Online Forex trading and Best Forex brokers

What is Forex?

Forex, also known as foreign exchange, FX or currency trading, is a decentralized global market where all the world's currencies trade. The Forex market is the largest, most liquid market in the world with an average daily trading volume exceeding $5 trillion. All the world's combined stock markets don't even come close to this. But what does that mean to you? Take a closer look at Forex trading and you may find some exciting trading opportunities unavailable with other investments.

FOREX TRANSACTION: IT'S ALL IN THE EXCHANGE

If you've ever traveled overseas, you've made a Forex transaction. Take a trip to France and you convert your pounds into euros. When you do this, the Forex exchange rate between the two currencies—based on supply and demand—determines how many euros you get for your pounds. And the exchange rate fluctuates continuously.

OPPORTUNITIES IN FOREX

Just like stocks, you can trade currency based on what you think its value is (or where it's headed). But the big difference with Forex is that you can trade up or down just as easily. If you think a currency will increase in value, you can buy it. If you think it will decrease, you can sell it. With a market this large, finding a buyer when you're selling and a seller when you're buying is much easier than in in other markets. Maybe you hear on the news that China is devaluing its currency to draw more foreign business into its country. If you think that trend will continue, you could make a Forex trade by selling the Chinese currency against another currency, say, the US dollar. The more the Chinese currency devalues against the US dollar, the higher your profits. If the Chinese currency increases in value while you have your sell position open, then your losses increase and you want to get out of the trade.

HOW TO BUY AND SELL CURRENCY?

Now what? Open your free forex demo platform and trade your opinion.

What Is Forex How to buy and sell currency?

All Forex trades involve two currencies because you're betting on the value of a currency against another. Think of EUR/USD, the most-traded currency pair in the world. EUR, the first currency in the pair, is the base, and USD, the second, is the counter. When you see a price quoted on your platform, that price is how much one euro is worth in US dollars. You always see two prices because one is the buy price and one is the sell. The difference between the two is the spread. When you click buy or sell, you are buying or selling the first currency in the pair.

Let's say you think the euro will increase in value against the US dollar. Your pair is EUR/USD. Since the euro is first, and you think it will go up, you buy EUR/USD. If you think the euro will drop in value against the US dollar, you sell EUR/USD.

If the EUR/USD buy price is 0.70644 and the sell price is 0.70640, then the spread is 0.4 pips. If the trade moves in your favor (or against you), then, once you cover the spread, you could make a profit (or loss) on your trade.

FRACTIONS OF A PENNY: TRADING ON MARGIN

If prices are quoted to the hundredths of cents, how can you see any significant return on your investment when you trade forex? The answer is leverage.

When you trade Forex, you're effectively borrowing the first currency in the pair to buy or sell the second currency. With a US$5-trillion-a-day market, the liquidity is so deep that liquidity providers—the big banks, basically—allow you to trade with leverage. To trade with leverage, you simply set aside the required margin for your trade size. If you're trading 200:1 leverage, for example, you can trade £2,000 in the market while only setting aside £10 in margin in your trading account. For 50:1 leverage, the same trade size would still only require about £40 in margin. This gives you much more exposure, while keeping your capital investment down.

But leverage doesn't just increase your profit potential. It can also increase your losses, which can exceed deposited funds. When you're new to Forex, you should always start trading small with lower leverage ratios, until you feel comfortable in the market.

Online Forex trading and Best Forex brokers

The Top Forex Brokers

In our search for finding the best trade platform we decided to put the most emphasis on ease of use and charting capabilities. Think or swim's trading platform is an amazing combination between design and functionality. The platform has virtually anything you could want, including live CNBC, trade alerts, news feeds, and practically every technical indicator under the sun. This powerful functionality is then rolled into one eye friendly easy to use piece of software.

thinkorswim

Likes: The 2016 #1 Desktop Platform, functionality allows Forex trading as well as stocks, options, and commodities trading from one platform.

Dislikes: No automated Forex Trading; dealing desk execution; no Meta trader platform.

Bottom Line: think or swim offers one of the most powerful trading platforms in the industry. Combined with the fact they provide execution services for stocks, options, and commodities, this organization is an excellent place to have a trading account. Their plethora of ideas, services, and instruments will help develop a trading style that accommodates any need.

