Forex, otherwise known as FX, stands for foreign exchange and is an advanced form of investment. The best Forex broker platforms allow you easy access to trade currencies across the globe, from the well-established such as dollar, pound and euro, to the more volatile. How much money you make depends on the price at the moment you choose to buy or sell, which can fluctuate dramatically. This is why FX can be considered a risky option despite trading around $3 trillion a day.
In the US, the Dodd-Frank Act means that any forex broker must be certified with both the National Futures Association (NFA) and the US Commodity Futures Trading Commission (CFTC). These regulations restrict the amount of leverage available to traders at a ratio of 50:1.
Essentially, the amount you can buy is measured in lots, typically a micro lot is 1,000 units so you may need to be prepared to buy in bulk. The value of each lot is measured in pips, this is the smallest amount it can move up or down. Most platforms will include charting technology and market news for you to make an analysis on how the trade may turn out, allowing you to make your own decisions. The best Forex brokers offer an easy-to-use platform, low trading costs and quality educational resources.
If you’re just starting out and aren’t sure whether Forex trading is right for you then check out our beginner’s guide to Forex vs Stocks first.
1. TD Ameritrade: Best overall
(Image credit: TD Ameritrade)
The best forex trading platform overall
More pairs than other brokers
Best forex trading platforms for tools
Some commission free options
Have to trade a high amount to take advantage of commission-free trading
Need at least $2,000 to start trading
Some expertise needed to use all features
Thanks to its well-regarded thinkorswim trading platform, TD Ameritrade comes on top for the amount of tools it includes. It allows you to trade Forex just as you would trade options, equities and futures. It supports more than 70 currency pairs, so experienced currency traders can try something new, and beginners can trade on the most common pairs.
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There are 350 technical indicators that will help you to establish when the best possible time to make a trade is. For the more experienced, the Prophet tool can help estimate the future performance of a currency pair.
When it comes to pricing TD Ameritrade is fairly straightforward. It offers some currency pairs to trade commission free. However, these have higher spreads and trade in increments of 10,000 units. Commission pairs cost 10 cents per 1,000 units, with a minimum of $1. You need to make an initial deposit of $2,000 to start trading Forex. As per US regulations, the maximum margin you can trade on is 50:1 on major pairs and 20:1 on exotic pairs.
Overall thinkorswim is a good choice for both traditional and other investments if you were keen to explore non-forex investments.
2. Interactive Brokers: Best pricing
(Image credit: Interactive Brokers)
An affordable forex broker platform that offers great value
Low or nonexistent spread markups
Tiered commission for high volume traders
Great educational offerings
You need an initial investment of $10,000
Need to trade high amounts to get low prices
Not one for inexperienced traders
If you’re an active trader wanting to trade a high volume, then Interactive Brokers is for you. It has the best pricing of the Forex brokers we looked at, although new investors should look elsewhere because you need to start with an initial deposit of $10,000.
The platform includes a wide variety of tools that monitor and analyze currency pairs to help you make trades at the right time to maximize your returns. There are over 90 technical indicators, which can help you track the performance of a particular currency pair. You can also compare a currency pair to an index, which is a useful way to see if it is over-performing or underperforming.
Like most Forex brokers, Interactive Brokers charges a commission as a percentage of each trade you make. It uses a tiered structure, and if you trade less than 1,000,000,000 units a month, you pay 0.2 basis points for commission on the amount you trade – so on an order of 100,000, you’d pay $2.00. When you trade higher volumes, that commission decreases. At the lowest level, you pay 0.08 basis points.
Interactive Brokers also has some of the lowest spreads we saw, sometimes with no markups at all. You can trade 86 currency pairs – all the major pairs as well as some exotic currencies like the Turkish Lira.
3. Ally Invest: Best platform
(Image credit: Ally Invest)
Forex broker with a customizable and easy to use platform
Multiple platform options
Easy to use
Spreads can be high
Some platforms are better for veteran traders
Not all features available on classic platform
Formally known as TradeKing, Ally Invest brings with it a great platform that is customizable and easy to use, making it ideal for beginners and experienced traders alike.
You can choose between the Classic platform and the Live platform. The former has all the basics, including over 50 technical indicators and other analytic tools to track performance and plan the best time to execute trades. The Live platform is more robust and has more charting tools and advanced features, including automated trading strategies. The Live platform is far more customizable, and you can set it up the way you prefer.
