Read more on forex trading risks. Steven Hatzakis is the Global Director of Research for ForexBrokers. Steven previously served as an Editor for Finance Magnates, where he authored over 1, published articles about the online finance industry. A forex industry expert and an active fintech and crypto researcher, Steven advises blockchain companies at the board level and holds a Series III license in the U.

as a Commodity Trading Advisor CTA. Blain Reinkensmeyer has 20 years of trading experience with over 2, trades placed during that time.

He heads research for all U. com and is respected by executives as the leading expert covering the online broker industry. John Bringans is the Senior Editor of ForexBrokers. An experienced media professional, John has close to a decade of editorial experience with a background that includes key leadership roles at global newsroom outlets.

Joey Shadeck is the Content Strategist and Research Analyst for ForexBrokers. He holds dual degrees in Finance and Marketing from Oakland University, and has been an active trader and investor for close to ten years.

An industry veteran, Joey obtains and verifies data, conducts research, and analyzes and validates our content. com is committed to the highest ethical standards and reviews services independently. Learn How We Make Money. Home Forex Guides Directory. November 15, Best overall broker, most trusted Minimum Initial Deposit £ Pros Outstanding platforms and tools Over 19, tradeable instruments Competitive pricing Cons No predefined layouts on the flagship web platform Limited product range on MT4.

Pros Flagship platform is top of the line Over 40, tradeable instruments Excellent customer service Cons High minimum deposit. Pros Low trading costs Excellent web and mobile platforms Robust research materials Cons Educational offering could be improved MT4 offering limited to 62 symbols.

Pros Robust platform for professional traders Wide range of global markets Thorough research offering Cons Trader Workstation platform is likely too complicated for inexperienced traders.

Best desktop platform, U. Pros Outstanding platform in thinkorswim Thorough research offerings Excellent educational materials Cons Does not offer copy trading Forex pricing is slightly higher than industry average. Pros Multiple high-quality platforms Excellent market research Wide range of markets Cons Only about instruments are available on the MT5 platform, compared to over 4, on non-MetaTrader platforms.

Pros xStation 5 platform is an industry standout Robust selection of trading tools Excellent customer service Cons Pricing is just average. Excellent all-round offering Minimum Initial Deposit £ Pros Excellent platforms and mobile app Extensive range of markets High-quality market research Cons Pricing is average for the industry Limited product range on MT4.

Pros Large number of investors to copy Extensive range of markets to trade User-friendly platforms and app Cons No automated trading strategies Stops, limits mandatory on trades Research trails competitors. security Find a trustworthy broker: ForexBroker. percent Pro tip: For most beginners, trading forex with an amount of capital that you can afford to lose can be a great way to learn with less risk, and can be of value if you focus on the percentage returns rather than their dollar value.

smartphone Mobile forex trading If you're a fan of mobile platforms — or trading forex on the go — see our picks for best forex trading apps here. biotech Methodology: To determine the best forex brokers for professional traders, we broke down each broker's active trading program, and compared all available rebates, tiers, and all-in costs. Submit Details. Steven Hatzakis Steven Hatzakis is the Global Director of Research for ForexBrokers. Blain Reinkensmeyer Blain Reinkensmeyer has 20 years of trading experience with over 2, trades placed during that time.

John Bringans John Bringans is the Senior Editor of ForexBrokers. Joey Shadeck Joey Shadeck is the Content Strategist and Research Analyst for ForexBrokers. Saxo Bank. CMC Markets. Interactive Brokers. TD Ameritrade. City Index. FP Markets. Admiral Markets. IC Markets. XM Group. Fineco Bank. HYCM Henyep. Trading Moneta Markets. Trade Nation. These signal sellers earn a kickback from the broker every time you make a trade. The attraction here is obvious. Shut up and take my money!

Much like the case of signal sellers, not all robots are scams. Major banks use computer software to automatically make billions of dollars in trades every day. But many of these robots are either not as good as advertised or are outright scams.

