Types of Forex Brokers
Finding the right Forex broker can be a very tough job. There is so much choice! There are hundreds of brokers to choose from all around the world. How do you know which ones you can trust and will offer you not only a good customer service, but also the trading conditions which are best suited to your requirements? You also, above all, always want to make sure that your deposit is safe, and that you can get your money back as soon as you ever want to ask for it.
Our Forex broker reviews are designed to help you make an informed, independent decision about which broker will best suit your needs. We’ve performed in-depth research on the top Forex brokers and compiled our findings into these comprehensive Forex brokers reviews. We have broken the information down into several easy-to-read and understand measurement metrics for ease of use, in addition to the detailed textual summaries.
In addition to offering a quick overview of each broker, we evaluated critical elements of over 100 Forex brokers. We compared the minimum deposit, trading platform, features, ease of use and customer service of each broker in-house, to provide you with a complete understanding of what you’ll get if you choose a specific broker. Underneath each broker review you can also find feedback from real customers, so that in addition to reading about our experiences, you can hear from other traders about their own trading experiences.
Why spend time researching and testing Forex brokers when we’ve already done the hard part for you? Before deciding to deposit your funds with any Forex broker, please ask yourself whether your deposit is safe. Ask yourself about the regulatory body which oversees the broker, and the reputation of the jurisdiction where the broker is truly located, not just the place where the sales office is based. It also doesn’t hurt to do a quick google search to see if a broker has been involved in any scandals or legal problems recently, although you must be careful here as some unscrupulous websites publish fake stories.
CFD Trading Brokers
Our Forex broker reviews are designed to help you make an informed, independent decision about which broker will best suit your needs. We’ve performed in-depth research on the top Forex brokers and compiled our findings into these comprehensive Forex brokers reviews.
A CFD, or Contract for Difference, is an agreement between two parties to exchange the difference between the opening price and closing price of a contract. CFDs are technically derivatives products that allow traders to trade on live market price movements without actually owning the underlying instrument on which the contract is based. In addition, there are no associated costs of physical ownership such as account management fees and stamp duty, as well as other advantages. This also means that traders can sell the product and buy it back at a later stage, which is known as going short. With CFDs, traders can maximize market exposure to over ten thousand markets for only a small fraction of the investment typically needed to trade the underlying asset directly. Before the advent of CFDs it was very difficult for retail traders and speculators to get access to assets beyond the major and minor Forex currency pairs such as commodities and stock indices. CFDs also make it possible to day trade the price movements of individual stocks without needing to actually buy or sell the stocks themselves. CFDs can be confusing in a sense to many people as they are associated with indices and commodities, but CFDs are not about the type of asset, they are just the legal wrapper that owns the underlying asset, designed to make buying and selling more convenient and simpler for both the client and the broker. Remember that CFDs are a leveraged product, which means that you are only required to put down a certain fraction of the total value of the trade. For example, if the margin requirement for the asset which is wrapped by the CFD is 10%, and 1 unit of the CFD represents a value of $1,000 worth of the asset, you will have to put up $10 per unit you wish to trade either long or short. Margin requirements on many types of CFDs are higher at many brokers than they used to be. Before choosing which broker is the best for you, view our list of the top brokers with CFD trading below.
GOLD Trading Brokers
Our Forex broker reviews are designed to help you make an informed, independent decision about which broker will best suit your needs. We’ve performed in-depth research on the top Forex brokers and compiled our findings into these comprehensive Forex brokers reviews.
Many brokers offer other trading instruments in addition to the different currency pairs that are the mainstay of Forex trading. Even brokers which offer little else beyond Forex now almost always include the option to trade gold and silver, the most popular choices beyond Forex which covers government-backed fiat currencies. Looking at Gold in particular, it is the original currency from the earliest ancient times of the human race, and therefore has a particular fascination for many. It is best to look at Gold as just another asset to trade and not as anything special. Some economists see it as a store of value, others as a hedge again inflation. In fact, for traders, the most important way to make sense of Gold is truly as a safe-haven asset: something that tends to rise in value when a sentiment of rising economic risk rises. Over the past few decades, there have twice been spectacular rises in the price of Gold, both of which only deflated gradually, and this is a large part of its reputation as something worth trading. Gold is usually offered for trading valued in U.S. Dollars (XAU/USD), but it is also sometimes available valued in Euros (XAU/EUR), and even at a few brokers in Chinese Yuan (XAU/CNY). This opportunity to trade gold and silver, in addition to currencies, through Forex brokers is providing an opportunity for traders to monetize their forecasts about various precious metals (silver, platinum and even palladium). Although the spread for gold and silver trading is usually relatively high and the leverage offered is low, trading these commodities may be an appropriate market idea. Minimum leverage requirements for Gold have recently been increased at many Forex / CFD brokerages, even though volatility in recent years has been relatively low. Forex brokers usually use XAU/USD notation for spot gold contracts and XAG/USD for spot silver as a trading instrument. The team at Daily Forex has taken the top gold trading brokers and has compiled the comparison chart below.
SILVER Trading Brokers
Many brokers offer other trading instruments in addition to the different currency pairs that are the mainstay of Forex trading. Even brokers which offer little else beyond Forex now almost always include the option to trade gold and silver, the most popular choices beyond Forex which covers government-backed fiat currencies. Looking at Silver in particular, it was one of the original currencies from the earliest ancient times of the human race, and therefore has a particular fascination for many. It is best to look at Silver as just another asset to trade and not as anything special. Some economists see it as a store of value, others as a hedge again inflation.
In fact, for traders, it should be remembered that unlike Gold, Silver is an industrial asset which has true demand issues – it is not simply a safe-haven like Gold. Over the past few decades, there have twice been spectacular rises in the price of Silver, although these bubbles burst quite rapidly, and this is a large part of its reputation as something worth trading. Gold is usually offered for trading valued in U.S. Dollars (XAU/USD), but it is also sometimes available valued in Euros (XAU/EUR), and even at a few brokers in Chinese Yuan (XAU/CNY). This opportunity to trade gold and silver, in addition to currencies, through Forex brokers is providing an opportunity for traders to monetize their forecasts about various precious metals (silver, platinum and even palladium). Although the spread for gold and silver trading is usually relatively high and the leverage offered is low, trading these commodities may be an appropriate market idea. Minimum leverage requirements for Gold have recently been increased at many Forex / CFD brokerages, even though volatility in recent years has been relatively low. Forex brokers usually use XAU/USD notation for spot gold contracts and XAG/USD for spot silver as a trading instrument. The team at Daily Forex has taken the top silver trading brokers and has compiled the comparison chart below.
