Best Forex Brokers for Beginners

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Trading conditions:

AvaTrade

AvaTrade is regulated by the Central Bank of Ireland, ASIC, the FSCA and the Japanese Financial Services Agency. AvaTrade is long-established and has won numerous industry awards for its reliability and trading platform.

AvaTrade offers a comprehensive repository of educational material to get new traders started, as well as helpful tools and analysis to assist traders in finding the best opportunities. While customer support is 24/5, the same as most of their competitors, it is available in 14 languages and high-quality support is a top priority.

Alongside the educational library, AvaTrade offers traders a free educational and analysis website called Sharp Trader designed to include everything a trader needs for day to day trading. Traders can enjoy daily technical and fundamental analysis by AvaTrade’s experienced researchers and videos reviewing a wide range of topics for all levels of trading knowledge. The site also offers trading tools – including an economic calendar and trading calculators as well as access to AvaTrade’s trading platforms.

The minimum deposit for opening a regular account with AvaTrade is 100 USD and no withdrawal or deposit fees are charged for credit cards or online payment services.

Trading conditions:

XM

Rapid growth since 2009 has landed XM upwards of 1.5 million clients from 196 countries. XM is considered to be the broker with the most extensive experience and in-depth knowledge of the global markets with an operational philosophy that is by ensuring client satisfaction; they earn client loyalty through 24/5 personal customer service, varied account types and competitive trading conditions.

From their start, XM set out to create an MT4 setup with high-speed market execution and a no re-quotes policy. While that policy still exists today, XM has continued to improve trading conditions further by offering accounts with no hidden commissions on trades, tight spreads as low as 0 pips on all major currency pairs, and fractional pip pricing.

XM's pioneering trading infrastructure earned XM the Best Forex Execution Broker by Shares Magazine’s at the UK Forex Awards 2017, the Best FX Broker Europe at the World Finance Forex Awards 2018, and Best Trading Support for 2017 Award from the Capital Finance International Magazine. Continue reading.

Trading conditions:

Pepperstone

Pepperstone is well-regulated Forex broker suitable for anyone who wants an STP account with a reputable ASIC-regulated broker.  The spreads are tight, and the account minimum deposits are reasonable for the standard trader.  If you wish to have a VIP account of a Micro account, Pepperstone is not for you.  Besides, I got tripped up by the negative balance protection, which does allow for losses great than your account balance - so making it not real negative balance protection.

Trading conditions:

HotForex

HotForex, the winner of the Best New Forex Broker South Africa 2016 at the Global Banking & Finance Review Awards, is a leading FCA UK regulated STP broker who prides themselves on being a stable, fair, secure and transparent.

Clients enjoy the MetaTrader 4 & 5 platform, a selection of account types with account currency in either USD or GBP, and an ultra-low minimum deposit.  Main account options are:

  • Micro: Minimum Deposit: $5 - Spreads from 1 pip, 1000:1 leverage and bonus offers
  • Premium: Minimum Deposit: $100 - Spreads from 1 pip, bonus offers, and more profitable trading.
  • ZERO: Minimum Deposit: $200 - The pro account with spreads from 0 pips and commission charged.

HotForex has award-winning customer service with UK toll-free phone numbers, a great course for beginner traders, and a section devoted to helping traders find trading opportunities.  This quality of education is comparatively unique compared brokers we list.

Trading conditions:

eToro

Founded in 2007, eToro’s aim was to make global markets more open, so that anyone could trade and invest simply and transparently. eToro has won multiple awards for innovation, are pioneers in technology, and have successfully disrupted the traditional industry approach.

With a unique proprietary trading platform, eToro has succeeded in making trading more accessible to the beginner trader, but only by completely upending the traditional broker space.

The social component, which sits at the centre of the platform, seeks to inspire and encourage traders. eToro also believes that making its community of 6 million traders integral to the platform creates transparency and makes the overall experience more enjoyable. As cryptocurrencies have become more popular, eToro has introduced a wide variety of cryptocurrency CFDs to traders.

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How to Choose A Beginner Broker

Now I want to take a more detailed look at the factors we assess when we are deciding on the best brokers for beginners in 2019. The main aspects we look at are Regulation, Spreads/Commission/Fees, Customer Support, Educational Material, Demo Accounts and the Platform. There are other aspects we look at too, but we believe that these are the most important for new traders.

Regulation

The first thing you want to look for is whether and how regulated a broker is. There are multiple regulation agencies worldwide, some of them well respected and others less so. The best brokers will be regulated by at least one of the big three: The United Kingdom Financial Conduct Authority (FCA), the Cyprus Securities and Exchange Commission (CySEC) and the Australian Securities and Investment Commission (ASIC).

There are other regulatory bodies that you will see regularly, such as the South African Financial Services Conduct Authority (FSCA), the Seychelles Financial Services Authority (FSA) or the Cayman Islands Monetary Authority (CIMA), and, while these regulators are generally well-regarded, they are not held in such high esteem as the FCA, CySEC or ASIC.