Here are a few things to look out for. Beware of unrealistic claims. Look for realistic numbers, not fantasies. Find out what broker the robot trades through. Many unregistered forex brokers offer robots. Not all brokers deal with regulated trades. As a matter of fact, the majority of forex trades are spot trades, and those types of trades are completely unregulated.

So how do you know if your broker is reliable? In the US, they would be regulated by the SEC and FINRA. In the UK, they would be regulated by FCA. Phony Funds and Ponzi Schemes. Another common foreign exchange scam is the phony fund.

You send them your money, and you never hear from them again. How do you avoid these types of scams? Simply avoid funds that are based in high-risk countries. The biggest offenders are Belize, Vanuatu, and Estonia.

These countries are notorious for turning a blind eye to this kind of scam, so criminals feel comfortable operating inside their borders. There are two warning signs that a fund is running a Ponzi scheme. First, they promise unrealistic rates of return. Ponzi scammers lure in new investors by promising ludicrous return rates, counting on their unrealistic promises to continue drawing in more money. In this case, you can simply have your bank or credit card company issue a chargeback to recover your money.

This can be a complex, time-consuming, and intimidating process for the average person. Contact us for a free consultation. We recover your money or you owe us nothing. When did you make your deposits? All these rules should be part of your trading plan and to be profitable, you should always stick to your plan! Read: What are Trailing Stops? Read: Who are the Best Forex Traders in the World? Forex trading also uses leverage that can magnify your returns as well as your losses in a very short period of time.

This leverage allows you to manage more money than you currently have in your trading account for potentially higher profits. We encourage you to learn more by starting with these popular ones:. This includes real-time charts and trading tools, its trading conditions to test your own trading system. Learn the skills needed to trade the markets on our Trading for Beginners course. Short on time? Get a PDF version.

Next: Step 2 of 4. The MYTS Forex Trading Guide. Chapter 3. WHY IS FOREX POPULAR. HOW DOES FOREX WORK?

So, you might like the idea of being a Forex trader, but it is not right for everyone. Trading is a zero-sum game so there are going to be winners and losers but this ratio led us to two conclusions: This underscores the importance of working out if Forex is right for you…before you consider risking your money on it. Learn more, take our premium course: Trading for Beginners. Because the market can be volatile , there is always the risk of losing money when trading a currency pair.

Before even considering trading, you need to know the basics of the markets, what influences them, and how trading works. And How to Overcome it Trading Psychology: How to Control Emotions While Trading. When making trading decisions, you can be right and make money , but you can be wrong and lose money.

Fast-changing market conditions, high volatility, and leverage can make Forex trading a high-risk activity. Must-reads: Why Trading Forex Part Time May Be the Best Option for You 7 Day Trading Styles and Techniques of the FX Market.

The Forex market is open round the clock, which allows you to trade whenever you want. Forex trading is often geared towards technical analysis, so if you have sound knowledge of price study, charting and technical patterns, Forex trading might be a good fit for you. Forex trading is often geared towards technical analysis. Commitment, patience, and dedication are the most important ingredients in trading.

The Forex market has been a fast-growing market over the last 20 years. Read: What is Illiquidity in the Financial Markets? Get started in trading. We encourage you to learn more by starting with these popular ones: Take our free course: Getting Started with Charts Take our free course: How Traders Interact with the Markets Take our premium course: Trading for Beginners.

And unfortunately, many newcomers to forex trading have unrealistic expectations about how it works and how profitable it can be. Without proper guidance or mentorship, forex trading can be hard! The forex market is fundamental to the way that international economies operate and the way in which goods and services flow around the world. Rather, currencies are bought and sold directly between different parties, across a variety of channels.

Given its non-centralized, direct form of trading between parties, the forex market is often referred to as an over-the-counter OTC market. The majority of forex trading occurs in a handful of global financial hubs— the UK, the US, Hong Kong, Singapore, and Japan. Forex trading is a complex business with lots of terminology—what follows are some of the essential elements of what makes up forex trading. This simple process underpins all currency trading— you sell one currency and buy another —always working in pairs.