Many brokers offer other trading instruments in addition to the different currency pairs that are the mainstay of Forex trading, expanding beyond the old-fashioned category of “Forex brokers” and becoming commodities brokers as well, typically offering at least Gold and Silver in addition to the usual Forex currency pairs. After Gold and Silver, the next most popular offerings are Crude Oil and Natural Gas, followed by the “softs” such as cocoa, sugar, wheat, soybeans. etc. A commodity broker is a firm or individual who executes orders to buy or sell commodity contracts on behalf of clients and charges them a commission.
Commodity contracts include futures, options, and similar financial derivatives. Commodities are the raw materials humans use to create a livable world and include agricultural products such as wheat and cattle, energy products such as oil and gasoline, and metals such as gold, silver and aluminum. Commodities can be tricky to trade. They usually don’t behave like Forex currency pairs, but they don’t typically behave like major stock market indices or individual stocks either. For example, major Forex currency pairs tend to move in relatively small waves most of the time, and often trend quietly, with no real difference between short or long trading as every trade is both “short” and “long” of something. Commodities typically consolidate for long periods of time before rocketing up or down very rapidly in value due to corners and natural events such as weather disasters, or human events such as war. Furthermore, there is arguably a minimum price for most commodities, which tends to put a “floor” under the market value, making trading on the long side more attractive than going short much of the time. This means that one of the most profitable ways to trade major commodities over recent decades has been to look for long-term breakout to new high prices over several months. Finding a good commodity broker is key to your success and the list we have compiled below of the top commodity brokers should help you find just the right one for you.
Most people are familiar with stock trading and have dabbled in the market over the course of their lifetime. Stock trading has been around for hundreds of years and brokers have come and gone. Purchasing stocks can be done in numerous different ways but the most popular method for retail investors and traders is by using a stock broker for the purchase and sale of either real shares, or in derivate instruments such as CFDs, and it is the latter wrapping over individual stocks and shares in mostly developed, major global economies which is the popular offering at Forex / CFD brokerages. There are high quality stock brokers that have been around for many years and have built up a reliable reputation for honesty and integrity.
They claim to offer their clients good execution with the right tools and support. On the one hand, if you choose a traditional stock broker, bank or other major finance house as your preferred vehicle to buy actual shares, either directly or packaged in baskets in funds such as stock ETFs, you will not pay any overnight fees on your long positions, and you will receive dividends and any other income or benefits which may accrue. However, minimum deposits required are relatively high, there is usually a minimum account fee per month, and your leverage is typically limited to 2 to 1. An alternative solution is to use a retail online internet Forex / CFD brokerage offering trading in a selection of individual stocks wrapped as CFDs. You can usually get higher leverage than 2 to 1, but spreads and commissions will tend to be higher. Perhaps most importantly, and it is certainly an important consideration for position traders or investors, overnight fees are typically charged on both long and short positions in stocks, and this can eat into profits. The individual trader needs to look at their budget and at how much they plan to trade and how long they hope to hold trades open for to make an informed decision. Our list of the top stock brokers below has been compiled by our team at Daily Forex in hopes that it will help traders select the broker that is best for them.
Oil Trading Brokers
Oil is one of the commodities that have become popular of late with Forex / CFD traders. There is a good reason for this, and it is simple: the market price of crude oil has historically been extremely volatile, and subject to dramatic, strong trending moves associated with major changes in economics, politics, and security. Crude Oil is important as it is still the primary fuel of human industry, but that could change if the world moves over from fossil fuels towards cleaner and greener energy sources. Crude Oil has also always been a commodity of great interest to Forex traders because it often enjoys a positive correlation with the currencies of major oil-producing nations, such as Canada for example. “Petrocurrencies” such as the Canadian Dollar are often seen as leading or lagging indicators of what is most likely to happen next to the price of Crude Oil, and vice versa.
Another interesting factor is the fact that the core demand of global industry for crude oil implies that there is a minimum floor below which the price will not settle, and this in turn implies that traders will be wise to see being long of Crude Oil as a typically better and less risky position than being short. A challenge in buying or selling Crude Oil is, how are you going to do it? If you buy actual barrels you will need to put a considerable amount, and then there is the cost of storage. There are funds which own Crude Oil, and other businesses too, but this is an approximation. The most feasible way to do it is to buy futures or options on Crude Oil contracts, but the minimums are usually beyond retail traders, who instead turn to CFD brokerages. This can work fine, but clients typically must pay relatively high spreads and commissions for Crude Oil CFDs, and an overnight fee which is usually very high on Crude Oil or Natural Gas on both long and short positions. Oil futures from NYMEX (West Texas Intermediate, or WTI) and ICE (Brent Crude) are usually part of the series of commodities offered by Forex brokers, together with the more popular commodities such as gold, silver, other metals. But not all Forex brokers offer their traders oil trading in addition to the other asset choices. Oil is a volatile product that is driven by supply, political and environmental factors, and the demand of energy-driven nations. To choose a broker who offers oil trading, see the list below compiled by the team at Daily Forex.
What are ETFs? “ETF” stands for “exchange traded funds”, so the simple answer if that ETFs are just funds which you can buy and sell shares in very easily. The beauty of ETFs is that they offer the trader or investor a way to get exposure to baskets of assets which are important, but overly expensive or complex for the trader or investor to get access to more directly. For example, let’s say you think the value of the shares of lots of a certain type of technology company is going to go up by a lot. One method to get exposure to the upside is to make a list of the top 50 technology shares filtered by whatever criteria you like, and then go in buy some individual shares in each of the 50. Problem is that this can be an expensive and complicated solution.
Well there is an easier way: you can find ETFs which own shares in the top 50 technology companies or the top 50 of almost anything you like! Of course, ETFs can also make it easier to go short, too, if that is what you are looking for. ETFs are a recent addition to the armory at Forex / CFD brokerages. If a broker offers trading in ETFs (invariably wrapped as CFDs), they probably have a very wide and sophisticated selection of instruments which may be traded. This could be ideal for any trader and investor who wants to be well diversified.
