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Best Ways to Trade Forex Profitably

The Global Forex market is not only the largest financial market in the world but also extremely fast paced.  The potential to make considerable profit in the trading world tempts foreign-exchange traders of all experience levels to try their hand at the trade. Because access to the Global Forex market is so easy to achieve many forex traders will enter the market head first, only to make an equally quick exit after experiencing their first loss or setback. Here are some top tips to help aspirant traders to avoid losing money and stay in the trading game.

 

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Do the need due diligence

Just because it is hassle free to make a start in forex trading it doesn’t mean due diligence should be avoided. Learning everything there is to know about the forex market is essential to a trader’s success. While the majority of an investors trading knowledge will come from live trading and experience, a trader should learn as much as possible pertaining to the market.  This will include topics such as  the geopolitical and economic factors which will affect a trader’s preferred currencies.

 

Traders can see due diligence as their Forex Homework. And their Homework will be an ongoing effort in order to prepare and adapt to the changing market conditions, regulations, and world events. A part of a traders research process will include developing a trading plan, determining the amount of risk involved, and formulating short-term and long-term investment objectives.

 

Find a Reputable and Well-Regulated Forex Broker

Unfortunately, the forex industry does not have as much oversight as other markets, and it is more than possible to end up doing business with a less-than-reputable scam forex broker. Due to concerns about the safety of their deposits and the overall integrity of a brokerage firm, forex traders should only open an account with a Forex Broker which holds a regulation by a reputable regulatory bodyTraders should research each potential broker’s account offerings, leverage amounts, commissions and spreads, initial deposits, account funding and withdrawal policies.

 

Here is an overview of the 10 Best Forex Brokers and Trading Platforms available to date:

 

CMC Markets

CMC Markets is a multi-asset class spread betting and CFD broker which is regulated by the UK’s Financial Conduct Authority (FCA). Clients have the ability to trade on more than 9,000+ trading instruments covering Indices, Forex, Cryptocurrencies, Commodities, Shares and Treasuries, all on the MetaTrader4 platform or the broker’s own proprietary, web-based Next Generation platform.

 

Pros and Cons

Pros Cons
Extensive range of offerings Does not accept U.S. clients
Regulated by FCA (U.K.) Differences between Next Generation and MT4
Emphasis on education & customer service High CFD spreads for certain indices
Research amenities are industry leading No back-testing or automated trading capabilities

 

CMC Markets offers a wide range of instruments to trade on covering all major asset classes such as 300+ Forex instruments, 60+ Indices, 15 Cryptocurrencies, 90+ Commodities, 30+ Treasuries and 9,000+ Shares and ETFs.

 

Trading Benefits

Trading Features Accounts Offered Funding Methods
No Deposit Bonus CMC Markets CFD Account Wire Transfer
Stop Loss CMC Corporate Account Credit Card
CMC Stockbroking Account e-Wallets
CMC Spread Betting Account
CMC Markets Professional Account

 

Customer support is available 24/5 via Live Chat, Telephone, and Email.

 

London Capital Group

London Capital Group (LCG) offers traders a in house platform called LCG Trader which is a web-based trading platform which enables traders to access 7,000+ instruments across 9 available asset classes directly from their web browser.

 

Pros and Cons

Pros Cons
Segregates client funds Doesn’t offer VPS
Established in 1996 Limited range of instruments
Regulated by Financial Conduct Authority, CIMA, CYSEC Not ASIC Regulated
Min. deposit from $0

 

To open a live account, no minimum deposit is needed.  London Capital Group (LCG) is regulated by the Financial Conduct Authority.  London Capital Group offers over 117 different instruments to trade, including over 66 currency pairs on the MT4 forex trading platform.

 

Trading Benefits

Trading Features: Accounts offered: Funding methods:
Allows scalping Demo account Credit cards
Allows hedging Mini account Bank Transfer
Offers STP Standard account Skrill
Low min deposit Zero spread account Payoneer
Guaranteed stop loss ECN account Neteller
Offers Negative Balance Protection Islamic account

 

Customer Support is made available via phone and email.