Ideal Client: All clients, especially those trading in other markets who want to consolidate their account to one broker.

Best Automated Trading

The recent increase in popularity of automated trading has led us to set out and discover which forex broker has the most to offer when it comes to automatic order placement and management. While AvaTrade offers 5 automated trading solutions, none are proprietary and none are as specialized as Interbank's Metatrader solutions.

AvaTrade

Likes: AvaTrade has a wide variety of platforms and automated trading solutions; CFD trading offers exposure to stock and commodity markets.

Dislikes: Wide spreads create pricey trades; dealing desk environment; under developed mobile trading application.

Bottom Line: Ava Trade does a good job at creating a well rounded brokerage experience. The company offers automated trading, education, fundamental analysis, and four different trading platforms. While transactions are a bit pricey, Ava Trade's "fixed spread" environment may appeal to traders who like consistent spreads and fixed transaction costs.

Ideal Client: Non-US clients who are looking for a great all around introduction to Forex with a small account. The high spread cost makes AvaTrade unattractive to those trading with larger accounts.

Social Trading

“Social” is certainly one of the biggest buzzwords on the net lately and it’s gaining traction in the investment world as well. We rated the social trading ranks based on a broker’s unique tools and community applications which help traders connect, exchange information, and gain new insights. eToro sports the OpenBook social trading site. The easiest way to describe it is to call it the Facebook of forex trading. The interface is similar, focus is centered around a news feed, the traders you follow are grouped together like friends and you can comment and discuss trades as they appear on the fly.

eToro

Likes: Interactive trading environment with trading competitions for both live account and demo account traders, including valuable prizes and awards. Active social investment network.

Dislikes: eToro is not available for US based traders interested in trading with eToro.

Bottom Line: eToro caters to new traders looking for an exciting and interactive trading experience without a large initial investment. They may not have the tightest spreads, but accounts can be opened for as little as 200 dollars which makes them a good candidate for practice trading with small amounts of real money.

Ideal Client: Clients with little or no forex experience, and clients looking to explore the social trading networks with a non-serious investment.

Active/Professional Forex Trading

If you are doing serious currency trading you should consider Interactive Brokers. Well known in the stock and options industry as an active trading broker, they have a $10,000 USD minimum to open an account and are not for the faint of heart.

Interactive Brokers

Likes: Tight spreads and low commission structures help minimize trade costs; "IB Marketplace" brings programmers & end users of API solutions together; 3rd party products available to sync with default platform.

Dislikes: $10K minimum opening deposit; platform navigation takes some getting used to.

Bottom Line: While some attributes of Interactive Brokers maybe considered hurdles (minimum deposit & default platform), this broker is able to provide opportunities that are unavailable anywhere else. Their combination of endless trade instruments, algorithmic trading, and platform "plug ins" creates a very customized and professional trading atmosphere.

Ideal Client: Professional level traders, both technical and fundamental.

Cheapest FX Trading

When choosing an online forex broker for cheap trading, commissions and spreads are the most important factors. For this review, we aggregated all the spread and commission data to determine the absolute cheapest forex brokers in the industry. MB Trading wins the frudal battle for several reasons. For one, their commission rate of $2.95/100k ($5.90 round trip) is one of the lowest rates among FX Brokers. Not to mention they offer it along side super tight spreads to everyone, regardless of account size. If that wasn’t enough they are now paying their clients 2.50 per 100k for placing limit orders.

Online Forex trading and Best Forex brokers

CMC Markets

Likes: Largest selection of currency pairs, and competitive spreads for all account types with further discounts available for active traders. Wide range of over 10,000 trade-able instruments offered. Regulated in multiple top-tier jurisdictions and publicly traded in the UK.

Dislikes: Web platform is Flash-based. Doesn’t offer MT4 platform so no support for automated trading.

Bottom Line: CMC Markets offers competitive spreads and access to a wide range of Forex pairs and global markets through its regulated entities in major jurisdictions worldwide. It’s Next Generation platform scored highly during our 2017 annual review and the broker placed in the top five (Best in Class) in multiple categories including Overall and Research.

Ideal Client: Self-directed retail and professional Forex traders.

Online Forex trading and Best Forex brokers