Please note this article contains affiliate links
Do you know the top 8 forex brokers in the world? If you’re a trader, it’s in your interest to make sure that you’re with the best broker possible. In this post, I’m going to have a look at which brokers have the best reputations so that you can make the right decision when it comes to which broker to choose.
This is no simple listicle giving you ten brokers to choose from. Instead, I’m going to tell you everything you need to consider when choosing a forex broker before offering you what, in my opinion, constitutes the top 8 forex brokers in the world based on the criteria I talk about below.
Firstly, What Exactly Is A Forex Broker?
Forex brokers are like stock brokers and, indeed, they often also allow trading of other instruments like stocks and indices. They provide forex trading platforms for retail traders which allows traders to get in and start trading foreign currencies using actual live price data. Most brokers design their platforms such that they can be accessed either via a desktop or a mobile device.
It is worth noting that the foreign exchange market is not one homogenous whole. Different brokers choose which currency pairs they will allow to be traded from their platforms. Most brokers will cater for the major pairs like EUR/USD and GBP/EUR, for instance, but some brokers may not cater for certain minor or exotic pairs. If you are interested in trading one particular asset, it’s always worth checking first that the broker does indeed cater for that particular asset.
How To Choose The Best Forex Broker
Most traders would agree that you need to see trading as a business. As such, you need to put the work in and always ensure that you are maximising your returns by getting the best possible value for your money, especially when it comes to which broker to choose. The amount you pay in spreads and fees can mean the difference between being profitable or losing but choosing the right broker is about more than just money. In this section, we’ll highlight some of the things that you should look out for when you are searching for the top 8 forex brokers in the world.
1. Is the broker regulated and by whom?
If you live in the United Kingdom or the United States, you can be reasonably sure the broker is regulated unless it’s an out and out scam of some kind. The reason being all brokers in the United Kingdom are regulated by the Financial Conduct Authority and all brokers in the United States are regulated by the Commodities and Futures Trading Commission. If you live elsewhere, or your chosen broker is located elsewhere, you need to check first that they are regulated and then who they are regulated by.
2. Assuming the broker is regulated, how safe are your funds?
Most regulators require the broker to use segregated accounts for clients’ funds, meaning the money is ringfenced and can’t be used by the broker elsewhere. Always read the brokers terms and conditions.
3. What is the broker’s reputation like?
A lot of traders are easily wooed by the promise of low spreads and sleek platforms that they forget to do the necessary research into the broker’s reputation. Before you sign up with any broker, you should always do a bit of investigating to see other people’s experience of the broker. What is the platform like to actually use? How smooth is the depositing and withdrawal processes? What is the customer support team like?
4. Is there a demo account available?
Most brokers offer demo accounts so that their clients can familiarise themselves with the platform before taking any real money trades. This is particularly useful to new traders who may not be used to using certain indicators, entering positions, setting stop losses and so on. The other great thing about a demo account is that it gives you the chance to see if you actually like the broker’s platform before depositing any real money there. If you do, great. If not, you can move on and try another broker’s demo account to see if that suits you better.
5. A Word On Fees
The fees involved in forex are relatively easy to understand. Forex brokers earn their commission from the spread, the difference between the bid price and the ask price. There are also overnight financing fees if you are using leverage and leave your positions open overnight.
It is easy to assume that these fees are just nominal amounts and that all brokers charge pretty much the same. They do not! The size of the spread is influenced by a number of factors but, ultimately, it is up to each individual broker how wide their spread is on any given pair. It may not seem like a big deal but choosing a broker with reasonable-sized spreads can mean the difference between making a profit or not in forex.
An easy way to compare the spreads on offer is to pick three or four currency pairs you are interested in trading and compare the size of the spreads with different brokers. The disparity may shock you.
6. The Top 8 Forex Brokers In The World
So, in no particular order and with all the above in mind, here’s our list of the top 8 forex brokers in the world.
IG were founded back in 1974, so they’ve been in the game a long time and they know what they are doing. They started out as the world’s first spread betting firm and, indeed, still offer spread betting. Today, however they also offer a range of other products and services.
Like IG, City Index has been around a long time, since 1983 in fact. They are part of GAIN capital and headquartered in London but have offices all over the world. They offer an extensive range of products to trade from, competitive spreads and sleek platform experiences. They have their own proprietary platforms, yes plural! You can trade from your desktop through their ATP Pro or via a browser through their Web Trader platform. They also have a MetaTrader platform but it only includes a limited product range compared to the other two.
FXCM are mere youngsters compared to the first two brokers in our list, not founded until 1999. However, they have quickly established themselves as one of the top 10 forex brokers in the world today. The best thing about FXCM is the sheer amount of trading styles they cater for. It doesn’t matter what your trading style, FXCM has the trading tools to find what you are looking for. The platform is simple to use and the customer support is great. What more can you ask for?
What we like about CMC markets is the professional feel to it. They were founded back in 1989 and, like a lot of the brokers on our list, they have grown into a truly global business. There are many tradable instruments to choose from, reasonable spreads that are often lower than the industry average and a number of innovative tools to help you make the best trading decisions possible. The CMC Markets Next Generation platform is a nice platform to trade from with a fantastic range of assets and tools to choose from.
Not to be confused with FXCM, FXTM stands for Forex Time and is one of the youngest companies on our list, only being founded in 2011. Don’t let that put you off though. FXTM are fast proving themselves to be one of the top 10 forex brokers in the world. One of the reasons for their success is that, unlike other brokers who offer multiple trading opportunities across a range of different assets, FXTM choose to focus on foreign exchange. They have CFDs available for over fifty currency pairs that includes major, minor and exotic pairs.
FxPro was founded in 2006 and is well established among forex traders. FxPro do have their own proprietary platform called FxPro Edge but they also use MetaTrader, so it is a platform that will be instantly recognisable to anyone who has used MetaTrader. FxPro are not the most competitive in terms of their pricing compared to the rest of the brokers on our list but they have a really good customer support team and offer a wide range of currency pairs.
eToro brands itself as the social trading platform. It was founded back in 2006 and has been steadily growing ever since. It is more of an investment platform instead of a trading platform but it offers such a fantastic user experience that we had to include it. The spreads are not the most competitive and some of the fees involved are a bit confusing to understand, so it’s not the best platform to trade currency from, particularly when scalping or swing trading. However, it is highly popular and there are lots of like-minded people there and lots of information and education that you can glean to make you a better trader.
Plus 500 were founded in 2008 and offer a range of financial services and products. For those wishing to trade the foreign exchange markets, they are a big, well-known name where you can feel secure trading. Their platform is easy to use and they also have an excellent mobile platform. On the downside, compared to the other brokers in this list, the amount of tools and resources they have on offer is fairly limited. Whilst that might be a good thing for new traders so they don’t become overwhelmed it can hold you back a bit as an experienced trader looking to drill down a bit.