Forex traders can also make use of the Metatrader4 platform, which is specially geared toward Forex trading and includes advanced tools to help you manage your orders. It also integrates with third-party indicators and analytics.
Through Ally Invest, you can trade on 50 currency pairs. The broker also offers excellent pricing, with no commissions on any trades. Instead, it makes money from markups on the spread, which vary widely depending on external economic factors. To start trading Forex through Ally, you need to invest at least $250, but Ally recommends starting with around $2,500.
(Image credit: XTB.com)
Clear data with great customer service
Trading calculator allows you to view your potential profit and loss before decisions
Control trading direct from the chart, with a one-click system
Heat map and the ability to lock in profits via a bulk order
No 24/7 customer support
Not all functionality is supported on the app
For the advanced trader, the portfolio may appear limited
XTB offers a vast variety of trading possibilities, with real trader talk and education opportunities alongside them. This collaboration puts the trader in the hot seat and helps them to make better-informed decisions.
There’s a clear left-hand panel with the latest stocks available, and here they range from typical CMD and FX to cryptocurrencies. It’s easy to toggle between the categories.
To the right-hand side is an educational toolbar, full of news, market analysis and educational videos that will help you to choose or complete your trade. For those that want to get stuck-in, the ability to place an order by right-clicking on the chart makes things incredibly smooth and simple.
The heatmap and top movers are tools that make analyzing the market a breeze, and the ability to see the potential profit and loss makes decisions so much more than just a gut instinct. Coupled with the education aspects for amateur traders, this is a platform that helps the trader to move forward, not just buy and sell.
(Image credit: Forex.com)
A forex trading app for people trading on the go
No commissions to trade
Small deposit needed
Brilliant mobile app
Mobile app doesn’t include analytic tools
Spreads are volatile
Not as many education facilities as other platforms
Forex.com is great for people who want to trade on the go, it has one of the best mobile apps we’ve seen. You can place trades and add funds through the app, and any changes you make in the app automatically sync with the desktop platform.
One drawback is you can’t use technical indicators or other analytic tools in the app, though this is true of most of the Forex mobile apps we looked at.
Forex.com lets you trade over 50 currency pairs. It doesn’t charge any commissions and instead marks up the spread on the currency pairs to make its profit. Spreads are volatile and change with market factors.
You only need to make an initial deposit of $250 to start trading. That’s one of the smaller amounts we saw, so this could be a good choice for beginning Forex traders.
Overall, the platform was hard to beat for use on the go.
6. Oanda: Best for beginners
(Image credit: Oanda)
A great forex trading app for casual traders
No minimum trade amount or initial deposit
Easy to use
Exotic options included
Fewer technical indicators
Not many educational resources
If you’re just starting to dip your toes into Forex trading, we recommend looking at Oanda as a broker. It doesn’t have a minimum deposit or minimum lot size, which means your initial investment doesn’t need to be as large as with other brokers. That means there is no requirement for several thousand dollars in initial investments which require you to trade in increments of 1,000 units.
Oanda’s platform is easy to use. It’s especially easy to set up a stop-loss on an order, which keeps you from being in a losing position for too long. You can trade on more than 70 currency pairs, including some exotic options like the South African Rand.
There are over 50 technical indicators, which is fewer than on many other platforms. However, it has many of the standard options that are useful for beginners.
The one drawback is there are not many tutorials or other educational resources.
7. Nadex: Best for experts
(Image credit: Nadex)
Stunning demo account that is true to form
You can open a demo account to access $25,000 in play funds
Offers both individual and business accounts for US residents
Works via browser and mobile
Charts aren’t customizable
Little customer service
No desktop version
Nadex is an exchange that allows trading in binary options, touch brackets, and call spreads. It is currently only available through an online trading platform and allows you to trade for $1 per contract. While legal, this type of trading is only recommended for expert traders.
With a fully functioning demo platform that gives you $25,000 in practice funds to test and learn, there is a lot to be said for the platform. For those needing a little more help it also includes courses and webinars in its education package.
While there isn’t a download or desktop application the platform works through most modern web browsers and includes a mobile version.
Binary options are currently the most popular trades, these sit at between 0 – 100% and cost $100. You are able to exit an option before the contract expiration date by closing a position on the Nadex platform. Each trade has its own maximum profit and loss with a typical maximum of 100% both ways.
One downside however, is the lack of customer service. Just two hours a day, six days a week via phone and email.
