What is really a forex broker? Although this may sound like a simple question, the answer is not as straightforward as you might think. In this article, we will therefore cover the main types of forex brokers that exist out there, how you can open a trading account, as well as some of the types of forex brokers that are available for you to choose from.
In reality, retail forex trading, which is what we are talking about here, makes up only a small portion of the much larger foreign exchange market. To simplify things a bit, we could say that the forex market as a whole consists of five major players:
All retail forex traders need to rely on brokers to trade in the foreign exchange market. And with the spread of the Internet all around the world, the number of retail forex brokers that offer their services online has also exploded. As the number of brokers keeps growing, navigating the jungle and choosing the right one has become more challenging than ever before for independent traders.
When choosing a forex broker to trade with, you first need to determine what type of forex broker you are looking for. Since each and every trader has his own individual need depending on trading style, account size, trading frequency, and other things, it’s important to look for the best offering tailored to your needs.
Here at FX-List, we have categorized a large number of brokers to make it easy for you to narrow down the search for the perfect broker depending on your goals. In all, we have listed the brokers in different niche categories, which means you can be sure to find the perfect match for you:
The reason why we have taken the work of dividing the forex brokers into all of these categories is obviously so that you and other traders can more easily filter down your search to find the option that suits your needs perfectly.
One common problem that for example many US-based forex traders face is that they struggle with the fact that a lot of brokers these days simply don’t offer their services to US citizens and residents.
Although it may sound surprising to you that brokers are willingly turning away potential clients, the practice can be explained by the very restrictive regulations that have been introduced in the United States over the past decade or so, making it risky and difficult for foreign forex brokers to operate there.
As a result, forex traders from the United States should look into brokers for US traders to compare only the ones that are willing to accept them, while ignoring the rest.
In the same way, brokers operating out of countries in the European Union are subject to strict regulations from the European Securities and Markets Authority (ESMA) that came into force in 2018. For example, these regulations mean that brokers operating in the EU are not allowed to offer their traders more leverage than 1:30, which may be a bit dull for traders who have the discipline it takes to trade with 1:100 or even 1:500, as brokers in many other parts of the world offers.
However, EU-based traders who want the security and comfort that comes with choosing a broker that operates under strict EU regulations should probably choose one among the FCA forex brokers.
Alternatively, EU-based traders who still want the flexibility that comes with more leverage and a wider selection of trading instruments could go for one of the ASIC forex brokers, regulated by the Australian Securities and Investment Commission. This is a highly regarded regulatory agency, yet flexible enough to let traders who want to trade aggressively keep that opportunity.
These are just requirements pertaining to regulations around the world. In reality, there are many more considerations to take when choosing what type of forex broker to go with, including things like the leverage that is offered, which instruments are available for trading, spreads and commissions, and how orders are processed and executed in the market.
Luckily, all of these criteria can be applied to your search by using the built-in filters on this website to find the best forex broker for you to trade with.
In case you have browsed and utilized the FX-List and found a preferable forex broker for your needs, as a next logical step you would probably go and visit the broker’s website (by clicking the blue “Visit Site” button). Once you will be taken there, just look for a Sign-Up or Register or Open Account link. By clicking it, you will initiate the account opening procedure.
Once your account has been set up, the next thing to do is obviously to make your first deposit so you can start trading as soon as possible. By now, you should be confident enough about your new broker that sending it your own hard-earned money is not a point of concern.
In terms of available payment methods, we know from experience that nearly all forex brokers accept international bank transfers (SWIFT), as well as credit and debit cards like Visa and MasterCard. In addition, many brokers accept Chinese UnionPay cards, and a range of online money transfer services like PayPal and Skrill.
In recent years, some brokers, often referred to as crypto forex brokers, have also started accepting cryptocurrencies such as Bitcoin and Litecoin as payment methods their traders can use, while sometimes even allowing trading accounts to be denominated in cryptocurrencies.
Armed with all this information, you should now be able to make an informed choice when it is time for you to choose a forex broker to trade with. The most important thing to remember is that you should go for the one that best suits your needs. Keep in mind that this means not necessarily choosing the same broker as you have seen recommended on online forums or by your friends.
With a good trading environment and a broker that is there for you throughout your trading journey, the rest will be up to you to make happen. Remember that success doesn’t come easy, but as with everything else in life, persistence is key.
