Overview of the best forex brokers
Forex trading is increasingly popular with both professional and private traders. Compared to the trading of shares, foreign currency trade has the advantage of a greater market liquidity and very low spreads (the difference between the bid and the ask price). Additionally, you can also trade Forex with leverage, which can multiply the profits immensely. Traditional brokers offer mostly share portfolios, and a limited, if any, range of tradable currency pairs. That is the reason why newer brokers have geared specifically to currency trading and the ever so modern online trading, which we believe is the best. There are several of the best FX brokers, which we would like to introduce here.
Plus500 easily takes the place of Best UK Forex broker with their professional service. They offer over 1000 instruments to more than a million clients. There are no commissions, but they profit from the fixed spreads. Plus500 offer plenty of bonuses. They operate on their proprietary trading platform that comes in three options: downloaded for Windows; browser version for Mac, Linux and Android, and mobile trading platform for iPhones, iPads, and Android devices.
AvaTrade is a versatile forex broker, whose free educational tools provide plenty of chances to beginner traders to learn the tricks and take their first steps in forex trading. The trading and strategist tools help clients manage their operations and you may use a free demo account until you perfect your competence. It is also famous for its mirror trading tools, where you may ‘mirror’ the trades of successful traders and hope to mirror their success, as well. Except for the different tools and trading platforms, on the AvaTrade site you will find also a section dedicated to the education of the beginner traders. There you will be able to watch many training videos and participate in different webinars, hosted by true experts in the field.
In the current comparison of forex brokers, Markets.com should be noted as a very professional supplier. First-class service, which comes up with a big trading range and very rich current information and analysis, is essential for sophisticated traders. That is how Markets.com have won several awards the latest of which are the Best Customer Service Care Europe 2012 Award by Global Banking and Finance, and Best Innovative Platform 2012 Award from the London Investor Show.
Forex brokers comparison
The best forex brokers may have much in common, yet the differences in the details can be very large and prove a possible argument for or against a particular provider. You have to look for particular things in a broker. On the one hand, you have to consider the cost of trading itself, the range of tradable currency pairs, commodities, shares or indices, and the ability to be quickly and easily notified about important trading signals.
Spreads are the only fees
With regard to the fees, brokers have one thing in common. Rather than collect fees or demand commissions, brokers profit only by the spreads. The spread is measured in pips and depends on how high the trading volume of the market is. Of the major currency pairs, USD / EUR, EUR / GBP and GBP / USD, spreads are usually the lowest. As for the tradable currencies themselves, each broker has actually covered all the major currencies with the largest markets in which the spreads are still with pips of one-digit numbers. Trading in foreign exchange of less importance should be done only by experienced traders. First of all, those markets are less liquid, which means slow rate movements and also, they are associated with higher spreads, which takes longer to get to profit.
Opportunities And Risks Of Leverage
Leverage is generally the use of various financial instruments or borrowed capital, such as margin, to increase the potential return of a trade. The most popular type of leverage is perhaps buying homes with a mortgage. In forex trading the size of the leverage does not affect the trading itself, but increases the chance for big profits as well as the risk of loss. Of course, leverage is necessary in order to achieve the appropriate lot sizes with small trading capital, but ultimately it is not really important whether a broker offers a leverage of 1:200 or 1:400. For instance, Plus500, as a professional broker, offers leverage only up to 1:50, while Markets.com allow leverage up to 1:200 and AvaTrade up to 1:400.
Trade in commodities, shares and indices
Another interesting point in Forex trade is the trade of commodities – even if this has nothing to do with foreign exchange trade. Nowadays, commodities are traded more intensively than ever and that opens up opportunities for retail traders to enter volatile markets with good profits. Forex brokers offer the most important shares and indices available for trading. The big advantage here is that costs are low because of the extremely low spread. Often, CFDs are also available, which are suitable for rather experienced traders.
Additional offers of the brokers
The individual brokers also differ in their additional services. For example, AvaTrade have a comprehensive educational section, with video lessons, free tutorials, webinars and a free ebook, which you may receive without any commitment to the broker. They also offer different ways of auto trading, among which Mirror Trader, Zulutrade, and Algorithmic Trading. AvaTrade work on their proprietary trading platform, but you may also download the popular Meta Trader. In addition, every new customer is eligible for a welcome bonus reaching up to $10,000.
Plus500 target its additional offers at experienced traders. The basic beginners’ information is touched upon only briefly. The most significant characteristic with this broker is the wide range of trading platforms, such as the support of a WebTrader, the MetaTrader MT4 software and smartphone apps.
