Best Beginner Forex Broker

The economy is down, employment is down, demand is down… but you know what’s up? The forex market is. Ever since the COVID-19 mess started, the foreign exchange market has seen a 300% increase in trading. 

This is not a surprise – so many people around the world are under lockdown or out of work, that they decided to trade online and make a buck in the most opportunity-rich environment we’ve seen in years. To be exact, they are exchanging currencies to make a profit, and many of them are beginners.

Even though the forex market seems like a mystery wrapped in an enigma, it really isn’t. It’s just about exchanging currencies as their prices change to make a profit over and over – not that complicated once you get the gist of it.

Maybe you cannot become a pro in a few days, but you can master the basics and start making money fairly quickly – if you have the right learning platform, of course. That’s precisely why this article is in front you – to recommend some of the best forex brokers for beginner traders and tell you how you can get started in the currency business.

Forex brokers are companies that allow you to trade through their trading software – as a newcomer, you want one that’s cheap, easy-to-use, and provides great education. Luckily, we’ve got a few companies just like that lined up for you to check out.

So, let’s check them out, shall we? 🎬

The Best Forex Brokers for Beginners

1. IG Group – Best Overall

Being among the top forex trading platforms in the world, IG’s software isn’t just very easy to use, but also has very broad functionality – a combination that both newbies and experts can enjoy. 

IG manages to offer a set of powerful yet accessible platforms, very competitive fees, strong regulatory licenses, and a well-made educational section – and because of that, it is number one on our list.

IG offers clients a choice between several different platforms – and all of them are quite comprehensive. While the tried-and-tested Metatrader 4 might appeal to seasoned industry veterans, the web-based platform is no slouch either – and with 28 indicators, it is quite powerful in its own right.

Much praise usually goes towards the mobile version of the platform as well. It essentially mirrors the functionality of its browser-based counterpart using less real estate, which is the best possible scenario when it comes to trading apps.

The prices are very appealing – the brokerage doesn’t charge withdrawal fees and the only significant commissions you’ll run into are charged when trading stock CFDs.

You might be subject to a $12 inactivity fee – but this will only happen if you don’t use the account for more than two years. The average spread for the EUR/USD pair with IG US is a mere 0.9 pips.

The broker’s educational resources include educational videos, courses, live webinars, together with platform tutorials.IG is a broker with a long and clean track record – it is regulated in 10 countries, but US-based clients aren’t insured in case the company goes bankrupt. All things considered, IG is very well-rounded with no major drawbacks to speak of – and a very affordable price point. Check out our in-depth IG review if you think this broker would be a good fit for you.

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2. FOREX.com – Best Education

If you’re looking for a brokerage that focuses on low fees, you might have just found it. FOREX.com isn’t a perfect medium for stock CFDs, but trading currency pairs comes very cheap – there are also no withdrawal and inactivity fees.

The trading platform might not be as beginner-friendly as the other names on this list, but it has very wide functionality – once you get used to it, you have a powerful toolkit in your hands. The mobile version is often regarded as one of the top forex trading apps and offers customizability, numerous charting tools, recommendations, and an informative newsfeed.

Opening an account is easy and fully digital – it usually takes 1-3 days to get verification and start trading. Also, Forex.com has a very approachable minimum deposit of $50, which is one of the lowest you will come across.

Aside from pricing, education is where Forex.com stands out. There are video tutorials for all levels of forex traders, as well as a detailed course on how to use the platform. Like all brokers on this list, Forex.com also has a demo account that you can use to test your skills by trading with virtual money and with zero risks.

Forex.com is also one of the oldest and most reputable forex brokers around – it’s well-regulated and its parent company – GAIN Capital – is listed on the New York Stock Exchange. All things considered, beginners who want to trade currencies will likely find many advantages with Forex.com.

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3. TD Ameritrade – Best for Forex and Stocks

If you’re looking for a brokerage that has stood the test of time, then this is the one for you. TD Ameritrade has been around since the late 70s and is currently one of the top stock brokers in the US.