 

Saxo Bank

Saxo is a globally regulated, multi-asset class broker which offers traders the option to trade on more than 40,000 instruments covering Forex, CFDs, Stocks, Options, ETFs, Commodities, Futures, Bonds and Mutual Funds from a single account across multiple platforms including their own – SaxoTraderGO and professional-grade SaxoTraderPRO.

 

Pros and Cons

Pros Cons
Segregates client funds Doesn’t allow hedging
Established in 2012 Limited range of instruments
Regulated by Financial Conduct Authority Not ASIC Regulated
Min. deposit from $6,500

 

The Saxo Group is regulated in 15 jurisdictions including authorisation from the UK Financial Conduct Authority (FCA), the Australian Securities and Investments Commission (ASIC), the Financial Services Agency of Japan (FSA) and many more.

 

Trading Benefits

Trading Features: Accounts offered: Funding methods:
Allows scalping Demo account Credit cards
Offers STP Mini account Bank Transfer
Low min deposit Standard account Payoneer
ECN account

 

Customer support is available in nearly 30 different languages via phone, email and an FAQ section.

 

XTB

XTB is a European broker which was founded in 2002, and has offices in 13 countries across the globe.  XTB is regulated by the UK Financial Conduct Authority (FRN 522157) and has been listed on the Warsaw Stock Exchange since 2016.

 

XTB is a fintech company which combines financial services with innovative technology and it offers clients two platforms to choose from:

 

  • xStation5
  • MT4

 

Pros and Cons

Pros Cons
Lowest FX spreads Does not accept U.S. clients
Regulated by FCA (U.K.) Non-FX spread costs are high
Offers protection for client accounts No guaranteed stop loss
Emphasis on customer service No back-testing or automated trading capabilities

 

Traders can choose from 25 crypto CFDs (9 individual coins or 16 crypto pairs) which are available 7 days a week (from 3am Saturday to 9pm Friday). Traders can buy or sell digital coins with 2:1 leverage and 365-day expiry.

 

Trading Benefits

Trading Features: Accounts offered: Funding methods:
Allows scalping Demo account Credit cards
Allows hedging Micro account Bank Transfer
Offers STP Mini account PayPal
Low min deposit Standard account Skrill
Guaranteed stop loss Islamic account Payoneer
Offers Negative Balance Protection Neteller

 

XTB support a wide range of languages including English, Spanish, Czech, Chinese, German, French, Italian, Polish, Portuguese, Romanian, Slovenian, Turkish, Arabic, and Russian.

 

IG

IG Group was founded in 1974 and is regulated by the Financial Conduct Authority (FCA) in the U.K. and the Australian Securities and Investment Commission (ASIC) in Australia.

 

Pros and Cons

Pros Cons
Used by 178,000+ traders Inactivity Fee
Established in 1974 Limited range of instruments
Regulated by Financial Conduct Authority and ASIC
Min. deposit from $250

 

The country of a traders residency will determine which account type they can open. In most countries, they will only be able to trade forex, CFDs and options.  Traders can choose between two trading platforms, IG’s proprietary trading platform or MetaTrader 4.

 

Trading Benefits

Trading Features: Accounts offered: Funding methods:
Allows scalping Demo account Credit cards
Allows hedging Mini account Bank Transfer
Offers STP Standard account PayPal
Low min deposit Payoneer
Guaranteed stop loss

 

Customer Service is available 24/7 via Phone, Live Chat and Email.

 

Pepperstone

Pepperstone was founded in 2010 and is regulated by the Australian Securities and Investments Commission (ASIC), as well as the UK’s Financial Conduct Authority (FCA).

 

Pros and Cons

Pros Cons
Segregates client funds Limited range of instruments
Established in 2010
Min. deposit from $200

 

Trading platforms on offer include MetaTrader 4MetaTrader 5 and cTrader. All three FX trading platforms come with a free demo account which will allow traders to test out the forex broker and platform for 30 days.

