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The best Forex brokers tested – the big comparison!

The best Forex brokers in Broker-Review.co.uk’s big comparison review. We’ll help you to find the best broker for your forex trading. Our comparison table shows all important criteria for each broker. In the detailed reviews you will learn about the special features of each broker.

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Ranking – Forex Broker



RankingBrokerRegulatorMax LeverageSpreadsAssetsMin. DepositMax. BonusDemo AccountMobileLanguageReview
1.
MiFID400:11,0 Pipsca. 200£250100%
2.CySec400:11,2 Pipsca. 110£10010%
3.FCA400:10,7 Pipsca. 100£100-
4.FCA
200:10,8 Pipsca. 75£215-
5.CySec200:13,0 Pips40£100-
6.CySec200:13,0 Pipsca. 50£100100%
7.FCA400:10,8 Pipsca. 125£2002-4%
8.CySec200:13,0 Pipsca. 50£100-
9.CySec294:12,0 Pipsca. 2000£10030%
10.CySec400:11,8 Pipsca. 100£25050€
Neukundenbonus
11.BaFin200:10,5 Pipsca. 80£4.00050€
12.CySec
400:13,0 Pipsca. 100£10025€
13.CySec-
Immer 100% des Trades
-
Selbstbestimmbar
ca. 100£100-
14.
FCA
500:10,1 Pipsca. 320£25010%
15.BaFin
40:10,2 Pipsca. 1 Mio. £2.000-
16.CySec400:13,0 Pipsca. 70£20015%

What is Forex Trading?

Even for most trading beginners, the term Forex should now mean something. What exactly is behind this term and how the Forex works, most newcomers do not know exactly. This is why we want to clarify and explain in the following guide exactly what is behind the term Forex and how the Forex trade works in practice. Forex, also called the foreign exchange market, is the world’s most important financial market. With an average daily turnover of more than $4 trillion, the Foreign Exchange Market is also the largest global financial market. Forex trades mainly between individual market participants. This is why foreign exchange trading is also referred to as an over-the-counter (OTC). The trading partners conduct exchange transactions with various international currencies.

Lucrative trade in foreign exchange

Quite simply, the Forex trading can also be called buying and selling a currency of a particular country using a currency from another country. Currency, or foreign exchange, is always traded in pairs. Among the most popular are Euro against British Pound, Dollar against Japanese Yen and Dollar against Euro. The most traded currency pair in forex trading is euro against US dollars. The exchange rate is directly dependent on supply and demand. Demand is determined, for example, by the economic or political situation of a country, the level of interest rates or, of course, by tourism. A forex trader will make profit if the price of a particular currency in comparison with the price of another currency behaves as the trader has expected beforehand. If, for example, the trader expects the price of euro to rise against the US dollar, he will enter a so-called long position. On the other hand, the trader assumes a short position if he expects that the price of the euro against the US dollar drops. This can generate a forex trader profits in both rising and falling price trends.

Market participants and trading hours

First and foremost, beginners are often wondering which market players are responsible for the extremely high sales of Forex trading. The major credit institutions as well as well-known industrial and trading companies are among the “big players”. Other participants include medium and smaller banks, trading companies and end users. The central banks also exert a great influence on currency trading. As a result of their monetary policy measures, they can strongly influence the exchange rates between the individual currencies.
Because of its time flexibility, Forex trading is suitable for every investor. Compared to fixed trading hours on the stock market, Forex traders can trade almost around the clock. The currencies can be traded without interruption from Sunday evening at 22:00 until Friday evening at 23:00. The electronic trading systems are therefore not bound to any fixed opening hours of the stock exchanges. The trade would also be possible at the weekend but as at this time most institutional market participants (banks, insurance companies and companies) are not active, a very high market volume is being missed during the weekend. Because trade takes place directly between the traders, exchange is carried out in real-time without interruption.