It was not a long time ago when the first thing you always had to say about Bitcoin was to explain what it was, because the person you were talking to didn’t know anything about it. Those days are gone, as 2017 saw cryptocurrencies, particularly the major ones such as Bitcoin, become a media sensation as their valuations soared up into that stratosphere from seemingly nowhere within months. The “bubble” in Bitcoin seemed be of truly historic proportions, as new millionaires were minted almost overnight from relatively small initial investors. A sad news story that year showed a man in the U.K. who had thrown his old computer away, with a large and seemingly worthless quantity of Bitcoin on its hard drive which he had not bothered to extract. He was no spending his days searching through the dump for his old computer’s hard drive, knowing he would never have to work again for the rest of his life if he could find it and safely extract the hard drive.
Bitcoin is a cryptocurrency – a digital currency - which may be freely purchased and sold with money, although it is not always easy to buy and store real Bitcoins themselves. There are a few places where you can buy and sell Bitcoin such as Bitcoin and cryptocurrency exchanges. It is arguably a bit misleading to call “cryptocurrencies” currencies as the hallmark of a currency is whether it is legal tender, or at least widely accepted and usable as a means of exchange. Bitcoin is not there yet by a long way and has still only been accepted by a few major companies as an acceptable means of payment. Fiat currencies such as the U.S. Dollar and the Euro are backed by the central banks of nation states. Bitcoin is backed by no central authority – it is the world’s first decentralized, ledgerized “currency”. The supply of Bitcoins is finite, with a limited number of new Bitcoins which can only be created by computers after they have probabilistically spent a similar amount to the “real value” of a bitcoin. Creating a Bitcoin necessitates running very advanced computer hardware with an internet connection. Determining the average cost of generating a Bitcoin may be used to estimate Bitcoin’s “fair value”.
Cryptocurrencies are an amazing new asset class. They are basically private currencies, which are decentralized and not under the control of any government or authority beyond their governing protocols, which are effectively algorithms. As such, they have a quality which fiat currencies such as the U.S. Dollar or Euro obviously lack: they cannot be devalued or otherwise manipulated. Cryptocurrencies do not suffer from inflation, and they are a dream of libertarians and monetarists. Cryptocurrencies use cryptography to secure and manage all transactions, and to create new units of the currency, through blockchain technology.
Cryptocurrencies have no meaningful commercial order flow which might interfere with speculative and investment operations. Cryptocurrencies are famous in the investment and trading worlds because their value collectively as an asset class, and particularly individually as the few major cryptocurrencies such as Bitcoin and Ethereum, have fluctuated wildly in value. Bitcoin dominates the market, with well over half (at the time of writing) of all cryptocurrency by market capitalization. The major cryptocurrencies were a rare historical exhibition of a dramatic asset value, on a par historically with the South Sea Bubble and Tulip-mania, but things settled down a great deal over the course of 2018. An easy option for trading Cryptocurrencies is to use a Forex / CFD brokerage, a great many of which now offer trading in at least Bitcoin and Ethereum, as exchanges can be expensive and cumbersome. It is worth checking out all options if you want to invest or trade in the major Cryptocurrencies. Watch out for CFD brokerages overnight fees on crypto CFDs, which can be high sometimes.
MT4 Forex Brokers
One of the most important features of a Forex broker is the choice of trading platforms offered to clients, although some brokers offer no choice at all and require their clients to use one trading platform in particular. Most Forex brokers offer the classic and ever popular MetaTrader 4 platform, often in addition to other available trading platforms. MetaTrader 4, also referred to as MT4, was developed by MetaQuotes Software and released in 2005. MT4 is an electronic trading platform used widely by online retail foreign exchange speculative traders. Although MetaQuotes announced that they would not longer be supporting MetaTrader 4 in an attempt to push the retail trading community into adopting its MetaTrader 5 platform, the popularity of MetaTrader 4 persists, and it is the most popular and common platform in the world of retail Forex trading: most brokers offer this platform to their clients as an option. Why does the MetaTrader 4 trading platform remain so popular, even though it is not without its critics? The answer is probably because most traders find it easy and intuitive to use, and because there are so many easily available add-ons which are compatible with it, many of which can be found for free within Forex trading communities. Some of these add-ons are called templates, which often include customized indicators. Sharing and using these allows an easy exchange of trading knowledge and strategies.
Another type of add-on are expert advisors, which run algorithmic trading strategies automatically without requiring human intervention in opening and closing trades. The MT4 platform has adapted itself over the years to meet the needs of MT4 Forex brokers and their clientele, with some help from MetaQuotes – although those days are over! Additional features have been added to ease the trading process and traders of all levels find the MT4 platform user-friendly and simple to understand. Before choosing a broker, it is important to review all of the platforms offered. We have made your choice easier by listing the top MT4 Forex brokers. All of them have been tested and reviewed by our Daily Forex team and we present them below, so you can make an educated and informed decision.
MT5 Forex Brokers
You might have heard of the MetaTrader 4 trading platform, but have you heard of the MetaTrader 5? You should have – it was released several years ago, in 2010. Made by the same company, MetaQuotes Software, who created the industry-standard and wildly popular MetaTrader 4 trading platform. This leads many to suppose that the MetaTrader 5 trading platform is just a MetaTrader 4 2.0 version, but MetaTrader 5 is much more than that! What both MetaTrader 4 and MetaTrader 5 have in common is that they are both trading platforms which can be used as back testing machines. They also have very similar graphical user interfaces and otherwise identical look and feel. The crucial difference between them is that MetaTrader 5 has the capability of plugging into a centralized exchange.
