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.

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.

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.

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.

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. AvaTrade is 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. AvaTrade offers 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.

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?!

Currencies are always traded in standardized lot sizes, where a lot is the minimum tradable amount of any instrument. A lot consists of 100,000 currency units, a mini lot of 10,000 and a micro lot of 1000 units of a currency pair. The capital required for opening the position may be raised with a leverage. Then the broker may open the position. If a position opens up with £20 and a 1:200 leverage, you are in the market effectively with £4000. If the value of the currency pair increases by 1%, your net income will increase by 200%. The same holds true for the loss in value, so with high leverage, you may lose much of the capital very quickly. Leverage is characterized by both opportunities and risks. New traders should work with smaller leverage and choose a forex broker, which also deals with micro lots.

Why are certain currency pairs spreads significantly higher?!

The price of a currency pair is determined after the normal market supply and demand, and the difference between these two is called spread. With less-traded currency pairs, therefore, increased demand can quickly happen, and thus, greater spreads. That is how the most traded currencies have very low spreads, as you may find a trading partner for a rather lower price. Typically, the more business is done in a particular currency pair the better the spreads given by the inter-bank network and, in turn, the better the spreads given to forex traders by brokers. Spreads themselves can be an indicator of market liquidity. Therefore, it makes more sense to trade in the liquid markets of the major currencies, whose spreads amount to only a few pips.

Conclusion

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. AvaTrade offers attractive auto trading options, thus responding to the more advanced traders.

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