Best FOREX Brokers for Beginners In 2024

Best FOREX Brokers for Beginners in 2024:

• ICM - Capital 91.10: Best Deposit and Withdrawal Broker

• Tradeview: 90.00: Trusted broker that offers very low trading costs as well as comprehensive financial literacy materials for its clients.

• XTB - 85.55: Best Customer Service Broker

• IG - 85.45: Best Regulations Broker plus Convenient Platform

• Saxo Bank - 80.09: Excellent Private Trading Platform

• CMC Markets - 80.07: More than 9,000 Assets

• ThinkMarkets - 80.05: Aimed at the Audience of Traders

What Is FOREX and Why Do We Need a Broker?

The FOREX market is the largest global financial marketplace. It is a hive of transactions powered by institutional buyers and sellers operating from all over the globe. Beginner traders like you play a small-but-important role in this worldwide marketplace. The FOREX market operates 24 hours a day and five days a week (Monday through Friday), except for international holidays. Brokerage firms give the average retail trader access to this market as they enable clients like you to buy and sell through a trading platform. There are so many other things FOREX brokers for beginners can do, like offer you leverage and provide you with educational resources. We'll explain more in the article. 

How to Open a FOREX Trading Account and Start Trading FOREX

Why Regulation and Licensing is Important

Ensure that your chosen broker is regulated by a reputable authority. FOREX brokers must be regulated by the same regulators who oversee other financial assets such as crypto, commodities, and indices. If you want to read more about some of the best-regarded regulators, read our article on regulation here. Remember that you do not have to use a broker with international regulation if your broker is regulated by a good local regulator.

How to Start Learning about FOREX Trading

So, are you eager to get trading?  Not so fast. Although this is not the primary aim of this article, we will let you know about the most important terms you will encounter as your trading journey with some of the best FOREX trading apps for beginners unfolds:

Pips 

In FOREX trading, a pip is a unit of measurement for the change in value of a currency pair. It stands for “percentage in point” or “price interest point.” A pip is typically the fourth decimal place in a currency pair and is a measure of how much the value between two currencies changes. It might seem confusing at first. We'll explain later in the article when we talk about spreads.

Lot

In FOREX trading, the term “lot” refers to the standard size of a trade. It is the unit of measurement used to describe the volume or size of a FOREX trade. There are three main types of lots in FOREX trading: standard lot, mini lot, and micro lot. Be prepared to use the term, "I would like to buy three lots," or some variation of it.

Position

A position size in FOREX trading refers to the number of lots or units of a particular currency pair that a trader buys or sells in a trade. Position size is an important aspect of FOREX trading as it directly affects the potential risk and reward of a trade.

Spread

In FOREX trading, a spread refers to the difference between the bid price and the ask price of a currency pair. The bid price is the price at which a trader can sell a currency, while the ask price is the price at which a trader can buy a currency. The spread is expressed in pips, as we have mentioned.

Japanese Candlestick patterns 

Japanese candlesticks, or simply “candles,” are a popular type of chart used in FOREX trading to represent price movements of a currency pair over time. A candlestick chart consists of individual candlesticks that each represent a specific timeframe, such as a minute, an hour, a day, or a week.

Each candlestick on the chart provides information on the opening, closing, high and low prices of the currency pair during that timeframe. The body of the candlestick represents the range between the opening and closing prices, while the wicks, or shadows, represent the high and low prices during that period. We've written a detailed article on Japanese candlestick patterns here.
Technical and Fundamental Analysis

Technical analysis is the study of historical price and volume data to identify patterns, trends, and potential future price movements. Technical analysts use various tools and indicators, such as chart patterns, moving averages and oscillators, to analyze market data and make trading decisions. You'll get the hang of this as you gain more experience.

Fundamental analysis, on the other hand, involves analyzing economic, financial, and political factors that may influence the value of a currency or other financial instrument. This may include reading news articles to analyze such factors as interest rates, GDP, inflation, political stability, and global events that may impact the economy.

Margin Trading

Margin trading in FOREX refers to the practice of borrowing funds from a broker to trade a larger position than a trader could with their own funds. This allows traders to take advantage of market movements and potentially generate greater profits. We'll tell you more about this later in the article.