There is no such centralized exchange in Forex, but there is in commodities and stock future, for example, and it is in trading non-traditional, non-Forex assets where MetaTrader 5 really starts to provide an advantage. The other major differential is that MetaTrader 5 complies with the U.S.A.’s “FIFO” (first in, first out) trading regulation. So, if you are a U.S. based trader, or if you are looking to trade non-Forex instruments, you might want to look for a broker that offers the option of trading with the MetaTrader 5 trading platform!
cTrader Forex Brokers
Forex brokers offer the cTrader trading platform for two primary reasons: to efficiently execute trades and for charting purposes. It has a clean, uncluttered layout which many traders enjoy. It is common for new traders to report that they found it easier to learn how to use cTrader compared to the MetaTrader 4 or MetaTrader 5 trading platforms. It is also intuitive and user-friendly. cTrader is used by many leading ECN brokers as it fits this execution model well. Ctrader was really designed to be used with ECN brokers as it is so fast and can take advantage of the pricing anomalies which sometimes arise at the best ECN brokers, such as inverted spreads for example. cTrader is intended for use with multiple assets beyond Forex, such as CFDs, and offers rich charting tools, advanced order types (including one order closes another), level II pricing, plus of course speedy entry and execution. cTrader is compatible with multiple devices and hooked up with the most sophisticated back-office technology. One of its main advantages of cTrader is that it eliminates the possibility of a dealing desk intervention. Another convenient feature is chart trading—you need only click and drag and then place your order directly from the charts. cTrader also offers the ability to show DOM (Depth of Market) if supported by the Forex / CFD broker, with the full range of executable prices coming directly from the broker’s liquidity providers.
Trading using DOM (Depth of Market) can be a whole new world for technical traders more used to trading off chart patterns and price-driven technical indicators. cTrader is also well-known for its community of algo writers and copiers and is beloved by auto-traders at least as much as MetaTrader 4 and MetaTrader 5. It is true that the number of brokers offering clients the option to trade with the cTrader platform is relatively small, however, there are some well-known names on that list. It has become the trading platform of choice for some major ECN-style Forex / CFD brokerages. Traders should evaluate several cTrader Forex brokers before coming to a decision about which one to choose. The team at Daily Forex has taken the work out of comparing the many cTrader Forex brokers by doing our own research and reviews. We have selected the top cTrader brokers and have listed them below.
Web Based Brokers
Web-based brokers are those Forex brokers that support Forex trading solely in the Internet browser window without installing any trading software. Web-based brokers allow Forex traders to place trades from almost any place that has a computer. Most trading platforms come in two varieties, at least for personal computers: program based, which must be downloaded and installed to run, and web-based versions. This means that no matter what trading platform you prefer, you can almost find a web-based version of it if that is what you want to use. Recent studies show that 89% of computer users stay with one of the various versions of Windows and very few use Linux or Mac.
Social Trading Brokers
What is “social trading”? Social Trading is really a very simple concept – it is a system whereby you can see what other traders are trading and copy their trades with your own money if you want. This is arranged within a brokerage whose clients all use the same (or similar) trading platforms which have a social element, allowing traders to not only view each other’s trades (sometimes including certain restrictions such as the expiry of a defined amount of time or closure of the trade), but also to communicate with each other. Perhaps most importantly, such social trading platforms also include universally applied metrics and rankings of everyone’s trading, or at least every trader who chooses to make themselves publicly visible.
For example, let’s say you want to see who the top traders are on a social trading platform. You would go to the trading analytics section of the site and choose an option to view top traders by, say, total performance over the past six months. They will all be listed in order of performance, and you can then drill down to find out more details about traders making the rankings if you choose. Most platforms have very detailed filters available to use for manipulating your search results, for example you might want to see the top performing traders over the past six months who have had maximum draw-downs of less than 10%. Before deciding if social trading is for you, review the list of Top social trading brokers below. The fact that a broker has a social trading facility should not be the only consideration you are looking at. Forex brokers must meet your needs in many other ways. We have organized this list to help you make the right decision.
Regulated Forex Brokers
There is absolutely no question as to the necessity of trading with a regulated broker. This can’t be emphasized enough. Trading with a completely unregulated brokerage cannot be recommended at all in any way. A regulatory authority should at least theoretically ensure the economic strength of the broker and its integrity towards its customers who are depositing money with it and trading through it using its price feed and execution and further services. Without regulation, traders are left without any resource to back up the legality of the broker they are using, and usually without regulation a brokerage’s victims have little redress. Unfortunately, some brokers pretend to be regulated when they are not regulated at all. First, it is illegal in many countries to operate a Forex / CFD brokerage without regulation, but in some jurisdictions, it is possible to do so, and in these jurisdictions, brokers unfortunately sometimes use misleading language in their advertising. Check the exact language that a broker uses in describing how it is regulated, if they are truly regulated they should be able to provide a license number which you can verify on the regulator’s website. Some of the world’s leading regulatory bodies covering Forex / CFD trading are: US - National Futures Association (NFA) and Commodity Futures Trading Commission (CFTC), Europe - Financial Services Authority (FSA UK) and Cyprus Securities and Exchange Commission (CySEC).
Check out the full list of trading related regulations here. Before deciding on a broker, carefully check that they are regulated, and which regulatory body regulates them. Keep in mind that regulation in some jurisdictions is much stronger than in others, and that the stronger regulation tends to be in major financial centers. For example, regulation in the United Kingdom is likely to be more stringent than in Cyprus, and in turn regulation in Cyprus is likely to be stronger than in, say, the Marshall Islands. The importance of regulation is not only in knowing that there is a body responsible for checking up on a broker, regulation also means there is an address to complain to in the event of malpractice which has a legal duty to get something done about it. Daily Forex researched the top licensed Forex brokers below in order for you to choose the most secured and reliable broker.
FCA Regulated Brokers
The Financial Services Authority (FSA) is a quasi-judicial body responsible for the regulation of the financial services industry in the United Kingdom. On April 1, 2013 the FSA UK became two separate regulatory authorities: The Financial Conduct Authority and The Prudential Regulation Authority. At this time, all brokers regulated by this body are regulated now by the Financial Conduct Authority, who have responsibility for regulating this financial service, but not for regulating pure gaming. The United Kingdom is a well-known and well-established quasi-offshore financial services center, and as such tends to be regarded as having a high, good regulatory reputation, balancing both volumes and standards. One of the most attractive things about Forex / CFD brokerages regulated by the Financial Conduct Authority is the possibility that deposits up to a limit of GBP 50,000 per person are protected by the Financial Services Compensation Scheme.
