Trillions of currencies move around the world 24 hours a day, 5 days a week, making the foreign exchange (also known as foreign exchange or FX) market one of the most active in the world. Because brokers often make large loans to traders to fund their speculative activities, wealth can be created and lost quickly.
If you want to take part in this promotion, you need a broker that trades currencies, and many big names in stock trading simply don’t offer this feature. Because the market is so diverse, you also need to evaluate a forex broker on a different basis than a stock broker.
Below are some of the top forex brokers, including some that allow clients to trade cryptocurrencies.
Here are the best online brokers for forex trading in 2022:
- TD Ameritrade
- Foreign exchange network
- Investment allies
- Interactive Brokers
- IG
- Robin Hood
Overview: Top Online Forex Brokers for June 2022
TD Ameritrade
TD Ameritrade offers a range of tradable products and currencies that truly complement their portfolio. Forex traders can use the broker’s reputable trading platform “thinkorswim” and also use some mobile apps to trade.
The broker uses spread pricing and offers leverage of 50:1, the legal maximum leverage allowed in the United States. It offers over 70 currency pairs, so the choice is wide. TD Ameritrade also allows clients to trade Bitcoin futures, but you must be licensed to trade futures and priced to use the broker’s futures program.
- Price: Distribution
- Maximum leverage: 50:1 for major currencies; 20:1 for minors
- Currency selection: 73 pairs
Forex.com
As the name suggests, Forex.com specializes in Forex trading (although it also trades metals and futures) and offers many attractive features. Clients can choose the pricing structure that works best for them: spreads or commissions, or the broker’s STP Pro pricing from global banks and other institutions with no additional markup.
Forex.com also provides traders with access to over 80 currency pairs, and its success with clients has led the broker to declare it the number one forex broker in the US based on the assets held by the broker.
- Pricing: Spreads and commissions, depending on account type
- Maximum leverage: up to 50:1
- Currency selection: more than 80 currency pairs.
Ally Invest
Ally Invest is known as a low-cost stockbroker (and for its exceptionally good options trading prices), but foreign exchange has really expanded its offerings. A great option for traders just starting out, Ally offers over 80 currency pairs and easy-to-use charting software, including a mobile app.
Ally also allows you to open a $50,000 practice account so you can learn how forex trading works even if you don’t plan to actually trade. Given the difficulty of forex trading, this is an excellent resource for beginners to try.
- Price: Distribution
- Maximum leverage: up to 50:1
- Currency selection: more than 80 currency pairs.
Interactive Brokers
Known for its low cost and robust trading platform, Interactive Brokers is favored by active and professional traders. Forex traders will not be disappointed by the advanced trading tools available and real-time quotes from many of the world’s largest forex trading banks. You can even trade stocks on international exchanges while attaching foreign exchange orders to hedge currencies.
Interactive Brokers also started trading cryptocurrencies in 2021. You can trade popular cryptocurrencies like Bitcoin and Ethereum for attractive commissions.
- Pricing: Commission: 0.08 – 0.20 basis points
- Maximum leverage: up to 50:1
- Currency Options: Over 100 Pairs.
IG
IG is a more specialized Forex broker open to US investors. It is a powerful agent that still offers many features such as: B. A demo account that can help beginners. The broker offers a web platform, a mobile application and access to the MetaTrader4 and ProRealTime platforms.
IG allows spreads as low as 0.8 pips (a pip is one ten thousandth of a pip) and says its EUR/USD pair is 20% lower than the top two U.S. brokers. The broker also offers extensive charting capabilities on its platform.
- Price: Distribution
- Maximum leverage: up to 50:1
- Currency selection: more than 80 currency pairs.
Robin Hood
Robinhood doesn’t offer traditional forex trading, but it brings the well-known smooth, user-friendly interface to the cryptocurrency space. Here, customers can trade a range of cryptocurrencies, including some of the most popular ones such as Bitcoin, Ethereum, Litecoin, and Dogecoin, for a total of seven cryptocurrencies. You can also get discounts on 9 other digital currencies.
Like its core brokerage offering free stock and options trading, Robinhood’s crypto trading is free.
What to Consider When Choosing a Forex Broker?
While you may be familiar with many branded online stock brokers, only a few of them deal with foreign exchange transactions. Instead, this space has been occupied by a plethora of more specialized niche brokers who can cater to bulk forex traders looking for a variety of upsides.
But no matter what type of broker you’re targeting, you should focus on at least a few features that each Forex broker has in common:
- Pricing: Forex brokers have two pricing options: include the price in the bid-ask spread or on a commission basis. Spreads are usually quoted in pips or thousandths of a pip.
- Leverage: How much leverage does the broker let you take? Generally, traders seek higher levels of leverage to amplify movements in the forex market. This level may vary depending on the liquidity of the currency.
- Currency Pairs: A few major currency pairs dominate the trade, but how many other currency pairs are offered by the broker (minor pairs, exotic pairs)? The most popular currencies include USD, EUR, JPY, GBP and CHF.
- Spreads: What are the trading spreads of the broker? The wider the spread, the less attractive the trade is. Of course, brokers who charge a spread premium tend to have wider spreads because that’s how they get paid.
Investors looking to buy cryptocurrencies can go through some traditional stockbrokers like TD Ameritrade or Robinhood, although the trades work differently than the regular forex trades described above.
One downside for US traders is that many of the top forex brokers are based in the UK and simply won’t accept them as clients due to their citizenship. However, the aforementioned brokers are all good for Americans.
How do I know if my Forex broker is regulated?
Regulating forex brokers is important to maintain business standards and protect clients. The Commodity Futures Trading Commission (CFTC) says most scams involve unregistered individuals, products or companies. Therefore, when you are involved in Forex trading, you should use a registered broker, it is actually easy to tell if you are dealing with one.
CFTC registered and regulated Forex broker. Brokers must meet certain financial standards, their employees must complete background checks, and companies must comply with certain conduct and disclosure requirements.
You can verify that a forex broker is properly registered by visiting the National Futures Association (regulated by the CFTC) website and using their search tool. You can view a broker’s registration, disciplinary or regulatory history, and financial information. Be suspicious of companies that are not properly registered.
What is the difference between a dealing desk and an agency broker?
When you trade Forex, you need a broker to execute your trades, but a broker may not always act in your best interest first. There are several different types of models – dealing desks and agency brokers – which have different incentives for executing trades.
A broker is someone who acts in the best interest of the client and whose job is to find the best bid. Therefore, the agent broker does not keep a list of trading assets that may conflict between the interests of the agent and the client, but only acts as a middleman. The client pays the agent specifically for this service, which can save the client a lot of money. So agents are usually reserved for wealthy clients who transfer large amounts of money.
In contrast, a dealing desk trades securities and owns them at the same time. This structure means that the dealing desk may not always work for the client’s benefit, but for their own.
Therefore, the dealing desk can act as both a principal and an agent in a transaction, leading to some strange conflicts:
- As a principal, the dealing desk acts for its own account, which means it can accept transactions from clients, with the result that it has a vested interest. In other words, the trading desk may benefit at the client’s expense, possibly supplying inventory to clients before the market falls, or buying before the market rises.
- As an agent, the dealing desk can execute trades for clients and pass on trade prices.
Because of this structure, the client may never know where the trading desk’s interest in a particular trade is – a problematic situation when you are the client.
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