(Image credit: Saxo Bank)
Market Analysis portal offers first class content
Competitive Forex spreads and commissions
Regulated in multiple major financial jurisdictions across the globe
$2,000 minimum deposit
Lack of automated trading solutions for copy traders
Not all platforms available
Well-established Saxo Bank offers three different types of accounts. In total, this gives access to over 30,000 CFDs.
For the beginners wanting a lower starting point, the Classic account only requires a $2,000 minimum deposit while the Platinum account rises sharply to $50,000. It also includes a VIP account for elite investors who deposit at least $1m
Its web-based platform SaxoTraderGO offers nearly 50 indicators and 17 drawing tools, this is mostly mirrored in the desktop version. Also there are alternative professional features available. An additional data subscription is required to use these such as the streaming Level 2 order book however, this shouldn’t put off the typical user.
Some functionalities such as charts or watch lists may not sync but overall the platform is robust. The research and educational Market Analysis portal is second to none and provides lots of third party content and research tools, including equity research reports from FactSet.
9. IG: Best user experience
(Image credit: IG Group)
Chart views are second to none
Access to trade over 15,000 products
Comprehensive trading and research tools powered by real-time exchange data
Broad range of markets, currency pairs, and multi asset CFDs (including cryptocurrencies)
Web-based platform needs customising
Have to pay for more advanced charting
Competitive rates only for volume traders
IG is able to offer traders over 15,000 products to access across multiple asset classes, including Forex, CFDs on shares, indices, commodities, bonds, and cryptocurrencies. It also provides access to other global markets including exchange-traded shares through its regulated offerings.
Customer service is something to shout about at IG, you can contact support 24hrs a day from 3am Saturday to 5pm Friday.
If you’re a volume trader then further competitive rates are available, these are through a commission-based offering, Forex Direct, which is offered on IG’s L2 Dealer platform. It uses a tiered pricing scale based on the trader’s previous month’s trading volume and has a $1,000 minimum.
The main platform is web-based and very easy to use. When it comes to charting it offers access to multiple views such as live market prices and streaming bid/ask rates. It also provides various other shortcuts such as access to a trading ticket or order dialogue window.
There is no real need for customisation either, the default charts within the platform all feature some advanced functionality, such as the ability to add an alert on a specific indicator, with a total of 22 indicators available to choose from.
10. Dukascopy: Best desktop platform
(Image credit: Dukascopy)
Favorite among traders
JForex desktop platform is highly dynamic and rich with features
Competitive pricing for active traders
Impressive trading community resources and research
$5,000 minimum at Dukascopy Bank for non-Swiss residents
Customer support has room for improvement to match quality of product offering
Crypto CFD offering not available during weekend session
Dukascopy offer the flagship platform JForex 3, that runs as both a desktop and web-based platform on Windows and Mac. It does offer another platform called MetaTrader4 although JForex appears to be the favorite.
This is mainly due to its competitive pricing, and the ability to access 64 Forex pairs and 357 CFD markets. It has some very handy benefits including the ‘cancel all button’ which goes one step further than the standard ‘close all button’ allowing you to quickly cancel all orders. This sort of feature is usually only available to high-frequency traders.
Within the platform there is access to an app store that offers 100s of apps to further upgrade its resources although there are already plenty included. Such as streaming market news from Reuters or MarketPulse, a live economic calendar with consensus forecasts, market sentiment indicators, and other research tools that help investors make educated trade decisions.
The mobile app is also jam-packed full of interesting features such as pre-defined screens and a customizable view of market movers. These can be refined over four further time frames, from monthly to hourly.
What is Forex trading?
Forex trading involves trading of currencies and is the largest and the most liquid market in the world. Forex operates 24 hours a day, five days a week, and it has no single, centralized market. On an average day, the forex market trades around $3 trillion dollars.
When you make a forex trade, you are buying and selling currency and, in essence, betting on the fluctuations in their exchange rates. For example, if you were to buy Euros when the conversion rate is 1.25 U.S. dollars for 1 Euro then sell when the conversion rate is 1.28 U.S. dollars to 1 Euro, that difference of .03 represents your profit. Typically, you won’t buy a small amount. Usually currently is traded in lots of varying sizes. A standard lot is 100,000 units of a currency, a Mini lot is 10,000 units, a Micro lot is 1,000 units. A few brokers may offer Nano lots, which are only 100 units.
The change in a currency pair’s value is measured in pips, which is the smallest amount that the value can change. Usually a currency pairs are quoted out to the fourth decimal, and a pip is the change in the last number. For example, if EUR/USD is trading at 1.3300 and it moves to 1.3302, that is a movement of two pips. When pips are magnified by the size of lot, that is where the opportunity to profit emerges.