If such protection is available, this means that even if you deposit funds with a regulated brokerage which collapses completely, the British government may reimburse you up to the previously mentioned maximum limit. If available, such protection can allow for security and peace of mind and would be a superior arrangement. Although there is some controversy over exactly when the provisions of the Financial Services Compensation Scheme apply, it should be noted that the regulations state that its protection is to apply as follows: “FSCS provides protection if an authorised investment firm is unable to pay claims against it. For example: for loss arising from bad investment advice, poor investment management or misrepresentation; when an authorised investment firm goes out of business and cannot return investments or money.” Some FCA regulated brokers are domiciled in multiple locations and are also regulated in their home country, although they must comply with standards agreed across all EEA countries. The EEA Authorized status is often given to firms that are authorized in another European Economic Area (EEA) state but are granted permission to offer services to UK citizens. Although the U.K. is scheduled to leave the European Union in March 2020, its regulation remains essentially aligned with ESMA, the European Union’s relevant regulatory authority. Daily Forex gathered the top FCA regulated brokers below in order for you to choose a secure and reliable broker.
ESMA Regulated Brokers
Under European Union rules, any Forex / CFD brokerage regulated by any European Union member state is also automatically regulated by the European Union as a whole. In the summer of 2018, new regulations came into force requiring all Forex / CFD brokerages located within the European Union to comply with European Union regulations under ESMA (the European Securities and Markets Authority). Although at the time of writing the United Kingdom is scheduled to leave the European Union in March 2020, the U.K. regulation is effectively aligned with ESMA already, and it is known not known whether the regimes may diverge again after some time has passed following the U.K.’s exit. ESMA lays down strict regulatory requirements, including a maximum possible leverage of 30 to 1, meaning no trade size can be undertaken without putting up at least 3.33% of its nominal value. Binary options have been banned completely, these trading products may no longer be sold from within the European Union. Perhaps best of all, at least from the customer’s perspective, is that all brokers must offer negative balance protection. In plain language, that means that no customer can ever be held liable for more money than they deposit with a broker, no matter what happens to the price within a leveraged trade: this is one of the reasons for raising minimum margin requirements. Daily Forex gathered the top ESMA regulated brokers below in order for you to choose a secure and reliable broker.
NFA Regulated Brokers
The National Futures Association (NFA) is an industry wide independent self-regulatory organization and watchdog of the commodities and futures industry in the United States. The NFA’s remit is to protect investors and depositors from fraudulent futures and commodities activities. The NFA also oversees mediation and arbitration for resolving consumer complaints. NFA maintains no ties to any specific marketplace. To be registered with NFA, Forex / CFD brokerages must follow their strict rules and requirements, including financial requirements, developed by NFA which are meant to protect investors from fraudulent activity and customer abuse of any kind.
The United States is not known as a major Forex / CFD brokerage center, with good reason – it is not one, although its regulatory system and infrastructure are obviously highly developed. Forex / CFD trading has never become as popular and widespread in the U.S.A. as it has in Europe and other global locations, and this has been partly due to extremely strict restrictions which the U.S.A. imposes upon offshore brokerages: any Forex / CFD brokerage outside the United States must report its clients’ deposits to the U.S. IRS or risk massive fines and other unpleasant consequences. Meanwhile, the regulation in the U.S. on Forex / CFD is very stringent, including the imposition of extremely low levels of leverage offered. The regulation seems to be harder than on stock and options trading firms, many of which refuse Forex operations to retail clients completely. This combination has led many analysts to suspect the NFA has a hidden agenda of restricting the growth of Forex / CFD brokerages in the United States. However, if you are a U.S. citizen, especially if you are based in the U.S.A., then using an NFA-regulated brokerage may be your best option, as finding a good offshore broker offering higher leverage and easier trading conditions can be extremely difficult. Below is a list of the top NFA Forex brokers. The Daily Forex team has done all the research and has made it easy for you to select the NFA regulated Forex broker that meets your own personal criteria.
Islamic Forex Brokers
Not all brokers offer an Islamic Forex account but those that do open up Forex / CFD trading to millions of Muslims who feel that their religion bans Forex / CFD trading except under certain amended rules. According to Islamic law, often referred to as Sharia law, Muslims are prohibited from earning interest on their speculative transactions. This law also applies to interest earned on any banking or investing.
Many brokers offer traders concerned about following these laws the possibility of trading Forex according to Sharia law by opening an Islamic Forex account where interest-free Forex trading is made available. This is also known as a ‘No Riba Forex’ account. The way it works is quite simple. When a Forex or CFD trade is made, there are always two sides to the trade. For example, a long trade in EUR/USD is long in Euros and short of the U.S. Dollar. A short trade in the U.S. S&P 500 Index (stock market) is short of the Index and long of the U.S. Dollar. Every instrument, whether the U.S. Dollar, the Euro, or the S&P 500 Index, has a rate of interest. In theory, the trader is paid the interest of whatever he or she is long of and pays to the broker the interest of whatever he or she is short of. In practice, usually the trader is required to pay some net interest to the broker every time a position is kept open over one night. This is widely believed to be contrary to Islamic law, so many brokers drop the overnight fees or payments and instead charge a little more on their spreads and commissions, which technically allows compliance with the law on riba (interest). The team at Daily Forex examined the top Forex brokers offering Islamic trading accounts and has compared them in an easy to read list where you can determine which Islamic Forex broker is the best one for you. Some brokers will agree to change a traditional Forex account into an Islamic Forex account quickly and easily and this is one of the features we have noted in the listing below, in addition to the other important information about our recommend Islamic Forex brokers.
Scalping Forex Brokers
Many, but not all, Forex and CFD brokers offer their traders a feature called scalping. Scalping is a rapid trading style where the trader looks for small profits, usually defined as less than ten pips pips by opening and closing trades that typically last only seconds or perhaps a minute or so, repeatedly. Scalping is also referred to as snipping or churning. The best scalping Forex brokers offer an opportunity to hold positions for mere seconds and use tight stop-loss orders on them.