TD Ameritrade is one of the most popular US forex brokers. It doesn’t suffer from any major flaws – and it particularly shines when it comes to competitive pricing. Fees associated with trading are quite low, there is no minimum initial deposit, and the brokerage doesn’t charge non-trading fees

TD Ameritrade has a user-friendly trading software that’s on par with that of other big names here but it also allows you to trade stocks, ETFs, bonds, and all other products typical for stockbrokers. The mobile app offers the full functionality of the browser-based and desktop platforms in a smaller frame.

The educational content is more focused on the stock market but there are a lot of forex-related videos and lessons too. Also, TD Ameritrade’s demo account lets you practice trading in the stock and forex markets – a handy tool for traders who want to do both.

TD Ameritrade is geared towards US clients but is also available in China, Singapore, Malaysia, and Hong Kong.

All in all, this is a great broker for traders looking to invest both in the forex market as well as US equities. If this sounds like something that would interest you, take a look at our in-depth review of TD Ameritrade to see if this is the broker for you.

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4. eToro – Best for Copy-Trading

eToro is one of the top Forex brokers at the moment and is held in high regard by beginners traders. It offers a user-friendly platform and low CFD fees – but it stands apart from the competition as a pioneer of copy-trading.

Stocks can be traded without paying commissions and the fees associated with trading CFDs are very low – as far the downsides go, forex trading fees are run of the mill, and a $5 fee is applied when withdrawing money. However, eToro only requires a $100 initial deposit, so you can get started quickly and easily.

This trading software is logical and easy to use, even for complete beginners. To make things easier, the broker has added the so-called Cloud Computing Portfolio to the platform – this allows users to invest in innovative tech companies that have seen high growth during the COVID-19 pandemic.

eToro’s ace in the hole is called copy-trading. This means you can follow expert traders on the platform and you can see all the trades they make. Then, you can just click a button to copy their trades – very good for learning.

eToro is a Forex broker with a good reputation and is regulated in The UK, Australia, and Europe. All in all, eToro’s trading platform suits most kinds of traders.

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5. Oanda – Best for API Trading

Maybe you’ve heard about people who use fancy new software to automate their trades. Well, Oanda certainly has, and it’s very welcoming of this new breed of API traders, but it is also considered to be one of the top forex brokers in the US.

API stands for “Application Programming Interface” – basically, this means using an algorithm to automatically trade for you via your platform. Unfortunately, not all platforms are suitable for this kind of trading, but fortunately, Oanda’s platform is. You can use the so-called Algo Lab to make your own trading algorithms and implement them into the platform.

The prices at Oanda are very low but you can only trade forex and CFDs. To make things even easier, there’s no minimum initial deposit and withdrawal fees – the entire application process is quick and completely digital, so you can get set up in about 10 minutes.

Whether it’s customizability, ease-of-use, functionality, or good research, Oanda’s platform has it all – except for price alerts. However, Oanda’s mobile app mirrors the great functionality of its web and browser-based counterparts, plus it has price alerts. Since price alerts usually arrive on your phone anyways, you can argue that this is not an issue. 

Among other things, Oanda provides good educational resources – there are training videos and webinars for all levels, although the courses aren’t organized perfectly. All in all, this broker is a good choice for beginners and tech-savvy traders who want to trade forex and CFDs – take a look at Oanda in more detail if this is the droid you’ve been looking for.

With Oanda, you can now trade CFDs on four major cryptocurrencies – Bitcoin, Bitcoin Cash, Ethereum, and Litecoin using the MetaTrader 4 and 5 platforms. Spreads start from US$80 for Bitcoin, US$5.00 for Ethereum, and spreads from as low as US$0.6 for Litecoin.

For a better trading experience, you can find customizable layouts, trade-through charts, a range of plug-ins, an intuitive interface, and more options, available on live and demo accounts.

Don’t forget that the cryptocurrency market can be unpredictable and volatile, so it’s important to protect your trades through powerful tools such as stop losses.

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What is Forex Trading? 💱

The word “Forex” stands for “foreign exchange” – this essentially means exchanging currencies as their prices change to make a profit. Let’s explain how trading currencies works and how it can be profitable with a real-life example.

Example of a Forex Trade 💶💵

The USD is going down in value because of the Coronavirus. Meanwhile, the Euro is much more stable and seems like it’s going to increase in value – what can you do with this knowledge? 

