Forex is a market where people can make money by starting with small capital. If you are serious about forex trading, then you must choose the right broker carefully. Compare some of the best forex brokers of 2020 and you will find yourself the most suitable for your trading style.
Points to Consider While Choosing A Forex Broker
While choosing a forex broker, these are the most important points you must pay attention to:
Regulation is the first thing you need to think of because it is what provides you with some sort of financial security. To put it simply, when a broker is regulated, it means it is supervised by government financial authorities to eliminate any unfair practice in trading. If you are a trader from the European market, then it is common to come across the Cypriot CySec or the British FCA. It a broker does not have a license; it means that it cannot operate legally. So, it is highly recommended to choose regulated brokers only.
Offered currency pairs
Whenever you choose a broker, you will find the main currency pairs that are common for most brokers. These pairs include EUR/USD, USD/CAD, and USD/JPY. Traders can trade a large number of currencies on the broker. However, you have to make sure that the broker you choose offers the currency pair you want or it will cause trouble later.
The trading platform is the gateway of the trader to the forex world. So, your trading platform must have all the functions that you need. The platform can be found as a web application that is designed for the company specifically. You can also use an external platform like MetaTrader 4 and MetaTrader 5 that offer more advanced options. A web application is very user-friendly, but with some limitations. The choice of the trading platform also depends on features like automated trading systems and hedging. You must also check if you can set a stop loss on the platform so you can stop your account from getting in the negative. So, while choosing a broker, do not forget to check the trading platform.
The height of the spread is a highly important parameter when it comes to forex trading. This value can be found by a specific unit “pip”. It is the smallest unit of traded currency. The value ranges between 0.3 and 3 pips, with three pips having a high spread relatively. Spreads can also be different according to currency pairs. So, do not only depend on the reviews you find online or trust a personal recommendation from someone blindly. Even if you have experience in trading, always make sure to go through the terms of business of a brokerage before choosing it.
Forex market is open for five days a week and 24 hours a day. So, the customer support of a broker should be available 24 hours on the trading days. Support is a very important factor, especially if you are a beginner in trading. Check if the support service offers phone support and live chat support. if you cannot get a hold of them during a problem, then you may have to suffer huge financial loss.
Five Best Online Forex Brokers In 2020
The Polish company XTB is the largest European broker currently. The broker is regulated by many national institutions like CNB, including the British FCA and the Polish financial office of CNF. Apart from the Czech Republic, the broker operates in ten more countries. XTB offers the xStation five web trading platform mainly, but traders can also use the MetaTrader 4 platform for trading. The broker has relatively low spreads. Spreads on known currency pairs start as low as 0.3 pips when you choose a PRO account.
Opened in 2006, the Irish company AvaTrade is regulated by the Australian ASIC and the Central Bank of Ireland. With the minimum deposit of 100 Euros, the brokerage offers an additional bonus that is 30% of the deposit. The leverage of the broker is up to 1:400. Traders can also use a hedging strategy to reduce the risk of trading. The company also makes sure that the clients’ accounts do not enter the red zone. Available assets include forex with stocks, indices, and products. However, there is no option of trading cryptocurrency on this platform.
ETX is a British broker that started its journey in 2002. The broker is regulated by both the Czech CNB and the British FCA. There is no need for a minimum deposit on ETX, and there are over 60 currency pairs for you to choose from. The currencies can be bought from 0.01 lots and spread for major currencies are from 0.6 points. Apart from forex, traders can trade binary options, indices, commodities, and stocks here but it does not have cryptocurrencies. The leverage is up to 1:200.
Based in 2007, eToro is a popular and fully regulated broker with an intuitive platform suitable for beginners. The interesting feature of this broker is the copy funds. It allows the traders to copy the steps of pro traders. It is not the best learning process in the long run, but an interesting process for novice traders. By seeing the strategies of others, you can create your own. You can trade 47 currency pairs, stocks, indices, goods, and cryptocurrencies.
One of the most famous brokers currently, Plus500 is a self-designed platform for Plus500 specifically. The broker is fully regulated by FCA and CySEC. It offers a demo account where traders can practice with virtual money. The minimum position size on this broker starts from 0.01 lot. Fixed and dynamic spreads are from 0.6 pips. The platform as well as the support system is completely in English.
Each of the best forex brokers comes with a set of pros and cons. Before you choose the one for you, consider all the points and pay attention to the type of assets, the availability of a licence, and the ability to conclude transactions.