Forex Brokers For Beginners

Choosing from the wide range of forex brokers for beginners can seem an impossible challenge. With so many large and small companies with different accounts, platforms and FX products, it can be hard to know where to start. Fortunately, this guide will explain everything you need to know, from comparing educational tools and account types to strategies and platforms. You can also use our list of the best forex brokers for beginners below to get started today.

How A Forex Broker Works

A foreign exchange broker (also known as an FX or forex broker) is a business that facilitates the purchase and sale of currencies. There are two basic forms of forex asset offered by brokers, spot and CFD. A spot forex instrument aids the direct purchase of one currency using another, with the broker physically exchanging the two currencies for their clients. Forex CFD brokers, on the other hand, allow their clients to speculate on the price movements of a currency pair without any physical currency being exchanged.

There are lots of helpful features offered by forex brokers for beginners to better understand and take advantage of the markets. This is primarily done through their trading platform, supporting technical analysis, order execution and account management. It is also common to find educational material from forex providers to help their customers learn trading fundamentals.

The best forex brokers for beginners

Pricing

Forex brokers for beginners and experienced investors make money through two main charges, commissions and spreads.

Spreads

The spread is the difference between the buy and the sell price. For example, if your broker offers the GBP/USD pair at 1.3710/1.3713, this means that you can either buy £1 for $1.3713 or sell £1 for $1.3710. The spread is the difference between these two values, i.e. 0.0003 (or 3 pips).

If you were to buy and then sell £100,000, you would spend $137,130 and then get back $137,100, paying a spread of $30 to the broker. The spread is set by both the markets and the broker, varying with the liquidity of the asset. An asset will generally display lower spreads when market demand is high. Nearly all forex brokers for beginners charge some form of spread, though these can temporarily fall to zero pips for certain currencies during periods of high liquidity.

Commissions

Some forex brokers for beginners may also charge a commission, taking a flat or percentage fee on the volume of a trade. For example, let’s say a broker offers the GBP/USD pair at 1.3710/1.3711. While the spread is only 1 pip, this broker also charges a commission of $5 per lot (100,000 units). Therefore, if you were to buy £100,000, you would pay a spread of $10 and a commission of $5.

If you are just getting started using forex brokers, these fees can seem a little difficult to understand. However, you must take the time to understand the fee structure of forex brokers, for beginners especially, and choose a pricing style that suits your strategy.

How To Compare Forex Brokers For Beginners

Here is what to look for in the best forex brokers for beginners:

Fees

The costs associated with different forex brokers can quickly add up, so a transparent and competitive pricing structure can make a big difference in potential income. Beyond commissions and spreads, forex brokers for beginners may charge for deposits, withdrawals, currency conversions, overnight holding fees and inactivity fees. There may be brokers targeted at beginners that offer attractive bonuses but catch users on hidden charges, so keep an eye out.

Account Types

There is a wide variety of forex accounts to choose from, often geared towards different experience levels, capital investments and strategies. Account types may vary by minimum deposit amounts, fees and market exposure. For newcomers, in particular, forex brokers with low deposit requirements can help you get started without risking too much capital.

Note, US citizens and clients that qualify as a Pattern Day Trader will need to maintain a trading balance of at least $25,000.

Regulation

Whether you are researching the best forex brokers for beginners in Iran, the USA or South Africa, you will want to find a broker that is regulated. The safest bet is one that is regulated in your country of residency. However, many of the top forex brokers for beginners will operate globally and follow international regulations. Look out for respected financial institutions such as the FCA (Financial Conduct Authority) in the UK, the CySEC (Cyprus Securities and Exchange Commission) in Cyprus and the SEC (Securities and Exchange Commission) in the USA.

Training Tools

The best forex brokers for beginners will offer comprehensive educational material and training tools that will help clients improve their knowledge and refine their strategies. Find a forex broker that offers educational material in formats that you find engaging and informative and use them to enhance your trading skills, whether that be videos, PDF guides or articles.

Platform

While platforms can vary drastically from simplistic and sleek to sophisticated and complex, the best ones offered by forex brokers for beginners will meet somewhere in the middle. For example, MetaTrader 4 (MT4) boasts a range of technical analysis tools and order types with a relatively easy-to-use interface. Many brokers offer demo accounts with which you can try their services and features in a risk-free environment. Most platforms can be downloaded for Windows and Mac, but it is a good idea to check first.

metatrader 4 forex trading app
MT4

Market Access

Not all forex brokers for beginners will offer a full range of currency pairs, some may be limited to major and minor pairs. Major currency pairs are comprised of USD and any of the other top eight global currencies. Minor pairs are other combinations among them and exotic pairs involve weaker, developing currencies. Major pairs, and some minor, often come with tighter spreads and better liquidity, though if you have an account in India or Canada, for example, you may want to invest in pairs involving Indian Rupees (INR) or Canadian Dollars (CAD).