 

Trading Benefits

Trading Features: Accounts offered: Funding methods:
Allows scalping Demo account Credit cards
Allows hedging Mini account Bank Transfer
Offers STP Standard account PayPal
Low min deposit MAM/PAMM account Skrill
Offers Negative Balance Protection Islamic account Payoneer
Neteller

 

Pepperstone offers 24/5 multiple language support via email, phone and live chat.

 

Interactive Brokers

Interactive Brokers was founded in 1978 and is regulated by multiple financial authorities including the UK’s Financial Conduct Authority (FCA) and the US Securities and Exchange Commission (SEC).

 

Interactive Brokers offers many account types, which fall into two big groups:

 

  • accounts for individual traders and investors
  • accounts for institutions

 

Pros and Cons

Pros Cons
Low trading cost Pro users incur an account maintenance fee if multiple trades are not made
Invest globally in a multitude of products via a single account Not everyone is eligible to open an IBKR Lite account
No minimum balance required
Tools to bring your trading to the next level

 

Trading Benefits

Tradable Securities Accounts Offered Funding Methods
Stocks Lite Bank Transfer
Fractional Shares Pro
Bonds
Mutual Funds
ETFs
Options

 

Traders can choose between two different web trading platforms:  The Client Portal and Webtrader and IBKR Mobile, Interactive Brokers’s mobile trading platform, is available both for iOS and Android.  Users can trade on Stock, Forex, Option and Futures – to name but a few.

Customer Service is available 24/7 via Live Chat, Phone and Email.

 

City Index

City Index is a Spread Betting, CFD and Forex trading broker which is regulated by the UK Financial Conduct Authority (FCA)City Index offers traders the ability to trade on 12,000+ instruments covering Indices, Shares, Forex, Cryptos and Commodities, all on the MetaTrader 4 platform, the broker’s own proprietary, web-based HTML 5 trading platform or the AT Pro desktop download.

 

Pros and Cons

Pros Cons
Used by 140,000+ traders Doesn’t allow scalping
Established in 1983 Inactivity Fee
Regulated by Financial Conduct Authority, ASIC and MAS Limited range of instruments
Min. deposit from $25
Used by 140,000+ traders

 

Trading Benefits

Trading Features: Accounts offered: Funding methods:
Allows hedging Demo account Credit cards
Offers STP Micro account Bank Transfer
Low min deposit Mini account Payoneer
Guaranteed stop loss Standard account
Managed account

 

Customer support is available 24/5 via Live Chat, Telephone, Email and an Online Contact Form.

 

Forex.com

Forex.com is a platform which can be used for trading foreign currencies and precious metals. Traders can trade over 80 currency pairs as well as silver and gold.

 

Pros and Cons

Pros Cons
Segregates client funds Doesn’t offer VPS
Established in 1999 Not ASIC Regulated
Regulated by Financial Conduct Authority
Min. deposit from $50

 

To open a live trading account, traders will need a minimum deposit of at least $50.

 

Trading Benefits

Trading Features: Accounts offered: Funding methods:
Allows scalping Demo account Credit cards
Allows hedging Mini account Bank Transfer
Offers STP Standard account
Low min deposit ECN account
Islamic account

 

Customer support is available by phone, live chat, or email 24 hours a day during market hours.

 

eToro

eToro is an online broker which was founded in 2006 and offers CFDs and Social Trading, with a head office based in Cyprus, UK.  eToro is supervised by the Financial Conduct Authority (FCA), Cyprus Securities and Exchange Commission (CySEC) regulatory bodies and has been in operation for over 14 years.

 

Pros and Cons

Pros Cons
Used by 6,000,000+ traders Doesn’t allow scalping
Established in 2006 Inactivity Fee
Regulated by Financial Conduct Authority, CySEC, ASIC Limited range of instruments
Min. deposit from $200

 

eToro offers traders two ways to trade: CFDs, Social Trading and eToro traders will need to make a minimum deposit of $200 and the platform can accommodate various levels of traders from beginner to expert.  Traders can trade in a wide variety of over 100 instruments and over 50 currency pairs on eToro’s user-friendly custom trading platform which is available as a browser-based web application. eToro also offers traders mobile apps for Android and iOS, making it easier to keep an eye on and execute trades.

