Best Forex Trading Accounts
What is a forex trading account?
An online forex trading account is an account where you can deposit funds for the purpose of investing in currencies. When you have a forex trading account with an online brokerage, you can use their trading platforms to buy and sell forex currency pairs. This will include major currency pairs such as the EURUSD and GBPUSD, minor currency pairs such as the EURGBP and EURAUD, exotic currency pairs such as the EURTRY and USDDKK.
What makes a good forex trading account?
Most forex brokers will offer a variety of trading account types to cater to the different needs and investment sizes of forex traders. Whether you’re looking to invest for the long term or buy and sell forex currencies regularly, you can find a broker that provides your ideal account. Some of the key features to consider when looking for the best forex trading account for you include:
One of the most important things to look for is that the forex trading account is offered with a brokerage firm that is regulated. A regulated forex broker can give investors certain protections that an unregulated forex broker cannot.
Minimum forex trading account deposit
Each forex trading account will have a minimum investment size required to open the account. Some forex brokers offer accounts from just $1 whereas other specialised account types can require much larger deposits of $500+.
Forex trading account leverage
A leveraged forex trading account allows you to trade with a larger position size than you would be able to without leverage. Whilst this can also increase potential profits, it can also significantly increase risks. You should make sure that you have a clear understanding of how leverage works and only open a forex account with a leverage that you feel comfortable with.
Forex trading platforms
If you are familiar with a particular forex trading platform then you may want to make sure the forex account types offers that platform. If you are new to online trading then you may wish to consider a forex trading platform that is user friendly such as the popular MetaTrader platforms which are provided by most forex brokers. The trading brokers review team have compiled a list of our best MetaTrader brokers. Some investors may wish to use a social trading platform so if you do, check that this is available before you open a forex account.
Forex trading tools
When you are looking to trade forex online, you are likely to need some tools to analyse the currency markets. This can include technical indicators, fundamental tools such as economic calendars and sentiment analysis, trading calculators, Trading Central, etc. The more tools a forex account has, the more detailed FX market analysis you will be able to conduct. If there is a particular tool that you cannot trade without, it may be worth making sure that it is available on your chosen brokerage account.
Some brokers offer the same currency pairs across all types whereas others have a different selection depending on the account type. You will want to make sure that the forex trading account that you are considering has all of the currencies that you would like to trade online now and in the future. If you plan to trade assets other than forex, you should also check that these are available. Other asset classes include stocks, commodities, cryptocurrencies, precious metals and energies.
Forex account fees
When you trade forex online you will usually need to pay a commission fee to the forex broker for entering and/or exiting your positions. Check the commission on each trading account and consider how it will affect your money management and if it is a charge that you are happy with. If you are looking to save on trading costs as much as possible, you can take a look at our best discount brokers.
Forex account spreads
When you are trading forex online, you will usually need to pay a spread for each position that you take. The spread is the difference between the bid and ask prices of the currency pair. Some forex brokers offer fixed spread and variable spread accounts. You should make sure that the spread type and size is suitable for your forex trading strategy. E.g. forex traders who use scalping strategies usually require low spreads whereas swing traders may not be so concerned with the spreads.
Forex account fees
In addition to the commission and spreads, forex trading accounts can incur other fees that you should be aware of and clarify with your forex broker if need be. Other forex trading fees can include rollover/swap, account inactivity fees and deposit/withdrawal fees.
Forex account funding options
The forex trading accounts provided by brokers will support different methods to make deposits and withdrawals to and from your account. Common payment options include bank wire, credit/debit card and online payment processors such as PayPal, Skrill and Neteller. You should check that the forex brokers accounts support those methods that are most convenient to you, considering how long each can take and the costs that may be involved.
Brokers can have different execution models on each forex account type. Some forex brokers utilise an STP/ECN model with no-dealing desk (NDD) interference and thus no conflict of interest between broker and traders. Others will incorporate a market maker model which means that they take the opposite side of the trade. You should consider what execution type you would prefer and choose the relevant trading account type.
Most forex brokers use a combination of liquidity providers (LPs) such as banks and funds. This is where they get their price quotes from. Usually, the more LPs that a forex broker has, the better the prices they can offer to forex traders are.
Some forex accounts have minimum and maximum position sizes. You should check that the account type you are considering supports the position sizes you plan to use now and in the future.
It can be beneficial especially for beginners to opt for a forex broker that has a forex academy with a selection of forex trading guides, tutorial videos and webinars. These can help to familiarise users with the difference between the forex account types provided. If you are new to trading online and would like as many educational resources as possible, you may wish to take a look at our best brokers for beginners.
Best Forex Trading Accounts: Open A Forex Account
Opening a forex trading account
Opening a forex account requires that you provide your chosen forex brokerage with some personal information which will usually include your contact details, proof of identity and address confirmation. This is a normal part of know your customer (KYC) procedures to ensure that brokers are compliant with anti-money laundering (AML) policies. Some brokers will ask for details about your financial experience which is just to make sure that their forex trading services are suitable for you.
Once your trading account has been verified which can be within the same day, you are able to make a deposit and trade forex online. Different forex brokers may have different requirements depending on the jurisdiction and how its business operates. Simply choose a forex broker and forex trading account that meets your needs, follow the account opening process and you will be able to start trading forex online.