High returns and losses

In Forex trading also a leverage can be used to take action. This means that the trader with low capital investment, which is in the form of a deposit with a corresponding Forex provider (broker) is deposited, can move substantially higher trading volume. Through a high leverage ratio, the trader can also generate profits that are many times higher than an invested capital. The same also applies to losses. With a leverage ratio of 1: 100, it is sufficient to deposit one percent as a margin with the broker. Up to a total of 100 percent, the trader can generate profits and, of course, losses. If the loss is higher than the existing capital on the trading account of the trader, the broker is prompted to call up further capital.
The currency market is a very dynamic market and enjoys huge popularity. Forex Trading sums of up to $ 5 trillion in daily turnover. The currency exchange takes place directly between individual market participants. Traders can rely on both falling and rising currency rates. Due to the strong price fluctuations and thanks to the leverage, very high returns are possible on the one hand. On the other hand, however, high losses are possible as well as high returns. In some cases, the losses even exceed the capital of the traders. This usually happens at a high leverage ratio. The prices of currencies are dependent on supply and demand. They are based on real events such as political, social and economic factors. Due to the flexible trading hours and the low stakes, the Forex trading is also lucrative for individuals as well as smaller investors.

How does the Forex trade work?

More and more private traders are entering the Forex trade and there are several good reasons for this. On the one hand, the trader can take part in trading with a relatively small capital investment. On the other hand, the trading volume can be scaled almost infinitely. Therefore, both trading positions, the one of several thousand euros and the one of several million are possible without problems. Forex traders must always use only a fraction of the trading volume of their own capital. On the other hand, this also entails major risks.

Foreign exchange rates and currency pairs

The foreign exchange rates are always stated in currency pairs. Each single currency in a currency pair is identified by the unique 3-digit currency code. Examples: British pound against US dollar (GBP / USD) and US dollar against Japanese yen (USD / JPY). Beginners who want to start trading with Forex should definitely know the most important currency pairs and their names. The first currency of a currency pair is referred to as a base currency or as a primary currency. The second currency of the pair is called counter currency or quote currency. The exchange rate specifies in detail how much is needed of the counter currency so that a single unit can be purchased from the base currency. For example, if the trader sees GBP / USD with a currency exchange rate of 1.63750, it means the British pound is worth exactly 1.63750 US dollars. If a trader wants to sell a British pound, he gets 1,63750 US dollar. The difference between the base rate and the counter currency is referred to as a spread in the Forex trade. The size of the spread depends primarily on the currently existing liquidity. While the spreads are somewhat wider in low-trading times, they are tightening again with increasing liquidity.

A practical trading example

Due to the current developments a trader believes that the British pound (GBP) against the Australian dollar (AUD) rises. He thus decides to acquire 10,000 GBP / AUD at the rate of 1.41703. This costs the trader exactly 14.1703 AUD. Now the trader waits a few weeks off and after that the current course at that point is 1.52703. This means that the 10,000 GBP purchased by the trader are now of course worth more. The trader decides to take the win, and exchanges his British pounds back into Australian dollars. In this example, the Forex trader would make a profit of $ 1,100. This practical trading example is intended primarily to show beginners how Forex trading works in practice. Forex traders can either buy (go long) or sell (go short). The trade can be done quickly and also cost-effectively. Especially lucrative currency pairs that promise the greatest profit can be found over the currency charts. Foreign exchange with high volatility is subject to strong fluctuations and has larger trading margins. Trading with such pairs of currencies traders can make a higher profit than with low-volatility pairs of foreign exchange.

What do you need to trade with Forex?

Due to its simplicity, Forex trading is extremely popular with beginners. Traders who want to start trading with Forex must meet very few requirements. Existing experience with financial instruments is an advantage, but it’s not essential. The trader must have only one computer or a mobile device with an Internet connection. Furthermore, he needs a suitable Forex broker. This broker provides the trader with a suitable trading platform. Depending on the provider, either web-based solutions or software platforms which must be installed on the computer, is used. Depending on the broker, the trading platform has many different functions and plays a central role in the Forex trade. The trading platform must provide the trader with all the important information about currency exchange rates. These are displayed clearly in the form of graphics. Based on the information displayed, the trader now makes his / her decisions.