 

Trading Benefits

Trading Features: Accounts offered: Funding methods:
Offers STP Demo account Credit cards
Low min deposit Micro account Bank Transfer
Mini account PayPal
Standard account Skrill
Islamic account Payoneer
Neteller

 

eToro supports a wide range of languages including English, German, Spanish, French, and Italian.  24/6 customer support is available via telephone and support ticket.

 

Make Use of a Demo Account

Nearly all Forex Brokers will offer their users a practice, or demo account. A Demo account will allow traders to place theoretical trades without making an investment. A Demo Account will allow investors to become better acquainted with trading techniques and a gain a better understanding of live trading.  As the old saying goes, Practice makes perfect.

 

Keep the Charts Clean

Once a forex trader opens an live trading account, it may be very tempting to take advantage of all the fancy technical analysis tools on offer. While some  of the indicators are indeed well-suited to the forex markets, it is very important to keep analysis techniques to a minimum in order for them to be as effective as possible. Using multiples of the same types of indicators can become redundant and even result in opposing signals. This should be avoided at all cost.  Any analysis technique which is not regularly used by a trader to enhance their trading performance should be removed from the chart.

 

Trading Account Protection

Proper money management techniques are an important part of Forex Trading. Professional traders would agree that anyone can enter a position at any price and still turn a profit but it is how one gets out of the trade that which really matters.  Part of this is knowing when to accept a loss and move on. Always using a protective  stop-loss order or limit order is a very effective way to ensure that losses remain reasonable. Investors can also consider making use of a maximum daily loss amount beyond which all positions held will be closed and no new trades will be initiated until the next trading session. While traders should plan ahead to limit losses, it is equally important to protect their profits.

 

Go Live But Start Small

Once a trader has done their Forex homework as we mentioned above, spent some serious time with a practice account, and has a solid trading plan in place, it may be time to go live! No amount of practice trading will exactly simulate real trading and it is vital for investors to start off small.  Factors like emotions and  the difference between the expected price of a trade and the actual price at which the trade is executed cannot be fully understood and accounted for until a trader goes live. In addition, a trading plan which performed like a champion in back testing results or practice trading could fail miserably when it goes live. By starting small, a trader can better evaluate their trading plan and emotions, and gain more much needed practice in executing precise order entries without the risk of breaking the bank.

 

Make use of Reasonable Leverage

Forex trading is unique in the amount of leverage which is afforded to its investors. Forex especially appeals to active traders as there is an very real opportunity to make potentially large profits with a very small investment. Properly used, leverage does provide the potential for growth. But leverage can also in turn, amplify losses.  A trader can control the amount of leverage used by basing the position size on the account balance.

 

Keep Clear Records

A trading journal is an excellent and effective way to learn from both profit and loss. Keeping a record of trading activity containing dates, instruments, profits, losses, performance and emotions can be extremely beneficial to growing as a successful trader.

 

Know the Impact of Tax

It is important for traders to understand the implication of tax on forex trading  in order to be prepared for tax season. Consulting with a qualified accountant or tax specialist can definitely be helpful in order to avoid any unwanted surprises .  A Tax Consultant can also help investors to take advantage of various tax laws.

 

Treat Trading as a Business

It is important to treat forex trading as a business. Traders  should keep in mind that individual wins and losses do not matter in the short run. It is how the trading business performs over time which is really important. Traders should try to avoid becoming overly emotional about either wins or losses at all cost and treat each one as just another day at the office.

 

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In Conclusion

The worldwide forex market is an attractive prospect to many traders, with low account requirements, continuous trading, and access to high amounts of leverage. When Forex Trading is approached as a business, it can be profitable and rewarding, but reaching a level of success will be challenging and will take time. Traders can improve their chances to success by taking steps in order to avoid losses. Do research. Do not over-leverage positions. And, use sound money management techniques.

 

Author Details

Louis Schoeman

Louis Schoeman

Featured Forex and Stocks writer

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