Best Forex Trading Platforms for Beginners Ranked

You’ll not find too many forex brokers operating in the US, especially in comparison to other hubs like the UK. This is largely due to the strict regulatory environment. Every forex broker needs to be authorized and regulated by the Commodity Futures Trading Commission (CFTC) and must hold a regulatory status with the National Futures Association (NFA). Besides the authorization from regulatory bodies as such, forex brokers also need to hold at least $20 million as a Retail Forex Exchange Dealer (RFED) with the CFTC (and as a member of the NFA).

You can check regulatory compliance directly through the broker’s website, most of which disclose their license number at the bottom of their homepage. For illustrative purposes, here’s OANDA’s disclosure;

“OANDA Corporation is a registered Futures Commission Merchant and Retail Foreign Exchange Dealer with the Commodity Futures Trading Commission and is a member of the National Futures Association. No: 0325821.”

You can then look up the firm on the NFA website using the Background Affiliation Status Information Center (BASIC) tool.

Finding a regulated FX broker is important to ensure the platform has been vetted for safe financial practices. Regulation ensures that your money is safe in the forex broker account, and you can count on the company's professionalism to look after your funds. The US holds a very tight ship, and for this reason, it's one of the most trusted FX hubs globally.

Beginner traders would want to learn the basics of trading currencies to increase their chances of profiting. Ideally, the brokerage platform will offer in-house training material to help you understand the basics and offer advanced strategies. The type of educational materials includes blogs, detailed tutorials, videos, webinars, and a community forum where users can discuss problems and solutions.

Risk management tools are a great feature for beginners to help reduce the size of potential losses and close orders before an account goes into a negative balance. Advanced platforms tend to offer sophisticated risk management tools, like Interactive forex Brokers’ IB Risk Navigator, but more often than not, risk navigation is done through different order types – most notably stop-loss orders.

Stop-loss orders allow traders to close out a position automatically by buying or selling an asset when it reaches a certain price, known as the stop price. It has more versatile versions such as trailing-stop loss, like trailing stop-loss orders, which adjusts the stop price at a fixed percentage below or above the foreign exchange market price of a security.

Here is a table with notable risk management features from the top forex broker platforms for beginners:

Complicated interfaces are already daunting for beginners – it’s even more important to have a clear outlay when dealing with complex and risky securities such as currencies. Ideally, best forex brokers for beginners support a clearly organized interface that doesn’t forego depth in features. The best way to assess personal suitability is to simply test out every feature and platform quality through a demo account.

It’s also ideal for a platform to support full functionality across products to ensure a seamless switch between devices. While many online forex brokers now adopting a mobile-first approach, the degree to which services overlap still varies across outfits. If you prioritize being on top of your trades while on the go, seek platforms that include all their offerings within the mobile application.

Demo accounts are crucial for beginner to understand ins and outs of forex trading, as well as the workings of the platform to assess whether it suits your experience and personal preferences. Trading with virtual money in a simulated market environment is a much less unnerving way to get acquainted with trading risky and complex securities like forex, and is important to utilize to minimize capital loss.

Commissions, spreads, and overnight swap charges concern the forex traders the most – and they vary widely by broker. The most common fees include;

• Commission: FX brokers may charge a percentage fee for trading currencies, which tend to go lower as the trading volume increases. Yet, many brokerages now waive commissions following Robinhood’s tremendous success.

• Fixed Spread: The fixed spread is beginner-friendly because it helps in accurate trade cost planning and protects against expensive trades. The catch is that it may lead to slippage and re-quotes if oline forex brokers use an instant execution model to offset the lost charges.

• Variable Spread: Variable commission trades may result in a better deal, but the costs are unpredictable, especially in volatile markets.

You can start forex trading with as little as $100 as long as the minimum deposit requirements set by the forex brokers allow – but you’ll need to trade larger amounts of money to increase your chances of profiting. As a beginner, starting with a small amount makes sense to learn the ropes, but the size of your returns grows in proportion to the amount staked.

Currencies are traded in pairs in 3 different market types:

• Spot Forex Market: Spot trades refer to the exchange of currencies immediately as the transaction is confirmed or within a short period of time.

• Forward Forex Market: This trade type refers to the trading of currencies at an agreed price at a future date or range of dates.

• Future Forex Market: This involves a contract that is legally binding to buy or sell a currency at a specific price and at a future date.

Most traders will not physically receive the currency they are trading. Instead, they are betting on the irregular price movements of a currency pair.

While there is no centralized forex trading location, FX hubs exist that account for most trades. The biggest FX trading hubs in the world are the United States, the United Kingdom, Singapore, Hong Kong, and Japan.

Base Currencies, quote currencies, and pairs

Currencies are traded in pairs with what is known as a base and quote currency. The base currency is the first currency listed, and the quote currency is the second one. When you buy a currency pair, you buy the base currency and sell the quote currency – when you sell a pair, you sell the base currency and buy the quote currency.

Each currency has a 3 letter code such as USD for the United States Dollar and GBP for British Pound Sterling and this trading pair would be expressed as USD/GBP, which involves buying British pounds and selling US dollars.

The rate for this transaction is 0.81, which means that for every US dollar sold, you would receive 0.81 British pounds.

Pips, lots, and margins

• Pip: A pip is the smallest price movement possible for an exchange rate, so bid/ask spreads are quoted in pips. The pip size varies based on the exchange rate and trade value.

• Lots: Buying and selling small amounts of currency is not practical; therefore lots exist. Lots are set prices for a batch that ranges from 100 to 100,000 units of currency.

• Margin: Through a margin account, you can borrow from the forex broker to increase your buying power. This magnifies the profits as well as the losses and should be used with caution.

Now, let’s take a look at the pros and cons of trading forex for beginners for a balanced overview and help you decide if it’s something that you'd like to venture into.

Picking the best currency pair to trade requires extensive research about the markets. Traders usually prefer the pairs with the highest volume, which include:

• EUR/USD

• USD/JPY

• GBP/USD

• USD/CHF

Forex pair categories

• Major: These currencies are defined as those having the highest average trading volume such as the US dollar, Euro, British Pound, Japanese Yen, Swiss Franc, and New Zealand Dollar. Major currencies are typically liquid and stable, and come with very tight spreads, therefore most suitable for beginner traders.

• Minor: Pairs that don’t include US dollars are called minors. They come with slightly higher spreads and are usually slightly less liquid than majors.

• Exotic: These pairs include currencies from emerging markets. They exhibit the most volatility, come with much wider spreads, and are the least liquid in comparison.

Volatility

While the totality of the FX market is highly volatile, the aforementioned major currency pairings show the least volatility in comparison. The more volatile pairings are often enticing for many traders as steep price swings create numerous trading opportunities and increase the scope to realize a profit – but that also increases the risk exposure by a landslide.

As a beginner, it's wise to stick with less volatile currencies until you are more acquainted with the market behavior and have a greater understanding of what drives the price swings.

Active times

Forex markets are available for trading 24/7, but at certain times of the day, they have higher trading volumes. The biggest trading markets are in London, New York, Sydney and Tokyo, and they are in different time zones. Therefore, GBP currency pair trades will peak during London’s working hours.

However, the trading volume is highest when the working hours of several market hubs overlap. This is the time when you can expect the highest volatility levels and the difference between the bid and ask prices narrows.