What You Need to Know About Leverage and Stop Outs

Leverage

Leverage, in simple terms, is when your broker allows you to put more money on the line by lending you some of theirs. In some jurisdictions, brokers can give you leverage as high as 500:1. This is great when you are winning but it is dangerous when you lose. Different regulators have different guiding policies on leverage. Key regulators have implemented specific rules to limit the leverage offered to retail traders as a means of consumer protection.

Here are selected leverage rules for CFDs according to some key regulators:

European Securities and Markets Authority (ESMA), Europe

ESMA caps the leverage for major pairs in FOREX trading CFDs at 30:1. This means that traders need to have a minimum of 5% margin of the total trade value.

Commodity Futures Trading Commission (CFTC), US

In the United States, CFD trading isn't permitted for retail traders. However, for related products, like futures, there are specific margin requirements set by exchanges and overseen by the CFTC.

Australian Securities and Investments Commission (ASIC), Australia

ASIC has recently implemented rules capping the leverage for CFDs for retail traders at 30:1, aligning with ESMA's restrictions.

Financial Conduct Authority (FCA), UK

The FCA has adopted rules similar to ESMA, capping leverage for CFDs at 30:1 for retail traders.

As we can see, responsible regulators closely monitor leverage levels. Leverage is a double-edged sword because you can make a lot of money, but you can just as easily become financially ruined!

Stop Out

The term "stop out" refers to a situation where a broker automatically closes some or all of your open positions to prevent your account from going into a negative balance. This is most relevant for traders using leverage. This mechanism protects you from accruing negative balances and owing money to the broker. Make no mistake, if you are at stop out stage, things have gone badly with your trading! It's something to be avoided.
The stop-out level is typically expressed as a percentage, representing the margin level at which the broker starts to close out open trades.

0% Stop Out Level:

At this level, when the margin level of the account drops to 0%, the broker will automatically close all open positions. This is the most aggressive stop out level. Essentially, as soon as the equity in the account equals the required margin, the positions get liquidated. This gives no room for your positions to recover even if the market turns in your favor immediately after reaching this level.

50% Stop Out Level:

Here, if the margin level drops to 50%, the broker will start closing out positions.

It offers a bit more flexibility compared to the 0% level. The broker will typically close the most unprofitable positions first, and if that's not enough to bring the margin level back above 50%, more positions will be closed until it's achieved.

100% Stop Out Level:

A 100% stop out level means that when a trader's equity equals the margin required for the open positions, the broker will start closing those positions. It’s important to know that this is similar to the 0% level but might be worded differently based on broker terminology.

In any case, the specific percentage and the order in which positions are closed can vary among brokers, so it's essential for traders to be aware of their broker's policy on stop out levels.

It's worth noting that while stop out procedures are meant to protect traders from negative balances, they can lead to significant losses in volatile markets if positions are closed automatically, especially if the market quickly reverses after the stop out. As such, using protective measures like stop-loss orders and not over-leveraging is always a good ploy.

How Much Money Do You Need to Trade FOREX?

Which Currency Pair Should You Start Trading With?

How to Choose the Best FOREX Broker for Beginners

Commissions and Fees

Trading fees can sometimes be difficult to track. Be sure to check how these fees compare with industry standards.
Spreads: There are two main kinds of spread, one is fixed and the other is variable. The spread refers to the difference or gap between two prices, such as the bid/ask rate in a currency exchange rate. An example of a good spread is 1.4 pips for the EUR/USD (the narrower the better, this means that a spread of 1.4 pips is better than a spread of 2 pips). This article explains more about this important concept.
Commission: This is nothing more than the service charge that brokers require for carrying out transactions on behalf of their clients.
Rollover Fees: When you leave a trade open overnight, the broker normally charges a rollover fee for the facility of holding your trade open for that period. This is because they assume the risk of the market changing adversely.
Withdrawal and Deposit Fees: Some platforms might charge fees for depositing or withdrawing funds. Pay attention to this. It's important to be aware of these and any associated limits or conditions.
Subscription or Inactivity Fees: Certain platforms have monthly charges or fees for inactive accounts. Ensure you're aware of these potential costs.

