The Best Forex Trading Brokers Reviews

Broker Rating Min Spread Min Deposit Review Website
0.1 pips $500 Read Review Open Account
0.8 pips $250 Read Review Open Account
1.7 pips $250 Read Review Open Account
0.7 pips $500 Read Review Open Account
3 pips $250 Read Review Open Account
0.6 pips £250 Read Review Open Account
0.3 pips $10 Read Review Open Account
0.1 pips $0 Read Review Open Account
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no info $2,000 Read Review Open Account

 

When you decide to step into the Forex trading world, whether you’re an experienced trader or a novice, there are a lot of unwritten rules you need to follow to get the best out of each trading experience. Everything begins with the first, and most important step – finding the right Forex broker. It’s a tough, tough quest, and you’re not going to get far without it. But no need to worry, that’s why we’re here!

This may be not the first Forex broker reviews site, you stumble upon, but it’s the best one! Why? Simply because we’re a team of professionals, and we’ll deliver everything with passion and transparency. We’ve gone through what you’re going through right now. At our website, you’ll find a complete list of the best forex trading practices, unbiased reviews of regulated and unregulated brokers, educational materials and the latest forex news! In other words, we’ll make sure you have everything you need in just one place.

What is Forex?

Forex, also known as FX, foreign exchange or currency trading – is a decentralized global market, where the entire world’s currencies are traded. With a daily volume exceeding $5 trillion, it’s the biggest, most liquid and most exciting market in the world!

What is Forex Trading?

Now you’re wondering how you can make money on this overwhelming market, aren’t you? It’s rather easy: by selling or buying currencies! Each Forex trade involves two currencies, the base and the counter. The entire process consists of betting on the value of a certain currency against another. The thing, that keeps the wheel spinning on the Forex market, is the exchange rate between two currencies (a currency pair).

An exchange rate can change a lot and incredibly fast during 24 hours a day, and it usually reflects the health of countries’ economies. Sounds amazing, no? Well, nowadays all you need to get started is a laptop, an internet access and a good Forex broker. We’ll make sure you have everything you need, from guidance to educational materials to a list of reliable forex brokers suitable for your needs.

History of Forex

Don’t roll your eyes yet, and this is a history lesson you need! The international monetary system went through a lot of changes that made it evolve to its current state. Don’t take it for granted and let’s talk about it a little! It all began in 1875 with the creation of the gold standard monetary system – a monetary system where a country’s currency had a value directly linked to a fixed quantity of gold. It was important, because it determined the quantity and growth rate of a country’s money supply.

Also, it was an international standard pointing out the value of a country’s currency in other countries’ currencies. Because followers to the standard maintained a fixed price for gold, rates of exchange between currencies tied to gold were necessarily fixed, making price levels around the world to move together. However, the gold standard system found its end at the beginning of World War I, due to the lack of gold at the time to all the excess currency that the governments were printing off.

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In need of a new monetary system, in July 1944, before the end of World War II, the representatives from the Allied Nations gathered at Bretton Woods, New Hampshire and created a new system: the Bretton Woods system of international monetary management.

To disentangle the main idea, its ground feature was that the U.S. dollar, that replaced gold as the main standard of convertibility for the world’s currencies and it became the one and only currency that would be backed by gold. Eventually, this whole system failed too in 1971 as the U.S. gold reserves couldn’t cover the number of U.S dollars that foreign central banks had in reserve.

Nowadays, there are two exchange rate systems used by governments:  dollarization pegged rates and managed floating rates. The first phenomenon happens when a country doesn’t have its own currency and borrows a foreign currency, making it a national currency. A smart move, as it can result in a more stable capital market, but it also takes the country’s power to directly influence its economy or make any kind of monetary policy. Pegged rates are often used by small countries, and they happen when a country decides to fix its exchange rate to a foreign currency.

Finally, managed floating rates are the ones, that allow a Central Bank to intervene in the foreign markets to change the direction of the currency’s float to support the stability of its balance of payments during extremely volatile periods.

The main Forex market participants

We assume it’s impossible not to ask yourself which institutions can participate or have an impact on the Forex market, right? Well, there are no doubts, that the most influential participants are Central Banks and federal governments.  In most of the countries, both have pretty much the same power when it comes to monetary policy, and they usually have regular consultations about it. Central Banks are the ones that need to meet some economic goals, thus they are often involved in managing the course of the reserve volumes.

The concept of ‘Interbank Market’ is important too, because this network is a big player in the Forex trading game. This network is composed of banks which act like dealers between themselves; basically, they exchange currencies at a premium to the price they paid to obtain it.  The minimum size for an interbank deal is $5 million, but usually, transactions are even bigger and can reach up to $1 billion in a single deal. Among the largest players are Citicorp and JP Morgan Chase (USA), Deutsche Bank (Germany) and HSBC (Asia).

As you can imagine, some of these banks have huge clients, and by clients, we mean businesses that deal with massive international transactions. These clients are called ‘hedgers’ and they take an important place on the Forex Market participants list. Another category is formed by ‘speculators’. These market participants aim to make a profit by taking advantage of the changes in exchange rates and nowadays, believe it or not, they generate 80% of market activity!