Also suitable for beginners

The Forex trading is suitable for newcomers, advanced and, of course, for professional traders. Beginners should of course use a different trading strategy than the experienced traders. The first losses shock most newcomers and scare them off. As with all other types of trading, losses are normal in the Forex trade as well. Mostly there are no winnings without a few losses at the beginning. Beginners should therefore not be discouraged immediately after the first lossy trades. Through a reliable risk management, the Forex traders can include and minimize any loss. Most beginners do not initially speculate with real money and only practice with a virtual trading account. This is another advantage in Forex trading, as most brokers provide traders with a free demo account without any risk. With this, the novice can practice quietly and get to know the exact way how the Forex Trading works.

What is tradable in Forex Trading?

The most frequently traded currency pair in the world is certainly EUR / USD (Euro and US Dollar). Compared to the other currency pairs, the liquidity of currency pairs with an investment of US dollars or Euros is the highest. In Forex trading, the currencies of GBP (British Pound), CHF (Swiss francs), AUD (Australian Dollars), CAD (Canadian Dollars) and JPY (Japanese Yen) are most often traded in a combination of US Dollar and Euro.

The overview of the major currencies

In general, the Forex trade distinguishes between the major and the minor currency pairs (also called exotics). Trade with majors is clearly decisive. Around 67 percent of all foreign currency sales are made with major currency pairs. The US dollar is involved in all popular currency pairs. This immediately shows that the American dollar is still the most important currency in the world. The most popular major currency pairs are traded on the international foreign exchange market mainly against the US dollar as a base currency or as a counter currency. In Forex trading, it is usually the case that some of the major currency pairs often tend to move in the same direction. This is especially true for the couples Euro / US Dollar, GBP / US Dollar, AUD / US Dollar and NZD / US Dollar. In the case of Forex Trading, it is generally possible to trade both major and minor currency pairs as well as crossed variants. If one compares the possible gains in the trade with majors with the possible gains in trading with exotics, the returns for the minors are usually much lower. Nevertheless, the exotic currency pairs have an advantage over the major currencies – they have a fairly well-calculated monetary stability. For this reason, many Forex traders also rely on the Minors. In addition, the exotics are also suitable to draw a conclusion to the Major.

The Exotic currencies can also be traded

The Exotic Currency Pairs are not usually traded against the popular currency of dollar. In addition to the key US currency, the Euro and the Japanese yen are among the most important foreign exchange market currencies. This is mainly due to the fact that the euro and the yen are held as currency reserves by many different nations. For this reason, a large number of Yen and Euro pairs are traded at very high volumes. The most popular currency pairs are: EUR / JPY, EUR / GBP, EUR / CHF and GBP / JPY. Compared to the major currency combinations, the exotic combinations have much lower liquidity. The exotics may therefore be more risky or more difficult to act upon. Exotic currency pairs include CAD / CHF, GBP / CHF and AUD / NZD. Traders are supposed to watch the exotics regularly. Based on the relative strength of the exotics, the traders can get important insights for major trading. If a trader asks whether to buy either NZD / USD or AUD / USD, then he should take a look at the currency swap of AUD / NZD. If the Australian Dollar falls against the New Zealand dollar due to a sideways movement, the NZD / USD pair is the better option to purchase because of its relative strength compared to AUD / USD.

Trading in currencies

When dealing with the Forex currency pairs, the demand for the traded currencies plays an important role. The traders are influencing the price difference between the currencies. On average, around 160 different currencies are available to the traders. The available Forex currency pairs also depend on the broker’s offer. Not every pair of currencies can be traded at any given time, so the traders have to keep track of the market on a regular basis. A long-term price change of a particular currency is easier to track than a short-term price change. In the case of short-term fluctuations, the profit-making prediction for buying or selling is somewhat more difficult. While long-term price fluctuations are usually caused by economic partnerships or political decisions, short-term price changes depend on many different factors. For a risk trader, both major and minor currency pairs are suitable, each with foreseeable price fluctuations. Inexperienced beginners should first refrain from trading with exotic currency pairs.