Tradable Assets and Instruments

• FOREX: With the largest trading volume globally, the FOREX market allows you to speculate on the future movements of currency prices, trading pairs like EUR/USD, GBP/JPY, and many more.
• Equities or Stocks: These represent ownership in a company and constitute one of the most popular avenues for retail traders, given their potential for substantial returns and the thrill of being a part of the corporate world.
• Commodities: Whether it's precious metals like gold and silver, or energy commodities like oil and natural gas, commodities trading offers a chance to profit from the tangible assets that drive global economies.
• Indices: This is another exciting opportunity. These are baskets of stocks representing a particular market or sector, like the S&P 500 or the Nasdaq, giving you exposure to broader market movements. 
• Cryptocurrencies: The relatively new kids on the block have garnered immense attention. Even the best FOREX trading apps for beginners should ideally offer you digital coins like Bitcoin, Ethereum, and countless altcoins for when you are ready to diversify to a new type of asset.
• Bonds: These assets are best for those interested in fixed returns. They are debt securities that offer periodic interest to holders and return the principal amount at maturity. 
• Options and Futures: These derivative products allow traders to hedge against potential losses or speculate on price movements without owning the underlying asset.

FOREX Trading Customer Service

Trading Platforms, Tools, and Features

When choosing the best FOREX trading platform for beginners, you should consider an array of features that cater to both novice and seasoned traders alike. In our experience, MT4 has become a staple in the online trading world for its user-friendliness, speed of execution and advanced tools. This platform has been around for many years, first created as a FOREX-only trading platform that has since been expanded to offer other instruments like stocks, indices, and commodities. In any event, whether you choose a broker with MT4, or your broker uses another platform, these are the elements of which you need to be aware:

• Platform Accessibility is the first consideration. Whether it's web-based or a downloadable application, a top-notch trading platform should offer flexibility in terms of access.

• Customization and User Interface. It's vital for traders to mold the platform according to their preferences, allowing them to set up their trading environment precisely how they want. This customization extends to 

• Technical Analysis Tools. The platform should be equipped with robust technical indicators to aid traders in making informed decisions.

• Risk Management Tools are another pivotal aspect. Trading inherently comes with risks, and a high-quality platform should provide instruments that allow traders to set stop-losses, take-profits, and other crucial order types. For those new to the trading world, 

• Performance and Reliability cannot be overlooked. Beginner traders especially need a platform that operates seamlessly with minimal downtimes or glitches. This ensures a smooth trading journey, allowing them to focus on market movements rather than technical hiccups.

• Learning and Support. This element is essential. The best brokers will offer platforms that are not only intuitive but also come with tutorials, guides, and responsive customer support to assist traders.

Is FOREX Trading Profitable?

How to Avoid Scam FOREX Brokers

The best way to avoid being scammed is to check that the broker you are using is regulated by a trustworthy regulator. Any broker regulated by a tier-1 regulator has had to undergo a stringent vetting of its operations.

Most scams involve criminals offering deals that are too good to be true. If the offer is scarcely believable, and the broker is putting you under pressure to trade, this is very suspicious. Other scams involve criminals creating a clone FOREX broker Website with basic functionality to dupe novice investors into thinking they are trading with a legitimate entity. Novice investors are lured to these Websites on the promise of quick wins and handsome profits. That's why the first thing you should ask your broker is, "Who are you regulated by?", quickly followed by, "Do you offer a compensation scheme if you go bust?" The sales agent should be able to answer these questions quickly and convincingly. Even then you should still do your own research.

Who is Arincen and What Do We Do?

The Bottom Line

Methodology

The team at Arincen collected more than 120 pieces of data covering more than 100 licensed FOREX companies. Data collection was done in three ways:

1. Companies’ Websites.

2. Other Websites that have ranked FOREX companies.

3. A survey questionnaire (referred to here as Survey “1”) was sent to the companies invited to participate in the exercise.

We have identified 12 criteria for our assessment, each containing several aspects and carrying its relative weight. These include licensing, deposits and withdrawals, number of assets etc.  

Afterwards, we validated the data by:

1. Registering with FOREX companies as a secret shopper and/or as Arincen.

2. Survey number “2,” in which we asked these companies’ customers for important feedback and experience. 

The next step saw us evaluate and rank each company, relying on the hard work of 15 Arincen employees. We were careful in ensuring the most accurate assessment possible, including considering different languages, as well as the various mobile-app operating systems, e.g., Apple, Samsung etc.

To add credibility to our research project, we sent a final and third survey (referred to here as Survey “3”) to enable participating FOREX companies to evaluate our research and whether it accurately reflects the realities on the ground. We were fortunate enough to receive a mark of 9.9 out of 10! We have kept to a minimum the margin of error, which stood at a measly 1%. To learn more about how we came up with the evaluation, please click here.