Currency pairs

Now that you have a basic understanding of how Forex trading works and how the market evolved, let’s dive into more detailed information that will encourage you to open an online trading account! As we mentioned above, Forex trading means betting on the value of a currency against another, therefore, one of the industri’es traditional instruments is the currency pair.

Forex markets have given most currency pairs nicknames or abbreviations, which reference the pair and not necessarily the individual currencies involved. Let’s take a major currency pair as an example: USD/CAD (ISO currency pair), the countries are, of course, the United States and Canada, their long name is Dollar – Canada and the nickname given by the Forex market is Loonie.

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There are three types of currency pairs: major, minor and exotic. Major currency pairs are the most frequently traded and the main feature of this category is that the US dollar is always one side of the pair. The majors have the lowest spread and are the most liquid.

Minor currency pairs (also known as crosses) do not include the U.S dollar. The most actively traded pairs focus on the three major non-USD currencies (EUR, JPY, and GBP) and are referred to as euro crosses, yen crosses, and sterling crosses. The remaining currencies (CHF, AUD, CAD, and NZD) are also traded in cross pairs.

Exotic currency pairs are not traded as often as majors or crosses, because their cost can be higher due to the lack of liquidity in these markets.  They contain a major currency paired with the currency of an emerging or a strong, but smaller economy from a global perspective, for example, USD/SEK (US dollar/Swedish Krona).

Types of Forex brokers

We can divide the types of Forex brokers into three main categories, based on the way they handle transactions and execute orders: No Dealing Desk (NDD), Market Makers and Electronic Communications Network (ECN) Forex Brokers.

As their name implies, the No Dealing Desk Forex brokers don’t have a dealing desk, but they gather and offer the best quotes (the most current prices and quantities at which the shares can be bought or sold) obtained from several forex quote providers. Each of the providers’ posts their best markets with the No Dealing Desk brokers, for the broker to execute transactions and orders of its clients according to them. Typically, the NDD broker charges a small commission or they simply expand the bid/offer spread to gain some profit.

Market Makers are always there for you with a firm ask and bid price. They buy and sell securities at prices they display in an exchange’s trading system for their own accounts, which are called principal trades and for customer accounts, named agency trades.  Using these two systems, they basically can enter or execute orders, they can handle transactions and quotes to buy or sell. They gain profit through a process known as the bid-ask-spread – this means that when they buy an asset, they charge a spread as a compensation for the risk of holding an asset.

Electronic Communications Network (ECN) Forex brokers, just like the NDD brokers, don’t have a dealing desk but they provide an electronic trading platform where traders, market-makers, and other forex market participants can place competing bids against each other.

How to choose the best Forex broker

Choosing the right brokerage company is a complex process with a lot of rigorous and unwritten rules. Luckily, our team of experts is here for you! We’ll do our best to guide your steps throughout the path to the most exciting forex trading experiences you’re about to have. Here are the main aspects our reviews will cover:

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A brief overview of the Forex broker

It’s important to find as much information as you can about the online Forex broker you’ll choose: whether it’s regulated or not, its operational address, who owns it, for how long it has been on the market and so on. You might find this step a bit irrelevant, but we assure you that the essence can be found only in the little details. This market is so overcrowded, online forex brokers appear on a daily basis with alluring offers and of course, they all claim you can rely on them. Most of the times that’s just a facet and by the time you’ll figure it out, it might be too late. Our team of forexx trading experts is here to diminish that risk for you!

What should a good forex brokerage firm offer

As the legendary investor Jesse Livermore said to the next generation of investors: Know yourself! It’s enough to just ask yourself: what do I need to feel comfortable trading with an online broker? A web-friendly and advanced platform to trade on, maybe a flexible broker to communicate with whenever you want or just a low minimum deposit you can afford? By identifying your needs, you’ll be able to see if a particular online broker is good or not for your current level of experience.

With that thought in mind, our reviews will simplify this process for you as we’ll gather all the information and present it in an unbiased way so you can make the best decision. From the account types and deposit options to the platforms, tools and customer support services the brokers offer, we got it all covered!

The safety measures

Do you know those terms and conditions pages you never read? Well, now it’s a golden rule to take your time and read everything an online forex broker states about its terms and conditions, policies and even their FAQ pages. Why? Because the safety of your capital depends on it! Due to their importance, our reviews will indicate only the major points that can have an impact on the safety of your capital. Other than that, we’ll strongly encourage you to go on the forex broker’s website and read everything carefully.

Advantages and disadvantages

There is no perfect online forex broker in this industry, keep this in mind! Each of them has their perks, but also some disadvantages. Our comprehensive reviews of forex trading companies will cover everything for you; including what the brokers lack and might have an impact on your trading process. Our team of forex trading experts will tell you if there’s a reason to be worried about or if the forex broker is professional, trustworthy and safe to trade with. After all, we’re here to prepare you for the first part of the road to success and profit, and believe us; we’re going to do our best!