If you’re a shrewd forex trader, you would exchange USD for EUR as soon as you saw this trend. This way, instead of letting your dollars lose value, you got Euros that are stable. In effect, you can sell your EUR for USD at a later date for a profit. 

For example, you exchange 12 USD for 10 EUR in February. A few months later, you can exchange the 10 EUR for 14 USD because the prices changed that much (you increased your money by 17%). BAM! You now have more USD than you used to just by exchanging it to a different currency. Note that the prices quoted here aren’t real – we just used them to make an example.

Something similar to this happened earlier this year, however, that trend is losing momentum. Don’t worry though, the forex world is always full of opportunity – especially nowadays when volatility is high almost everywhere you look. But, to trade currencies, you need a broker first.

What You Need from a Forex Broker as a Beginner ⭐️

First off, we must understand what a forex broker is. A forex broker is a company that acts as a medium between you and the currency market. A broker is the only legal way to directly trade in the markets and they also give you a trading platform as well as other resources you need to trade.

Brokers are usually very accommodating – this is because forex brokers make money by charging commissions for every trade you make. In essence, the more you trade, the more money they make – this is why they want you to be as comfortable and motivated as possible.

That being said, there’s a bucket load of brokers you can choose from – but picking the right one is extremely important. After all, your brokerage should suit your trading preferences and not be a scam (it pays to know how to recognize fraud forex brokers).

If you’re new to the trading game, you might not know what to look for when choosing a good and reliable broker – that’s why we’re here to help. Here are a few questions you need to ask yourself if you want to find a good broker for beginners.

1. Is Your Forex Broker Safe and Reliable? ✅

There are many scams or in some cases brokers that aren’t regulated in your country – meaning, you aren’t insured if something goes wrong. Since having a reliable brokerage is of utmost importance, here’s how to figure out whether a broker is someone you can trust your money with.

• First off, it should have a long and clean reputation, which many companies don’t. 
• A broker should be regulated by your country’s top regulator (like the FCA in The UK or the CFTC in The US). This way, your account will likely be under government insurance.
• If a broker is listed on the stock exchange, that’s a good thing. This means that the company is publicly traded – meaning, it has to be accountable for its stock price to stay high.

2. Are Your Broker’s Prices Low Enough? ✅

Brokers charge a fee for every trade you make, as well as some other activities. Ideally, a brokerage should have very low fees for the type of product you’re trading – this will maximize your profits and minimize risks. 

Also, some brokers charge you withdrawal fees when you transfer the money from your account to your bank or e-wallet. There’s also the inactivity fee that will hit you if your account remains inactive for a long time – it’s best if you find a broker that doesn’t charge these fees at all.

3. Is the Trading Platform Easy to Use? ✅

Your broker’s trading platform is your window into the markets. As such, it must be clean, understandable, and easy to use. If trading software is complicated and buggy, it will give you more stress than success. 

A trading platform should allow you to access all its features from the main screen and give you a search option so you can find products easily. The trading software should also provide news, fundamental data about products, and allow you to draw charts (for predicting market trends and such).

In forex, timing is very important – selling a product a minute later rather than sooner can cut your profits just like that.

That’s why platforms let you set up alerts – this means that the broker will send you a notification or an SMS as soon as a product you’re interested in reaches the price you want it to. Notifications and alerts allow you to grab opportunities at a moment’s notice – meaning that you’re much more likely to execute a trade at a favorable price.

4. Can This Broker Help Me Learn to Trade? ✅

As we said earlier, the brokers want you to trade as much as possible – that way, they can make money off of you. This is why many brokers provide educational articles, video lessons, and even comprehensive trading courses so you can get into trading shape.

When choosing your first broker, it should ideally provide excellent educational material. This means high-quality video lessons and courses that help you start forex trading at the basic level and give you expert-level theoretical know-how. 

After you’re all geared up with knowledge, you should try trading, but not for real. Almost all Forex brokers offer demo accounts – these allow you to trade in the real market but with fake, virtual money.

That way you can get a realistic trading experience but without risking any money. If that goes well, the next step is the real deal.

5. How’s the Broker’s Customer Support? ✅

Forex brokers can have technical difficulties, hidden fees that make your money mysteriously disappear, as well as all sorts of delays and problems. When things aren’t running smoothly, you need to call the broker and ask for help.