Some brokers allow scalping in general but impose some restrictions on scalpers in form of additional commissions, spreads or trade number limits. Such brokers are typically found among DMA brokers and ECN brokers. Not every Forex broker permits scalping. Most, however, will allow some scalping in non-aggressive style which means a trader will have long-term trades along with short lived trades from time to time It is the traders' responsibility to check broker scalping policies in the client agreement. Why is that many Forex and CFD brokerages do not permit a scalping style of trading from their clients? This is an important question to ask and to answer. Remember that most Forex and CFD brokerages operate a market-making execution model, where the client’s losses are profits for the brokerage and the client’s wins are losses for the brokerage. Could it be that scalping is a trading method which can be used very successfully, and that therefore many of these brokers don’t like it? It seems quite likely that this is the case. Also, scalpers would not hold positions overnight, and therefore the broker cannot earn from any overnight fees which are typically charged on positions rolled over past midnight London time. However, a more innocent explanation might be that Forex and CFD brokerages like to use their trading desks to cover their own potential liability by covering their client’s positions, but scalping clients move too quickly for the broker’s dealing desk to achieve this. This is another reason why some Forex and CFD brokerages will not allow scalping. It is important to do a proper comparison before opening an account with any Forex broker. Also consider carefully the fact that even if you don’t want to scalp now, you might decide to trade in this style later, and if so you don’t want to be stuck with a broker that doesn’t allow it. Listed below are the top Forex brokers that allow traders to scalp.
Hedging Forex Brokers
What is hedging? Hedging is when a trader has an open trade, and then opens a new one in the same asset and in the same position size, but in the opposite direction. This has the effect of freezing whatever floating profit or loss the trader was enjoying from the initial position, as at the time that the second position was opened. Based upon this description, hedging might sound like a pointless action for a trader to take.
Some argue that it is, but on the other hand it can be seen as a useful tool in practice. For example, imagine that EUR/USD is bouncing between support at 1.30 and resistance at 1.3200. A trader is long from 1.3000 and the price is approaching the resistance at 1.3200. The trader expects the price will bounce around within this range. Instead of taking profit at 1.3200 and hoping the price will go back down to 1.3000 for another long trade entry, the trader could simply go short with a position of the same size at 1.3200. After this action, it would not matter if the price ranged between 1.3000 and 1.3200 – the floating profit from the long at 1.3200 is locked in, as long as neither of the positions’ stop losses are reached. Not all Forex / CFD brokerages allow hedging. One reason why is that some trading platforms do not allow it, and it is also banned from retail Forex operations in some jurisdictions (notably the U.S.A.). Another reason is arguably that hedging can be used to grow an “equity millipede”, encouraging traders to allow profitable positions to run, and market-making Forex / CFD brokerages might not want to see this happen. Consider whether you will want to hedge your trading positions before opening an account. Below is a list of Forex / CFD brokerages which do allow their traders to hedge their trades.
U.S. Forex Brokers
Do you live outside the USA? If so, the brokers listed below may not be regulated in your country. For our list of best internationally regulated brokers, see our global brokers list. If you’re a US citizen trying to choose between different US Forex brokers, you’ve probably realized that your options are more limited than those available to international traders. US Forex brokers must be regulated by the NFA or CFTC and are subject to stringent restrictions which are designed to protect US traders. NFA regulated brokers must limit their leverage to 50:1 and conform to rigorous record-keeping and reporting requirements. Nevertheless, there are a handful of NFA regulated Forex brokers in the USA that offer reliable service and user-friendly platforms (there are also several US-based Forex brokers that operate within the country's borders without the necessary regulation).
We’ve tested the trading platforms, customer service and ease of use of the top US Forex brokers and recorded our findings to help you choose the NFA regulated broker. Please be aware that it is quite possible for a U.S. citizen living outside the U.S.A. to open accounts with Forex and CFD brokerages outside the U.S.A. provided they hold another nationality. Traders doing this should be careful to ensure they inform the brokerage in writing of their U.S. nationality and report their tax accounting and possibly the account itself to the IRS and to the Department of the Treasury. It may even be possible for a U.S. citizen living in the U.S.A. to open an account with an “offshore” Forex / CFD brokerage: contrary to a common misconception, U.S. taxpayers are not banned from opening accounts with brokerages outside the United States, it is simply hard to find brokerages that are willing to accept U.S. persons as clients due to the onerous reporting obligations to the U.S. IRS which accompany such business activity. Advantages for a U.S. trader using an offshore brokerage typically include an ability to hedge trades, and a possible ability to utilize leverage greater than fifty to one on Forex, which is the maximum leverage which may be offered to clients under U.S. regulations. On the other hand, reporting for tax and compliance purposes may become more complicated and cumbersome. If you're looking for a Forex broker outside of the United States, check out our Forex brokers reviews list to find the broker that's appropriate for you.
U.K. Forex Brokers
UK based traders can register and trade with any broker. However, when it comes to the regulation of Forex brokers in the U.K. we turn to the Financial Services Authority (FSA), a quasi-judicial body responsible for the regulation of the financial services industry in the United Kingdom. On April 1, 2013 the FSA UK became two separate regulatory authorities: The Financial Conduct Authority and The Prudential Regulation Authority. At this time, all brokers regulated by this body are regulated now by the Financial Conduct Authority, who have responsibility for regulating this financial service, but not for regulating pure gaming. The United Kingdom is a well-known and well-established quasi-offshore financial services center, and as such tends to be regarded as having a high, good regulatory reputation, balancing both volumes and standards.
One of the most attractive things about Forex / CFD brokerages regulated by the Financial Conduct Authority is the possibility that deposits up to a limit of GBP 50,000 per person are protected by the Financial Services Compensation Scheme. If such protection is available, this means that even if you deposit funds with a regulated brokerage which collapses completely, the British government may reimburse you up to the previously mentioned maximum limit. If available, such protection can allow for security and peace of mind and would be a superior arrangement. Although there is some controversy over exactly when the provisions of the Financial Services Compensation Scheme apply, it should be noted that the regulations state that its protection is to apply as follows: “FSCS provides protection if an authorised investment firm is unable to pay claims against it. For example: for loss arising from bad investment advice, poor investment management or misrepresentation; when an authorised investment firm goes out of business and cannot return investments or money.” Some FCA regulated brokers are domiciled in multiple locations and are also regulated in their home country, although they must comply with standards agreed across all EEA countries. The EEA Authorized status is often given to firms that are authorized in another European Economic Area (EEA) state but are granted permission to offer services to UK citizens. Although the U.K. is scheduled to leave the European Union in March 2020, its regulation remains essentially aligned with ESMA, the European Union’s relevant regulatory authority. Daily Forex gathered the top U.K. based brokers below in order for you to choose a secure and reliable broker.