So, if you are looking for a broker – make sure you choose one that is regulated by at least one of the big three; or if you don’t, make sure that you have a very good reason for doing so. Regulation isn’t just a marketing ploy – with good regulation comes a host of important consumer safeguards:

  • Segregated funds: Client funds are kept separate from broker funds, so in the case of broker bankruptcy all client funds are returned
  • Legal oversight: Brokers have to disclose the percentage of clients who lose money on their platform, they also have to give a clear and concise explanation of spreads, commission and other fees.
  • Lower leverage: In Europe, brokers are only allowed to offer a maximum of 50:1 leverage unless a customer can prove they are financially educated. This protects new traders from losing vast sums of money.
  • Negative balance protection: Meaning, clients can never lose more than what they have in their account. If a client’s leveraged position deteriorates rapidly their account can end up in the negative – under CySEC regulation, this loss is now automatically covered by the broker.
  • Formal complaints procedure: Well-regulated brokers will have a formal complaints procedure that is overseen by the regulator – this will include the option to escalate the complaint to the national ombudsman.

So, as you can see, making sure your broker is well-regulated should be your first step.

Spreads, Commission and Fees

Once you have decided on a few well-regulated brokers, the next thing you want to look at is the spreads or other fees/commission that your short-list of brokers will charge you.

A spread is the difference in the bid and the ask price – or the buy and the sell price – hence the catch-all name Contract for Difference (CFD) that describes this type of trading, i.e. when the asset traded is not actually being purchased or sold. The spread is how most brokers make money (but not all – we will get to that in a moment): Every time you place a trade most brokers will be taking the opposite side – they are assuming that your analysis of the market will prove incorrect and that you will either lose your position or hit your stop-loss before the asset value changes enough to cover the spread.

Spreads are measured in pips (0.01 of the base currency) and all good brokers will advertise their spreads on at least the major currency pairs. Good brokers should have very tight spreads on major currency pairs, for example, FXCM is offering a spread of 0.8 pips on the AUD/USD pair; for the same pair, AvaTrade is offering a spread of 1.8 and XTB, while it has a floating spread, has a minimum of 1.7.

So, the tighter the spread the better chance you have of taking a profit from your trade. But, as I mentioned above, not all brokers make their money from spreads. Those that do are called market makers or dealing desks – and rather than putting your trade directly to the market they ARE the market. The other type is ECN/STP (Electronic Communication Network/Straight Through Processing) brokers – these don’t take the other side of your trade, rather they post your trade directly to the market. In this case, rather than profiting from the spread, they will take a small commission on each trade. Many traders prefer this as it removes any question of bias; because the broker is not actively profiting from your loss, they are much less likely to tilt the tables. Additionally, because ECN/STPs are taking a commission on your trades their spreads are generally much tighter than market makers, it is not uncommon to find spreads as low as 0 pips at a good ECN/STP broker.

Apart from spreads and commissions, you should be aware of any other fees brokers may charge. Usually, these come in the form of deposit or withdrawal fees – especially with credit card deposits or when withdrawals or deposits are made in a different currency than the currency traded. Read the small print carefully and you will avoid nasty surprises.

Customer Support

So, we have looked at regulation and spreads, commissions and fees, now it’s time to look at customer support. Most brokers will advertise excellent customer support but there are some important things to look for. First off, you will want to check on opening hours, most good brokers will be open 24/5 (24 hours a day, Monday-Friday) though some are also open over the weekend. If you work a day job during the week, weekend support can be invaluable. You will also want to check what type of support is available – the usual options are live chat, email and telephone – so you can make sure that your preferred form of support is available. Be aware that some brokers, such as eToro, have a ticket system due to the large volume of support requests they receive.

All that said, it is difficult to tell what kind of support you will receive from just reading a website. You will want to check our reviews and cross-check with other online commenters and see what customers are saying about the service they receive.

Education

As a beginner trader, you will also be very interested in the educational materials on offer. Most brokers will offer some form of education but a select few really make an effort to educate their customers.

Better brokers will offer structured multimedia courses that start with the basics of Forex trading, continue on to terms and concepts with real-world examples and finish up with technical and fundamental analysis and the use of indicators and strategies. As a new trader, this is really what you want – most people find it easier to learn with mixed media video and reading and the more material the better.

Some brokers will also offer webinars and even real-world seminars and my advice is to consume as much as you can. With Forex trading, you can never be educated enough and there will always be something new to discover.

Demo Account

Closely linked to the point above, if you are just starting out you will want a broker that offers an unlimited demo account that mirrors their live account offering as closely as possible. What you are really looking for in a good demo account is an educational experience. In an ideal world, this would work perfectly in tandem with a structured educational course so a new trader could learn concepts and then test them on the demo account before spending any real money. Demo accounts are also a great opportunity to learn how a platform works; unless you are using MetaTrader (more on that below) every platform is slightly different and will take some getting used to. A full list of the best demo accounts is here.

Platform

Last, but certainly not least, you have to think about what platform you want to use for trading. Most brokers have their own proprietary platforms but many also support MetaTrader 4 (see here for our breakdown of the best MetaTrader 4 brokers and a look at the platform itself), MetaTrader 4 still being the industry standard despite the uptake of MetaTrader 5. A good platform should be clear and concise and allow for charting to be used simultaneously while trading. You should also be able to use third-party signals and other algorithms to refine your trading strategy.

Conclusion

Thanks for reading through this roundup of the best brokers for beginners and our thoughts on the factors that we think should apply when making this decision.

Trading Forex and CFDs is not suitable for all investors and comes with a high risk of losing money rapidly due to leverage. 75-90% of retail investors lose money trading these products. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.