Forex traders benefit from some advantages

Those who choose to trade with pairs of currencies benefit from many advantages compared to trading in classic financial instruments. Because of its size, the Forex market is extremely liquid and is not tied to any fixed opening hours. Gaps (larger share gaps) therefore appear much less than in the case of stock trading. The major currency pairs are characterized by very high volatility. Short-term traders thus profit from greater price movements in shorter periods. Even without current market-influencing news, the major currency pairs tend to move in a pronounced trend. This allows nearly every dealer to trade with profit. Forex traders are very flexible and can act almost at any time of the day or at night. In the Forex market there are almost no limits regarding the trading volume. This allows the traders to decide for a customized order volume. The Forex market is suitable for both professional traders with a trade account in millions and beginners with a smaller trade accounts.

Things to be considered regarding the Forex trading?

Beginners who want to start trading with the Forex trade should look at the topic carefully. Forex trading is not as complex as trading with classic financial instruments, but a few important definitions and terms should be known. Within a short time, newcomers can familiarize themselves with the most important functions, trading instruments and strategies. The most important definitions for Forex trading are definitely pips and lots.

Definition and Function of Pip & Lot

The foreign exchange rates are indicated with up to 4 digits behind the comma and are therefore very precise. The so-called pips is the smallest unit tradable by the traders. For example, if the popular Euro / US dollar pair has a price of 1.2630 and then falls to 1.260, then it is referred to as a share price loss of 30 pips. Pips are not only the official unit for price changes in the Forex trading, they are also used for other issues. Many of the Forex brokers, for example, list their spreads in pips. The absolute performance of various trading systems is also measured in pips. In addition, it is usually also the case that both profits and losses are given in this unit of measurement – pips. Normally, a pip is always the fourth decimal place with regard to the price movements in the Forex trade. This applies to all currency pairs except for one. For the currency pair USD / JPY, the second decimal place already counts as a pip. This is due to the fact that the Japanese yen will only be given 2 decimal places.
In addition to the official unit of measurement Pip, there is another important unit in Forex Trading. The value of a pip always depends on the respective position size. The position size in the Forex trading is measured in lots. This item size always comprises 100,000 units of a specific currency. In the above example of the Euro / US dollar pair, this would be 100,000 euros. Some brokers offer the traders besides the lots also the trade with the mini lots. The mini lots correspond to 10,000 units of a certain base currency. In addition, there are the micro-lots, which correspond to 1,000 units of the currency.

What is behind the Forex Arbitrage?

The arbitrage trade is not limited to the Forex market and is also used in other trading instruments. In the case of arbitrage, the market participant attempts to exploit the minimal and short-term price inefficiencies effectively in order to achieve a risk-free profit. Traders with this particular trading strategy are also referred to as arbitrageurs. These market participants also contribute to the efficient formation of market prices. There is an important condition for arbitrage trading: traders must be able to place several orders in one market without a broker spread. For this reason, private investors can also implement the Forex arbitrage almost exclusively with ECN brokers. These providers allow traders to place several orders directly into the order book. Arbitrage is one of the most popular trading strategies by some traders. The so-called arbitrageurs exploit the temporal and spatial price differences of different exchange rates on the different foreign exchange markets and generate profits with this strategy.