Daily trading news, market analysis and trading signals are among the additional offers with the online broker Markets.com. Furthermore, individual markets are analysed by experts in the field and an economic calendar offers information on the next upcoming major events, such as the publication of financial statements and quarterly results, which may have significant effects on price movements. Nevertheless, Markets.com is also suitable for the traders that are just starting out. There are forex training materials, video courses, webinars, ebooks, information on technical analysis (charting) and FAQ sections with everything important for the basics of Forex and CFD trading.
Our online broker experience
What we noticed when testing the various Forex Brokers is the different speed of performance of the orders. Especially in fast moving markets, where you want to take advantage of small fluctuations with high leverage, it is important that the order is executed quickly and reliably. Therefore the broker should have a stress-resistant IT infrastructure that can handle even an unexpectedly high number of orders without limitation. Markets.com and Plus500 are among the best forex brokers in our experience, and they are very professional suppliers.
Test the brokers with free demo accounts
All who have no experience in the field of forex trading, but are interested in this type of speculation and wish to learn more, will find a free demo account perfect. Some brokers offer large and important information portals for newcomers. In the “Trading Schools” newbies may learn all important terms, strategies and chart analyses and, then, using a demo account, they can apply the knowledge learned directly to real exchange trades. We already presented Markets.com as a beginner-friendly broker. They offer a whole Educational tab on their main site, where traders will find basics, visuals, charts, as well as ebooks, video lessons and webinars. Plus500 and AvaTrade offer demo accounts, where beginners may get familiar with the software and the trade. The practice with real exchange rates and spreads allows you to test the forex broker under real conditions before trading with real money.
Forex bonus offers in comparison
Another significant part of the online forex broker comparison is the bonuses they offer for new customers. There are some big differences, which is why it would be best to present to you the details of various deposit bonuses.
Best forex deposit bonus offers
The most common forex bonus is that given for the first deposit. Due to the large competition on the online market, individual brokers advertise different first deposit bonuses. Those bonus amounts come under certain conditions, of course. You may check Section 2.3 for more information. There are usually two models of payment with deposit bonus offers: immediate payment on the trading account or a pending bonus.
Usually, the first option is available in Forex bonuses, and the bonus is directly made available to the trading account. The only restriction is that the bonus can be withdrawn only when the corresponding trading requirement is met. A pending bonus is, however, first credited to a separate bonus account, it is enabled by active trading and is gradually transferred to the real trading account. In principle, both variants have similar trading conditions, which, of course, differ from one provider to another. It is important to note that prior to meeting those, only the bonus amount cannot be withdrawn, while the actual capital is always available for payment.
The welcome offer of Plus500 is easy to be implemented and, in the same time, high enough. With bonuses of between 12% and 20% (depending on deposit amount) to as high as £6,000 deposit bonus, it is very generous. Depending on your trading position, you are credited to obtain the so-called trading points, which are gradually implemented and activated with the bonus amount.
Terms and conditions related to bonuses
All bonus offers are subject to certain terms and conditions, which need to be taken into consideration. The illusion that you can have any amounts of money that offered as bonuses and without limitation is really attractive. Yet, there are specific bonus conditions whose details we should always be careful about.
As already mentioned, it is particularly the bonus part of marketing, which would make a broker stand out in strong competition. Because of that, the usual bonus on the first deposited amount is between 10% and 20%. In general, this amount is immediately available for trading, and occasionally it may feature as a pending bonus on a separate bonus account. The purpose of traders is to get more for what they paid, and to get a better profit. The broker, however, wins a new customer through this and the broker’s profit is generated from the spreads when opening multiple positions. The bonus deals are structured so that the converted bonus acts as a discount on the fees accruing to the spread. The trader therefore receives a portion of the spread (up to the bonus amount) back as a discount and the forex broker gives its new traders a discount, in this way getting some more loyal customers. This applies equally to the deposit bonuses and the sign-up gifts, which, of course, require a correspondingly lower trading volume.
Questions and answers
What is the purpose of trading with leverage?!
Why are certain currency pairs spreads significantly higher?!
The Forex market has the highest trading volume of almost $5 trillion daily, and using the services of an online forex broker, you can speculate on the market as an individual. As with all forms of speculating and trading, one should be clear about the potential risks (e.g. leverage) prior to beginning to trade, and one should follow a disciplined strategy. For online trading you need also a reliable forex broker offering low spreads. The brokers presented here meet these requirements. They offer the best bonuses, comprehensive education and demo accounts. Markets.com is particularly well-suited for newbies with their Education tab, AvaTrade offers attractive auto trading options, while Plus500 stands out with a great variety of positions traded and easy-to-use trading software, thus responding to the more advanced traders.