal. Bank wire and credit cards are available, as are services like Sofort, IDeal, MultiBanco, WebMoney, and Qiwi. Finally, e-wallets such as Trustly, Skrill and Neteller can be used as well.
Caspital.com’s Learn to Trade library contains a variety of courses that cover trade-related concepts such as the leverage and margin, derivatives, and more. There are also educational articles that focus on numerous trading markets, including forex. Moreover, investors who are new to FX can make their first trades on a demo account as opposed to a live account. With a demo account, beginners are able to test out different strategies and skills without worrying that they will lose real money.
The spread of the EUR/USD and the AUD/USD pairs is 0.6, while the GBP/USD and USD/CAD spreads are higher at 1.3 pips and 2 pips, respectively.
- 10. VantageMin Deposit$200FeesMost deposit methods are free with the exception of:
- China Union Pay: 1.30% - 2.50%
- Neteller: Subject to Neteller's fee
- Skrill: Subject to Skrill's fees
CommissionsRetail: none MetaTrader RAW ECN commission per 1 lot:- USD: $1 (round turn $2)
- GBP: £1 (round turn £2)
- EUR €1 (round turn €2)
Spread- EUR/USD: 0.3
- GBP/USD: 0.5
- USD/CAD: 1.2
Leverage EU30:1Leverage non-EU30:1CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 73.77% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.Vantage is a broker headquartered in Sydney, Australia, and it offers its services to international investors as well. Creating an account is simple, and the verification process does not take long either. You will have the option to enable two-step verification when you create your account, which will make your account all the more secure.
This broker boasts tight spreads, such as the EUR/USD’s 0.3-pip spread, the 0.5 spread of the GBP/USD, and the AUD/USD spread of 0.4 pips.
Vantage users have several platforms they can pick from, the first of which is the tried-and-true MetaTrader 4. Vantage offers Vantage SmartTrader Tools, a package that enhances the MT4 experience. It features a Correlation Matrix, a Correlation Trader, an Alarm Manager, and an Excel RTD Link. MetaTrader 5 is the other option one could go for, and there is also Vantage’s ProTrader platform which is powered by TradingView.
If you ever run into problems while using one of the platforms at Vantage, you can get in touch with a representative of the broker’s customer support team. Calling is the first method of communication, and the number you will need to use depends on where you reside. Requesting assistance through email is also possible. Finally, live chat can be used by traders who are fond of this option.
Related Topics
FAQ
1. How long to deposits and withdrawals take when it comes to forex brokers?
2. What are long and short positions?
- Short GBP/USD: you sold the pound, and bought the dollar.
- Long GBP/USD: you bought the pound, and sold the dollar.