Cyprus Forex Brokers
Recent years have seen the island of Cyprus, a member of the European Union with a relatively strong economy, emerge as a major location for Forex / CFD brokerages. The reasons why are because the location within the E.U. allows passporting privileges, and because the regulatory touch is real but relatively light. This is the kind of balance that most Forex / CFD brokerages want to strike. There are many Forex / CFD brokers that choose to be domiciled in Cyprus where there are less stringent trading requirements than those imposed by other European financial regulators. Low fees and other costs, especially start-up costs, encourage brokerage start-ups within and relocations to Cyprus. The Republic of Cyprus also has high-quality ancillary services which are useful to brokerages, such as the accountancy sector, and has a not insignificant technology sector too.
Let’s not forget one of the most important incentives: the rate of corporation tax, which Forex / CFD brokerages pay on their profits, is only a flat rate of 10%, and that is the lowest rate you can find within the European Union at the time of writing, and that is highly unlikely to change any time soon! CySEC is the financial regulatory agency of the Republic of Cyprus and most Forex brokers that maintain their main offices in either Limassol or Nicosia function under CySEC guidelines. Because Cyprus is part of Europe and a member of European Union, retail CySEC regulated Forex / CFD brokers also have access to all European markets. In addition, CySEC became the first regulatory body to regulate binary options in May 2012, before banning the industry completely in line with new European Union law some time afterwards. Some binary options firms made the decision to become Forex CFD brokerages at this point, so in Cyprus that might be something to watch out for. Below is a list of the top brokers located in Cyprus. They are listed according to the ratings received by the Daily Forex team who have done all the research and have made it easy for you to select the Forex broker that meets your personal criteria.
Canadian Forex Brokers
Under Canadian law, Forex trading falls under regulated activity, and is deemed to be either trading in securities or derivatives depending upon the exact province in which the Forex broker in question is located. Any Canadian Forex broker offering its services for Canadian nationals is legally required to be a member of the IIROC (Investment Industry Regulatory Organization of Canada). Any such Forex / CFD broker must also be registered in the province from which they are carrying on their business in order to be legally able to offer their clients trading on any kind of margin (i.e. any leveraged trading). In theory at least, Canadian residents may not trade Forex with any Forex / CFD broker which is not regulated in Canada (i.e. with any “offshore” broker). Although it is possible to find offshore brokers outside Canada who will accept Canadian residents as clients, the Canadian resident will later on find it problematic to report offshore brokerage profits in their Canadian tax return, and if they don’t report it, will then open themselves up to the potentially criminal offence of tax evasion. For these reasons, it is obviously a very good idea for any Canadian resident wishing to trade Forex to do it with a Forex / CFD brokerage which is registered in Canada.
One potential difficulty with Canadian regulation is the extremely low maximum leverage limits which are allowed. The classification of the Canadian dollar (CAD) as one of the world's major currencies has made Canadian Forex trading both accessible and understandable to traders at all skill levels and in all geographic locations. Still, it's not enough to merely understand the market – it's just as critical to have a Forex broker that offers the best trading conditions for Forex trading in Canadian dollars (and all currency pairs). Start by determining which pairs you'll be trading. USD/CAD, also known as the "Loonie" is Canada's most popular Forex pair, but our traders also watch others including CAD/JPY, CAD/CHF, EUR/CAD and AUD/CAD. It is most important as a first step in choosing a Forex / CFD broker that you choose a broker which looks solid and well-regulated: a broker that will not disappear with your deposit or refuse to return your funds (including any profits) to you when you ask to receive it. Your next step should be to check each potential broker to make sure it offers the pairs you want. Next, check the spreads of each of the top Canadian Forex brokers to compare their offerings and determine where you'll pay the least commission depending upon your trading style. You'll also want to check each Canadian broker's policy about swaps (often known as rollovers or overnight financing) and leverage, to ensure that the service on offer is what you are looking for, and that your Canadian Forex experience will be as pleasant (and hopefully as profitable) as possible.
Australian Forex Brokers
Though the Australian regulator ASIC regulates a great many Forex brokers in Australia, traders in the southern hemisphere needn’t look only within their borders for the best brokerage. In fact, some of the best Forex brokers in Australia may not be based in Australia at all! Nevertheless, the benefits of choosing an Australian Forex broker should not be overlooked. Specifically, Australian Forex brokers may provide market updates during the Asian trading session, stronger customer support availability during local trading hours and a connection with local banks. Recent years have seen Australia (along with New Zealand) become something of a Forex / CFD trading hub. This is partly because in the early days of online Forex / CFD brokerages, there was little regulation in Australia, which is also a country which speaks English and has fairly strong finance and technology sectors.
All this added up to make Australia an attractive country in which to start up and locate a new Forex / CFD brokerage. Recent years have seen more regulation, and many observers now feel that Australia strikes an excellent balance between freedom and regulation. For example, brokerages in Australia now have a clear competitive advantage over north America and the European Union in terms of the maximum leverage which brokerages offer. You can find Forex / CFD brokerages in Australia which offer maximum leverage on Forex instruments as high as 400 to 1, while the maximum leverage in the European Union is only 30 to 1 – not that we are recommending trading with excessively high leverage, which can be dangerous, in fact nobody really needs leverage higher than the already very high 30 to 1. In summary, Australia is a healthy and thriving location for Forex / CFD brokerages. We’ve compiled a list of the top Australian Forex brokers based on reliability, professionalism, responsiveness and, of course, trading conditions, to help you find the best Australian Forex broker for your specific needs.
Dubai Forex Brokers
Recent years have seen Dubai, effectively a city-state component of the United Arab Emirates, emerge out of relative obscurity to become one of the world’s largest and most exciting offshore financial centers. For the Arabic-speaking world, this role used to be filled by the Republic of Lebanon, which had a well-developed banking sector with strict privacy and capitalization requirements, but Lebanon’s civil war in the 1970s saw this image fade away to a large extent. Although Lebanon has bounced back, Dubai has emerged on the scene, offering a light but real regulatory touch, a virtual absence of taxation, and a strongly skilled population of international finance and technology professionals.