That’s why  your brokerage needs to have great customer support. After all, if you’re holding a large amount of money with some company, you need that company to be very, very responsive. Otherwise, as soon as something unforeseen happens and you need help, you’ll get stressed out waiting on the phone for hours on end.

When assessing brokers, make sure to see what user feedback says about their customer support. If you can get in touch with them quickly and if they are helpful, then you’re in good hands.

6. Important – Check for Negative Balance Protection ✅🛎️

Brokers let you borrow money to make bigger trades and earn more money. If your trades with this borrowed money are successful, you earn more, the broker earns more via commissions – everyone’s happy. 

But if the deal fails, you have to return the money you lost. This is quite tricky to do, so you should definitely go to a broker that doesn’t let you get in debt. If a forex brokerage has Negative Balance Protection, your account balance cannot go below zero – meaning, you cannot get in debt because of a bad trade.

How to Start Trading Forex 🏁

The most important thing is to start small – seeing as how easily accessible leverage is in forex trading, it’s quite easy to bite off more than you can chew. Same thing here –  so here are the steps you need to take if you want to enter the exciting and mysterious world of forex.

Learn 🎓

First thing’s first – you need to learn how forex trading works. You can learn this through tutorials on websites like this one or through your broker’s educational resources. 

Besides knowing how the markets work, you need to know the forex terminology. Don’t worry, there isn’t a lot of it and it’s quite simple to understand. We explain some main Forex terms in the following section of this article.

Make a Plan 📝

Pick the area of the market you understand and like the most. If you find something interesting, it will be much easier to stay on top of the latest developments and know what to do about them.

After that’s done, you need to make a plan. For example, if you plan to trade USD and EUR, you need to keep an eye on current events and trends so that you can predict where the prices are going. Staying informed gives you an edge – while most traders will place trades that are more or less random, acting with intention has a much higher chance of succeeding.

Find your Perfect Broker 🎯

Once you know what’s going on and what you want to do – it’s time to choose a broker. The brokerage you choose should allow you to trade the products you’re interested in and have low commissions for said products. 

Get Used to the Platform 👨‍💻

A platform is much like a kitchen – if you don’t know where everything is, you will have a messy cooking experience. Getting used to a platform isn’t hard – even if the broker doesn’t provide lessons on how to use the software, you can likely figure it out by using the demo account.

Close a Trade 📈

If everything else is in place, then it’s time to test your knowledge and mettle. You need to buy a product, hold it until its price goes up, and sell it. If you can do this once, you can do it twice – and if you can keep doing it, you will profit. 

It’s normal to completely fail with your first few trades. Even if you did great on the demo account, trading with real money is a completely different beast. Believe it or not, we unconsciously behave differently when real money is on the line, which can lead us to make irrational decisions. You need to be aware of this and trade rationally and consciously.

Repeat and Keep Improving 🛠

Just because you made a few good deals doesn’t mean your streak of success will last. At least, not if you get complacent. The markets are always changing and you need to change with them – only this will allow you to make great trades day in and day out over a long period.

A Few Quick Terms for Beginners 💨

At first glance, forex trading will seem like a convoluted mess due to the sheer number of fancy words you don’t understand yet. Luckily, you can probably go through all the terminology in 30 minutes, but for now, let’s see some of the most important terms you can come across while trading.

Spot Forex  ☑️

This means buying and selling (a.k.a. exchanging) a real currency. For example, you exchange your USD for EUR – later, you exchange the EUR back to the USD back when the dollar rises in value. That way, you end up with more money at the end of the transaction.

Spread ☑️

A spread is the difference between the buying and the selling price for currency pairs. There is one commonality you’ll find when it comes to the relation between commissions and spreads: the price differences tend to be very small for popular currency pairs like the USD/EUR and much higher for more exotic pairs. To profit from a forex trade, your spread must be higher than the commission you paid on the currency pair.

Pip ☑️

A pip is a unit that represents 0.0001 of difference in the price of two currencies. For example, if the EUR/USD changes from 1.1811 to 1.1812 – that is a difference of 1 pip. 

CFD  ☑️

CFD stands for “Contract For Difference” and it is essentially a bet. You predict where the price of an asset or currency is going to go, and if your predictions come true, you get paid. 

