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Trillions of currencies circulate around the world, 24 hours a day, five days a week, making the foreign exchange market (also known as forex or fx) one of the most active markets in the world. Fortunes can be won and lost quickly, as brokers routinely allow traders to borrow large sums of money to finance their speculations.
If you want to do this, you’ll need a broker that handles currency, and many of the big names in stock trading don’t offer this feature. Because the markets are so different, you also need to evaluate a forex broker on a different basis than the criteria you would use to evaluate a stock broker.
Below are some of the top forex trading brokers, including pairs that allow customers to trade cryptocurrencies.
Overview: Top online forex brokers in January 2023
TD Ameritrade
TD Ameritrade offers a variety of tradable products, and currencies really make up for its portfolio. Currency traders can use the highly respected broker “thinkorswim” forex trading platform, and can also trade on several mobile apps.
The broker uses spread pricing and offers 50:1 leverage, which is the legal maximum allowed in the U.S. This broker offers more than 70 currency pairs, providing a wide choice. TD Ameritrade also allows clients to trade Bitcoin futures, although you must obtain approval to trade futures, and pricing is using a broker’s futures scheme.
(Charles Schwab has bought TD Ameritrade, and will eventually integrate the two companies.)
- Price: Spread
- Maximum leverage: 50:1 on major currencies; 20:1 in minors
- Currency options: More than 70 pairs
Interactive Brokers
Interactive Brokers is known for its low fees and powerful trading platform which is preferred by active and professional traders. Forex traders will not be disappointed by the state-of-the-art trading tools available as well as real-time quotes from many of the world’s largest forex brokerage banks. You can even trade stocks on international exchanges and attach forex orders to hedge currencies at the same time.
Interactive Brokers will also start offering some cryptocurrency trading in 2021. You can trade popular cryptocurrencies like Bitcoin and Ethereum with attractive commissions.
- Price: Commission: 0.08 – 0.20 basis points
- Maximum leverage: Up to 50:1
- Currency options: More than 100 pairs
Forex.com
As the name suggests, Forex.com specializes in currency trading (although it also trades metals and futures) and it offers a lot of interesting features. Clients can choose the pricing structure that suits them best: spreads or commissions, or the broker’s STP Pro pricing, where prices are from global and other banks with no additional markup.
Forex.com also gives traders access to more than 80 currency pairs, and its success with clients has led the broker to state that it is the No.1 forex broker in the US, in terms of assets held by the broker.
- Price: Spreads and commissions, depending on the account type
- Maximum leverage: Up to 50:1
- Currency options: More than 80 pairs
Allied investment
Ally Invest is better known as a low cost stockbroker (and for very good prices on options trading), but currency trading really adds to the breadth of its offerings. Ally is a great choice for traders just starting out, and offers over 80 currency pairs and easy-to-use charting software, including a mobile app.
Ally also allows you to open a $50,000 practice account so you can see how currency trading works, even if you don’t intend to actually trade. Given the difficulty of forex trading, it is a great resource for beginners to try.
- Price: Spread
- Maximum leverage: Up to 50:1
- Currency options: More than 50 pairs
IG
IG is a more specialized broker focused on forex, and open to American investors. This is a high-powered broker that still offers many features, such as a demo account, that can help novice traders. The broker offers a web platform, mobile app and access to the MetaTrader4 and ProRealTime platforms.
IG allows spreads as low as 0.8 pips (one pip is a ten-thousandth of a point), and says that prices are up to 20 percent lower on the euro-dollar pair than the top two US brokers. The broker also provides various charting capabilities across its platforms.
- Price: Spread
- Maximum leverage: Up to 50:1
- Currency options: More than 80 pairs
- What to consider when choosing a forex broker
While you may be familiar with many of the branded online stock brokers, only a few of them deal with forex trading. Instead, a large number of more specialized, niche brokers filled the space, and they could cater to the high volume of currency traders looking for every edge possible.
But regardless of the type of broker you are targeting, you should focus on at least a few features that are common to any forex broker:
Pricing: Forex brokers have two ways to price their services: by plugging the price into the buy-sell spread or by commission. Spreads are often quoted in pips, or ten thousandths of a point.
Leverage: How much leverage will your broker assume? In general, traders look for higher levels of leverage to magnify movement in the currency market. The rates may differ depending on the liquidity of the currency.
Currency pairs: A number of major pairs dominate trading, but how many others (minors, exotics) does the broker offer? The most popular currencies include the US dollar, euro, Japanese yen, British pound and Swiss franc.
Spread: How wide is the broker’s spread for trading? The bigger the spread, the less attractive the trade will be. Of course brokers who charge spread markups will tend to have wider spreads because that is where they are paid.