And although there are hundreds of different countries in the world— hence dozens of different currencies —most currency trading occurs with just seven major currency pairs.

All the major currency pairs involve the US Dollar USD —this is by far the most traded currency in the world. These abbreviations are widely accepted codes used to reference currencies.

The first two letters of each code usually but not always refer to the country or region of the currency and the third letter usually refers to the currency itself. In, GBP , for example, the first two letters— GB —refer to Great Britain , the region of the currency. The last letter— P —refers to pounds , the name of the currency. The ordering of this sequence is important—the first currency of the pair is called the base currency and the second currency is called the quote currency.

So, the price of a forex pair is expressed as how much one unit of the base currency is worth in the quote currency. Here, USD is the base currency and AUD is the quote currency, hence you can buy 1 USD by selling 1.

To help make things easier when talking about movements in currency prices, forex traders often talk in terms of pips. It is a market convention for a small price movement in the forex market. So, in our quote example, if the USD-AUD price moved from 1. In the forex markets, as in any market, the balance between supply and demand determines the price at which trading actually occurs. The difference between these prices is called the spread.

This makes sense—if it were the other way around, you could buy a currency at a lower price and immediately sell it at a higher price and make an instant profit. So, as a way of standardizing trading volumes in forex markets, currency trading occurs in batches called lots. Leverage in forex trading allows you to trade on larger amounts than you actually need to provide capital for.

To illustrate, consider again our leverage example. While leverage has its obvious appeal, as it can magnify losses as well as gains it should be managed carefully. Excessive leverage, especially for novice traders, can lead to very large losses on capital. These margin calls can come at any time, depending on your cumulative losses, and can sometimes take you by surprise.

This can lead to devastating results, as it often occurs at the worst possible time, ie. when market prices are down , exacerbating your losses. This is a dreaded word in trading— drawdowns —which is the term used to describe cumulative losses. More specifically, drawdowns describe any amount of cumulative loss to your capital that occurs, whether the individual trading losses occur sequentially or not.

You then hit a bad patch, and over a two-week period you have both winning days and losing days, but mostly losing days. Your capital goes up on winning days and down on losing days, but it ends up being overall down over the two-week period. As you become more experienced in your trading, your drawdowns will be one of the strongest indicators of your trading success.

And if you ever plan to trade forex on behalf of others , one of the first things that potential investors will want to look at is your drawdown history— if your drawdowns are managed carefully i. The high liquidity in forex markets— at least in the major currency pairs —translates to lower spread costs. Hence, a trading program in forex generally costs less, all else equal, compared with other markets.

But for carefully risk-managed trading, more leverage means that less capital is required for your desired level of market exposure. And, of course, the leverage that you choose to use will also depend on your personal level of risk tolerance. Overall, the forex market offers many benefits for traders compared with other markets, and this is one of the reasons why forex trading has gained popularity with retail investors over recent years.

But the forex markets can be quite restrictive for some traders—there are only a handful of major currency pairs, for instance, compared with the hundreds or thousands of liquid stocks available for trading.

Volatility in forex markets also tends to be lower than other market s , such as stocks or crypto, which can reduce the number of trading opportunities in forex.

But ultimately the choice of which markets you wish to trade in—forex or otherwise—will depend on your individual risk preferences and your favored trading style. Are there forex traders who make huge returns, increasing their capital many times over in a short period of time? Yes, some do. The reality is that most successful traders make small, consistent gains rather than outsized returns.

It may not sound very exciting, but it counts. And small consistent gains can be very meaningful when reinvested over time, thanks to the power of compounding. Forex scams are usually presented as trading systems or education courses that typically promise fabulous— unrealistic —results. You may be tempted by slick advertising or false claims, perhaps with free giveaways or free seminars to get you started. Keep in mind that there are some genuine courses and systems on offer, but these are typically more straightforward and low-key in their presentation.

Andrew Lockwood, for instance—a veteran forex trader and head of Forex Signals , a forex education and mentorship community—suggests the following key areas to be aware of when considering a forex trading system:. Choosing a good broker will also give you access to a good range of currency pairs in forex or other instruments and markets if you plan to trade beyond forex.