Forex Leverage – Functionality and Special Features

The use of large financial leverage is one of the most attractive features of Forex trading. By means of such a leverage, traders can achieve very high profits in a short time despite manageable bets. Of course, the leverage also carries considerable risk that the traders should know about before using a Forex leverage.
For example, if an investor borrows $ 100,000 and deposits this money in euros, this is equivalent to a lot. Neither a bank nor a broker will allow an investor such a high amount without equivalent security. For this reason, a so-called margin is levied and its amount varies from broker to broker. If a vendor requires a margin of one percent, the investor must deposit a total of 1,000 euros for his position size from one lot. For this purpose, this amount will be blocked as security on the Forex account of the investor. The Forex leverage is thus the reciprocal of the margin requirement. In the above example, the margin exactly corresponds to a leverage of 100. If the trader is correct with his market assessment, then he can achieve a hundredfold yield in this case. Of course, a Forex leverage can also work in the opposite direction. In such a case, the investor will not only lose all his invested capital. If he can not completely cover the loss with his existing capital, there is a margin call by the broker. Through this, the broker asks the investor to pursue new capital. If the trader is unable to meet his margin requirement in the short term, the position is not closed.
The Forex leverage offers high profit as well as high losses. The possible losses can even go far beyond the respective application and cause a total loss. So to deal with a high volume with a smaller financial commitment, traders can also get a sort of loan from the brokers. However, this is only granted if the trader places the required margin performance.

How to find the right Forex provider?

Before a trader can start trading at all, he has to make a very important decision. Without a suitable Forex broker, trading on the foreign exchange market is not possible at all. Beginners as well as volunteers benefit from a very large selection of providers. The individual brokers fight very hard for the favor of new customers and lure them with great offers. While experienced traders are certainly aware of the criteria they need to consider when choosing a broker, for a beginner that is much more difficult.

Amount of spreads

For beginners, providers who work with the market maker model are especially relevant. These brokers offer the traders fixed spreads and thus they can be compared excellently with one another. The spread is, apart from the financing costs (levied for holding a position overnight), the most important cost factor in the Forex trading. In terms of low trading costs, traders should pay attention to a broker with the lowest possible spread. The minimum spread for currency pairs AUD / USD, EUR / USD and USD / JPY is 0.8. For pairs EUR / GBP and GBP / USB a minimum spread of 1 is charged.

Minimum deposit and leverage

The individual brokers also differ regarding the amount of the minimum deposit. For beginners, the lowest possible amount is of course an advantage. There are brokers with minimum deposit set as low as 50 Euro. The higher the leverage for Forex trading, the less trader needs. At a leverage ratio of 1: 100, the trader needs only 1 percent of its own capital. At 100 euros he can trade a mini-lot of 10,000 euros. Some brokers offer their customers a very high leverage of up to 1: 400. More aggressive traders benefit most from the highest possible leverage ratio.

Trading software and trading tools

A suitable Forex software is essential and definitely belongs to the most important decision-making criteria in the broker’s choice. The software should be clear, easy to use, and easy to learn. Apart from its actual function as a trading instrument, the software also provides traders with many useful features, such as chart tools, order masks, and indicators. These should also be scrutinized before a decision is taken. With some brokers, traders can also create a risk-free test account. With this a trader can get to know the Forex software of the broker in detail.

Bonuses and extras

Due to the popularity of Forex trading, there are a lot of different brokers now. The individual providers struggle bitterly to lure new customers so they attract them with bonuses and other advantages. In the choice of broker, however, beginners should nevertheless pay attention first to the most important quality criteria. Only then the bonus offers should be considered. Most popular are the financial bonuses on deposits and the VIP programs that provides traders with improved trade conditions for a certain trading volume or additional functions for example. With regard to bonuses and extras, the traders should always compare the bonus conditions.

The Broker Comparison

Many beginners, of course, do not know the crucial criteria that must be taken into account when choosing a broker. Even if they inform themselves and familiarize themselves with the criteria, they have to take a close look at each individual provider. The traders need a lot of time for the high research effort. For this reason, we provide our carefully researched broker comparison to beginners and intermediate traders. On the basis of a very detailed and time-intensive research, we examined all current providers and compared them closely. People who are interested in the Forex trade can find all the important details about the different providers and do not have to search half the Internet. In our broker comparison, we take account of all important decision-making criteria. Each user can sort the comparison according to specific criteria and finds a suitable broker in a short time.