There are many Forex brokers domiciled in Dubai. Overseeing the regulation of financial services in Dubai is the Dubai Financial Services Authority (the DFSA). The DFSA operates only in Dubai’s special economic zone. It is responsible for regulating all Forex / CFD brokerages operating from within the Dubai International Financial Centre. The DFSA supervises and regulates 635 entities, 496 authorized firms, 121 DNFBPs, 16 registered auditors, and 2 authorized market institutions. Brokers operating outside the Dubai International Financial Center are regulated by the UAE’s Federal Securities and Commodities Authority. Due to the relatively light regulatory touch in this area, traders should be discerning when choosing to open an account with any Dubai-based Forex / CFD brokerage. One aspect of Forex / CFD brokers in Dubai which traders may find especially attractive is the profusion of brokers there who are able to draw on local expertise and offer more truly sharia-compliant Forex / CFD trading services, not only regarding the typical swap (interest) free “Islamic Account” offering which most Forex / CFD brokerages around the world will accommodate, but in other more subtle ways also. For Muslim Forex / CFD traders interested in taking this route, Dubai can be an attractive destination in which to seek the right brokerage service, for this reason. See our listing of the top Dubai Forex brokers below before deciding on a broker.
South Africa Forex Brokers
South Africa, as almost every Forex / CFD brokerage in the world could tell you, is a market where interest in Forex trading is really bubbling up. More and more South Africans are becoming interested in investing or speculating in capital markets. If you are one of these, please do be careful with what you do with your doubtlessly hard-earned savings: there are a few scams out there which prey specifically upon South Africans. This is a major reason why Forex and CFD trading in general has to some extent began to attract a poor reputation in South Africa, and unfortunately there have been one or two notable unscrupulous individuals who have exploited the South African desire for a more prosperous life. Yet there are legitimate Forex / CFD brokerages offering their services to South Africans who would be unfairly tarnished by the unethical practices of a few scammers. There are two major reasons why Forex / CFD trading is attracting more interest in South Africa. Firstly, the South African economy has been growing quite strongly, at least by the standards of developed economies. The second reason is that regulation in North America and the European Union has been getting stricter, leading to new brokerages seeing arenas of opportunity in more emerging markets instead. South Africa is one of the most developed countries in Africa, so it’s not surprising that the country enjoys one of the most reliable and established regulatory bodies in the region for those who want to trade Forex (and pursue other economic trading opportunities).
The Financial Services Board (FSB) is an independent institution, established to oversee the South-African non-banking financial services industry, and it was established over twenty years ago, making it a reliable regulatory body for South Africa Forex brokers. The best South African Forex brokers will, of course, hold FSB regulation, though there are many South African Forex brokers that operate in the country without oversight. We would recommend that in order to become a successful Forex trader in South Africa, you choose a broker that is regulated and that adheres to industry standards meant to protect traders’ funds, such as maintaining segregated client accounts and minimum capital requirements. Before you begin Forex trading in South Africa, consider what type of trading you want to pursue. Do you plan to trade the South African currency, the rand? Or are you looking to trade standard currency pairs such as EUR/USD? No matter what pair (or pairs) you choose, look at the spreads offered by the brokers on the South African Forex brokers list below and make sure you’re getting the best spreads available. Likewise, make sure that your Forex broker will allow you to deposit in South African Rands, if necessary. While you’re evaluating the trading conditions of the Forex brokers in South Africa, it’s also important to look at the trading platforms available. Are you looking for South African MT4 Forex brokers, or for a web-based option? Do you want a broker that has its own platform? Don’t be afraid to open a demo to try different South African Forex brokers before deciding which one is best for you. With a demo account you can optimize your trading strategy and really test the platforms and trading conditions for yourself. With the right research and testing you should have no problem finding the best South African Forex broker.
Market Maker Brokers
Some Forex / CFD brokerages are known as “market makers” or “market making brokers”. What does this mean in plain English? It means that the broker gives its clients a price at which they may buy or sell, but the broker isn’t sending these transactions anywhere else. Instead, the broker effectively bets against its clients’ trades, although it may possibly monitor the trading of its more successful clients and hedge against the collective winning trading positions of that group. However, it is common for many market-making brokers to not cover their exposure at all and bet instead on their client base generating net losses. In this model, it is important to understand that although market makers make profit from spreads and overnight financing charges, they also make profit when their clients lose, and make losses when their clients win. There is an inherent conflict of interest in the market-making brokerage model, although that does not mean that these brokers are doing anything illegal or unethical.
There are some advantages to this model, even for the traders. For example, market-maker brokerages were generally better able to survive the Swiss Franc crash in 2015, which badly affected those brokers relying upon liquidity providers to cover their Swiss Franc liabilities. Market-makers can offer cheaper and freer trading in many market conditions, often in instruments which might be more illiquid at other brokers. The fact that the broker is poised to profit from your losses doesn’t mean that you are forced to make losing trades! Market maker brokers can give you a fair price and a liquid environment in which to trade. An important thing to know about market maker brokers is that they typically charge spreads only, and usually do not charge any commissions on trades.
Some Forex / CFD brokerages are known as “ECN brokers”. “ECN” stands for “Electronic Communications Network”. An ECN broker is the complete opposite to a market-making broker, because all the ECN broker does is match buyers and sellers. To illustrate this point, it just means that every time a trader with an ECN broker wants, for example, to buy one lot of EUR/USD, the order is simply matched with another trader who wants to sell one lot of EUR/USD. The broker themselves has no exposure or involvement at all, at least in theory. It must be said that it seems likely that some brokers claiming to be ECN type brokers are not telling the full truth. For example, if you see an ECN broker rejecting trade orders in a very active market, you might wonder why a real ECN broker would do that.
However, even if some brokers do fudge the lines at times, they may still be operating a mostly ECN service which clients might benefit from. The major advantage of trading with an ECN broker is that spreads can be very low, and sometimes may be zero or even inverted. This is because ECN brokers charge commissions and make their profits from these much more than they do from spreads. However, this can sometimes be a problem for smaller traders, as the commissions may be subject to minimums which make frequent, small-size trading overly expensive. For this reason, ECN brokerages often require relatively high minimum deposits. Another potential drawback with ECN brokerages is liquidity. As the broker doesn’t “make a market” but has instead to match every willing buyer with a willing seller, trading can sometimes be slow and sticky, particularly during high-impact news releases. However, there are obvious advantages to using an ECN broker which will be attractive to many traders, and we’ve compiled a list of the most interesting ECB brokers below!