By trading CFDs, you don’t have to buy the underlying asset – this allows traders to bet on price movements of international stock, ETFs, currencies, etc. Note that roughly 70%-80% of CFD traders end up losing money.

Spread Bet ☑️

This is essentially the same as a CFD, but it doesn’t incur taxes. This means spread betting will yield more profit if you win, but you can’t get a tax deduction if you lose.

Margin ☑️

The margin is the funds that are retained with the broker until the transaction is cleared. If you bet on something for $100 with the plan to reap the rewards late – the 100$ will sit with the broker until the deal goes through. 

Leverage ☑️

Most individual Forex traders don’t have enough money to have huge margins so their earning ability is limited. That’s why brokers offer leverage – this means they will essentially lend you the money so you can make bigger deals.

For example, you want to buy a EUR/USD contract for 1,000 Euros but you only have 100 EUR on your account. If the broker offers 10:1 leverage for EUR/USD trades, this means you can make a 10 times bigger trade with borrowed money – e.g. buy into a $1,000 position with only $100 on your account.

If your trade is successful, great! You got more money than you otherwise would have.

However, if the trade goes bad, you can end up owing your broker money. That’s why you should start your forex experience with a broker that offers some type of insurance or customer protection.

How COVID-19 Has Impacted Forex Trading Worldwide 😷

Forex traders like it when prices are going up and down (a.k.a. high volatility) – that means there’s money to be made. Maybe you’ve already heard it on the news but volatility is very high in the age of the Coronavirus.

At the same time, millions around the world are losing jobs and business revenue. This is why many have turned to the markets – forex trading has quadrupled worldwide. This makes sense since the markets are full of opportunity while the real economy is having a rough period.

The trading conditions as we know today are unprecedented and have brought exciting change. One example of this is the jump in Forex activity in Nigeria, which seems like it’s becoming the new FX capital of Africa.

All in all, the combination of economic lethargy and increased volatility has made forex trading a very appealing prospect for the people of the world. Naturally, brokers are competing to draw the newcomers to their side, so it is as good a time as any to begin trading forex and make a buck.

Is Forex Trading Worth It? 💯

If you’re a good, safe trader, then yes – thousands around the world are making a living just trading forex. However, the FX world is full of profitable and very risky opportunities that often destroy the balances and the confidence of beginners.

For example, CFD and spread betting are very profitable but roughly 70%-80% of traders lose money on these transactions. Also, making one bad trade while using a lot of leverage can wipe out your entire trading balance. Although high-stakes, high-profit trades are tempting, steady progress and patience are the keys to success here. 

Forex Trading vs. Stock Trading

If you are trying to find a new career path through online trading, you might’ve noticed that there are two types of markets – the forex market and the stock market. Both of these avenues can be very profitable and have their upsides and drawbacks.

Pros of Forex ✅

Ease of Buying and Selling – Since the forex market is a global currency exchange, by definition, it offers huge liquidity. This means you can buy into or sell your positions quickly and at any time. In the stock market, this is much more difficult, as you have to wait for a suitable buyer to sell your assets.

Accessibility – The global forex market is open 24 hours a day, 5 days a week. This means that everyone can access all the world’s markets at any time from any place. 

Contrary to this, international stock traders have to wait until their markets of choice open. For example, Europeans who want to trade in the US market have to wait until evening for the American stock market to open – this requires much time management from the trader.

Cons of Forex ⚠️

Risk and Leverage – Trading currencies can usually only yield a very small profit unless you’re using large amounts of money. This is why forex brokers and banks offer leverage – that means you can trade with money you borrowed from them. 

For example, if your broker offers a 100:1 leverage, that means you can make a $100,000 deal and just use $1,000 of your own money. However, if your highly-leveraged trade goes bad, you can lose all your money on paying back your lender. Contrary to this, some stocks allow you to make large profits with small investments – and less risk overall is required to make a profitable trade.

Knowledge – Forex traders must know how to analyze macroeconomic trends and fundamentals. This is so because currencies respond to nation-level economic activity. On the other hand, although understanding macroeconomics is useful, a stock trader can make solid predictions by focusing on a single sector of the industry.