Customer Support

Getting in contact with your broker is important in the event of any issues as delays can make the difference between profit and loss. Responsiveness is especially key amongst forex brokers for beginners. Ensure that the contact methods and active hours match those most convenient for you. Many brokers will offer a 24/7 live chat window on their website that can be helpful.

When comparing brokers, test their customer support or check review sites to get a feel for their customer service.

Strategies

Day Trading

Intraday forex speculation involves opening and closing several orders within one day. All positions are generally closed by the close of the markets and trades can range from a few seconds to most of the day. The approach has become very popular as, when investing over such short time periods, many potentially profitable opportunities will come up. Most of the top forex brokers for beginners facilitate intraday FX trading with a range of tools and rapid order executions.

Scalping

Scalping entails making lots of high-volume trades over short periods of time. The idea is to close a position as soon as it becomes profitable, reducing the chance for the trade to reverse and lose money. This approach lends itself to automated trading, which opens and closes positions at pre-set points. Forex pairs with high liquidity and tight spreads are best used for scalping, as the profit margins per position are slim. Unfortunately, not all forex brokers for beginners allow scalping, so it could be worth checking a provider’s terms and conditions before opening an account.

Forex Brokers For Beginners In Nigeria And Across The World

Swing Trading

Swing traders analyse market trends that are rising or falling and open long and short positions accordingly. There are lots of subcategories of swing strategies using patterns, news or diagrams to analyse and identify trends. Plenty of the top 10 forex brokers for beginners offer the tools and support needed to implement swing trading strategies.

Margin

The use of margin isn’t a strategy in its own right, but it can make a huge difference in your investment style and options. Using margin, which is also known as leveraging your investments, allows you to increase the size of your position by borrowing money from your broker. There will likely be different limitations on the leverage rates you can access with forex brokers for beginners, for example, depending on whether you might be in Zimbabwe, Myanmar or Puerto Rico, hold a micro account or have a high net worth professional account. Leverage can multiply both your profits and your losses, so it is recommended for beginners to use leverage responsibly.

Final Word On Forex Brokers For Beginners

The foreign exchange market is an exciting place to get started and there are plenty of forex brokers for beginners to consider. The key points above are a good place to start when comparing platforms, though be sure to try their demo accounts and look out for regulation and customer reviews before committing money. See our list of best forex brokers for beginners to get started now.

FAQs

Are There Any Good Forex Brokers For Beginners?

Yes, there are plenty of excellent forex brokers for new traders, see our top list of forex brokers for beginners for recommendations. Foreign exchange is a massive market and anyone from experienced investors to complete beginners can take advantage of currency movements. Major pairs like USD/EUR and USD/JPY offer high liquidity and low spreads. Newcomers to the market should carry out proper research and fully understand the risks before opening an account.

Can Under 18s Use Forex Brokers?

No, minors cannot open accounts with forex brokers, this is also the case for 16 and 17-year-olds. You must provide proof of your age before opening an account with regulated FX brokers, though demo accounts may be offered without age verification.

What Are The Best Forex Brokers For Beginners?

Whether you are in Jamaica, the Philippines or Pakistan – there will be many suitable brokers that cater to your needs. As a beginner, you will want to take your time choosing the right broker for you. We have compiled a list of the best forex brokers for beginners.

What Forex Brokers Have The Best Platforms For Beginners?

There is a wide range of trading platforms available and many brokers will offer their own proprietary software. MetaTrader 4 (MT4) and MetaTrader 5 (MT5) are popular amongst investors of all experience levels, though this doesn’t mean other platforms are not also great for beginners. You can use a demo account to test out a forex broker’s platform before investing real capital.

Can I Use A Forex Broker For Cryptocurrency?

Forex brokers deal with foreign currencies such as USD, GBP and EUR. Some brokers may offer instruments in other markets, like NASDAQ indices, commodities (gold, oil etc.) or cryptocurrencies, such as Bitcoin and Ethereum. Check whether your broker offers all the assets you wish to trade before committing any cash.

Where Can I Learn More About Forex Brokers For Beginners?

This guide is an excellent start for new forex traders, but there are also free educational resources available throughout the internet. Social networks such as Reddit and TradingView are a good place to get in touch with other traders and exchange tricks and tips.