Because the changes in currencies are usually very small, it would seem that forex trading is ideal only for institutions or investors that can afford to buy large lots. This is where leverage comes in. Typically, a brokerage will offer you a margin account which can magnify the amount you have available. The ratio of the amount you borrow on margin and the amount you deposit is the leverage. U.S. brokers cannot offer more than 50:1 leverage.
Forex trading strategies
As with all types of investments, there are many different forex trading strategies. Hedging and speculation are two main strategies. Some basic strategies include choosing a trading time that coincides with the time that the markets in the countries whose currencies you’d like to trade are operating, using stop-loss orders to protect against heavy losses. Advanced strategies can include carry trades, which take into account the interest rates of currencies and not just the conversion rates.
Since currency exchanges are so volatile, it’s a good idea to test your forex trading strategies before you put up your own money. Most brokers offer a demo account and include tools that allow you to backtest your strategies.
Forex trading tools: Platforms and Tools
The trading platform and the tools it offers is one of the most important considerations when choosing a forex broker. Our reviewers tested the platform demo provided by each broker as well as their mobile apps, looking for platforms that are easy to use and that provide analytic tools to help you gauge a currency pair’s performance.
With the best platforms, you can create multiple watchlists to track different groups of currencies. Some only allow you to create a single watchlist or add to a single pre-made watchlist. You should also be able to create alerts to notify you when a currency pair reaches a certain price or meets some other criteria. Ideally, you should be able to receive email or text alerts, but some platforms only offer notifications inside the platform. A few of the platforms don’t offer alert options.
Forex brokers also provide charting tools to help you gauge the performance of a currency pair. These tools include technical indicators that can help you plan your trading strategy. TD Ameritrade offers by far the most technical indicators, with over 300.
The brokers we reviewed have a range of currency pairs available for trading, the highest is 120 and the lowest is 10. Most trading occurs on major pairs, such as EUR/USD, USD/JPY, GPD/USD and USD/CAD, but having the option to trade different currencies, such as the Thai Baht, the Hungarian Florint and the Danish Krone, can give you an opportunity to spread around your investments, diversity your portfolio and potentially reap larger rewards from more volatile currencies.
The main cost of forex trading lies in the bid/ask spread. This is the markup a broker applies and is derived from the difference between the bid, or selling, price and the ask, or buying, price. The spread is usually the difference in the last two decimal places of the exchange rates. Forex brokers refer to this difference as pips. Since exchange rates are constantly fluctuating, spreads often do as well, especially when a particular country’s economic fortunes take dramatic turns for the worse or the better.
Some brokerages charge commissions on each trade. These brokerages often have tighter spreads but may be better for higher volume traders. Commission-based brokers also tend to require the highest initial deposits. A few brokers we reviewed, such as Oanda and Nadex, don’t have minimum requirements and also allow you to trade any size lots of currency.
Forex Education & Support
Forex brokers should also provide traders with investment education and platform training. Our reviewers found that the best brokers offer video tutorials and step-by-step training on the platform’s features in addition to training manuals. While forex investors are more experienced that other investors, we still consider it important for a brokerage to provide educational resources. The best include weekly webinars and ongoing blogs that provide important context on the forex markets as well as ideas for new trading strategies.
Since the forex market operates around the clock, it’s important to be able to get support whenever you’re trading. Many brokers offer phone support during hours the Forex markets are open as well as live chat.
A Forex Signal is a notification or suggestion to enter a trade, usually when a currency pair reaches a certain price at a certain time. Forex Signals are either generated by an analyst or an algorithm and, besides price and time, there are a variety of technical indicators to pay attention to as well. A Forex Signal can give a trader a clear idea of when to buy or sell. Forex Signal services can be free or subscription-based. Most are geared toward short-term trades and not long-term trading strategies.
Many Forex Signal services promise results, but the market is constantly shifting, and Forex is especially susceptible to global events, so promised results may not come to fruition. Be wary of any service that makes guarantees about profits. Some traders can use Forex Signals as a crutch instead of learning to spot opportunities in the market themselves.
Traders can choose between manual and automated signals. A manual signal requires the trader to place the trade himself or herself, whereas automated signals can integrate with your broker’s platform and fill the trade automatically. Most Forex Signal services with automated trading require a subscription to use that feature. Many offer a free or reduced price trial period so you can try the service and see if you like it.
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