Well, understanding how brokers work— the differences between them, the technology options available, and the ways in which the retail and professional brokerage markets differ —is a complex area. But here are the essential things to look out for:. Based on these criteria, the following brokers are recommended by Forex Signals for their reliability, pricing, and execution non-US residents :. For US residents , brokers that are regulated by the CFTC, NFA, or both, are a good choice—three of the most popular are: IG , OANDA , and Forex.

Forex trading is a legitimate way to make money. However, forex scams abound, so you need to be aware of what to look for to avoid these. And yes, forex trading can be profitable— there are many successful forex traders who make consistent profits every year. Recommended brokers include Axi , Avatrade , and IC Markets.

But perhaps the biggest challenge for newcomers is to have expectations that are realistic— the industry is awash with false promises and potential scams. He has over 25 years of professional experience in the financial industry. The views expressed in this article are solely for informational purposes and do not represent financial advice in any way whatsoever.

Risk Disclaimer : Trading CFDs, forex, and other financial instruments, especially if leveraged, is risky. Depending on the type of instrument, you may not own or have rights to the underlying assets. Past performance is no indication of future performance and tax laws are subject to individual circumstances and are also subject to change at any time. Forex trading is often promoted as being easy, automated, and very profitable—but is this too good to be true?

This article introduces algorithmic trading for individual investors—what it is, how it works, whether it can be profitable, and how it differs from institutional algorithmic trading.

HDS is reader-supported and we may receive compensation from affiliate links on this site at no extra cost to you— learn more Please Note: Trading financial instruments, including forex, is risky— please read our risk disclaimer Yes— forex trading is a legitimate way of making money. Contents What is the forex market? How forex trading works Currency pairs Pips Spreads Lots Leverage Drawdowns The benefits of trading forex Is forex trading profitable? How much can you make trading forex?

Beware of forex scams Choosing a forex broker Conclusion What is the forex market? Think back to the last time that you traveled to a foreign country. Or, think about the last time you bought a TV or other device from your local store. These are two everyday examples of the need for foreign currency exchange— forex. How forex trading works Forex trading is a complex business with lots of terminology—what follows are some of the essential elements of what makes up forex trading.

Currency pairs Forex trading occurs in currency pairs. These are: United States Dollar USD vs Euro EUR United States Dollar USD vs Japanese Yen JPY United States Dollar USD vs Great British Pound GBP United States Dollar USD vs Australian Dollar AUD United States Dollar USD vs Canadian Dollar CAD United States Dollar USD vs Swiss Franc CHF United States Dollar USD vs New Zealand Dollar NZD Do you notice anything? Using these codes, currency pairs are expressed in adjacent sequences.

For instance, USD-EUR represents a US Dollar-Euro currency pair. Based on the convention, a pip is the fourth decimal place in a currency price quote. The buy price will always be higher than the sell price.

Lots Currency trading can be a little abstract compared with, say, share trading. A standard lot is , units of the base currency. So, 1 standard lot of USD-AUD refers to , US dollars worth of currency. Leverage Leverage in forex trading allows you to trade on larger amounts than you actually need to provide capital for. Why does this matter? Leverage allows you to magnify your potential gains in forex trading. But leverage can be risky, as it also magnifies your losses.

But it can work the other way around as well , magnifying trading losses. Drawdowns This is a dreaded word in trading— drawdowns —which is the term used to describe cumulative losses. Drawdowns matter! Is forex trading profitable? The simple answer is— yes, maybe.

But they are rare , and there may be a fair degree of luck involved.

Popular Insights Forex. Based on these criteria, the following brokers are recommended by Forex Signals for their reliability, pricing, and execution non-US residents :. ALL REVIEWS. Overall, the forex market offers many benefits for traders compared with other markets, and this is one of the reasons why forex trading has gained popularity with retail investors over recent years. In the US, they would be regulated by the SEC and FINRA.

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