It’s important to know that a regulated Forex broker is the best type of Forex trader for you. Whether you are an individual investor, a hedge fund, or even a corporate trader, there is an online Forex broker that is right for you.
A Forex broker is an intermediary that helps you trade currencies. It allows investors to get into the market and trade using one account, whereas if you were to purchase your currency directly from a vendor such as TD Canada Trust, they would identify you as a customer. In order to maintain anonymity in the marketplace, most Forex traders will use a Forex broker to do their trading for them.
The Forex market is the largest market in the world for trading currencies with a daily turnover of about US $1.5 Trillion per day, where over 2 billion people trade on currency pairs involving the U.S. dollar and other leading currencies such as:
Euro / Dollar (EUR/USD) Yen / Dollar (JPY/USD) Australian dollar / U.S. Dollar (AUD/USD) Pound Sterling / U.S. Dollar (GBP/USD) Canadian dollar / US Dollar (CAD/USD) Swiss Franc / U.S. Dollar (CHF/USD)
Most of these transactions or 85% are conducted electronically through a Forex broker.
If you are planning to trade online, you should be aware that not all brokers who offer currency trading services are regulated by their respective governments. Regulated Forex brokers have the necessary licenses and permits to operate as a business based in your local country.
- Standard benefits:
– You will be trading with a licensed broker.
– You’ll have access to more currency pairs.
- Emotional benefits:
– You will feel secure about your investment decisions.
– You will have the assurance that you are working with an honest company.
In the U.S., the Commodity Futures Trading Commission (CFTC) regulates Forex brokers in both futures and options trading. They do this so that investors can trade with confidence without worrying about market manipulation or fraud – two things they fear could have negative effects on their economy.
In Canada, the Financial Services Commission regulates Forex brokers. The FSC was founded to protect Canadian retail investors from losing their money in fraudulent investment schemes that were prevalent throughout the 1990s. It’s their job to ensure that financial companies are following all appropriate rules and regulations when it comes to running a business with public or private funds.
Individual investors – If you are an individual investor, a regulated Forex broker can help you open an account simply by registering through their website. You will then be able to trade using your own money and learn how to work the market as if it were a game.
Hedge fund traders – Most hedge funds use a Forex broker’s services to execute trades. If you were a hedge fund, for instance with $5 million in your bank account, you would want to use an online Forex broker where the minimum amount required to open an account is $10,000 or even $1,000 so you could scale up your trading if needed.
Corporate traders – Corporations often use Forex brokers to hedge against an impending currency fluctuation. One example is a company shipping goods to China from the United States. They need to make sure that if their currency depreciates (i.e.: U.S. dollar), it will be offset by its depreciation against other currencies, such as the Chinese Yuan (RMB).
Here are the best online brokers for 2021, based on 256 variables.
- TD Ameritrade – Best overall, best for beginners.
Great trading platform, great tools. The opening account can be a bit tricky because you need to open an account with another broker first and then transfer the funds to TD Ameritrade. Some people find it unnecessarily complicated. Interactive Brokers – Best for experienced traders. They offer zero commissions on a lot of products including futures and Forex (except if you want that they charge $0.003 per share).
- Fidelity – Best for everyday investors.
If you are looking for a regulated Forex broker that offers the widest range of currency pairs, Fidelity has you covered. There is no reason to look anywhere else as this broker provides clients with four different order types including advanced orders such as trailing stops and fill or kill.
This broker also provides investors with tight spreads and excellent execution speed from its own global network of liquidity providers.
For individuals and small businesses who are looking for access to the Forex market, Fidelity offers accounts with as little as $10 available.
- Charles Schwab – Best IRA accounts.
Charles Schwab has long been known for offering innovative trading solutions. In 1994, the company launched its first internet-based trading portal and in 1999, it was one of the first regulated Forex brokers to offer online trading in over 180 different currencies pairs with no fees for retail investors.
In addition to having access to a wide range of currency pairs, investors at Schwab can also take advantage of the company’s award-winning trading platform.
- Interactive Brokers – Best for professionals.
Interactive Brokers is one of the most popular Forex brokers for online traders that are looking to scale their operations. Although it is a firm favorite with hedge funds, this broker also provides retail investors and corporations with access to over 80 global market centers. In fact, IB offers its clients almost all types of orders at no additional cost including conditional orders and advanced orders.
Even though this company is popular among active traders, it also offers account types that are designed for beginners. However, you will need a verified account before you can trade there.
- TradeStation – Best for advanced traders
As the largest, most advanced online trading platform in the world, TradeStation offers traders access to over 100 markets. In fact, this broker has won many awards including being recognized as one of the top-rated brokers for customer support. The company offers a full range of services and products that are designed for individuals who want to learn how to trade Forex on a global scale.
Whenever you talk to a professional Forex trader, he or she will tell you that Forex trading can be highly profitable. It all comes down to finding the right broker for your individual needs and requirements.
Although there are literally hundreds of regulated Forex brokers available to trade with, not all of them have the qualities that traders look for in a good broker. It is important to find out which of these qualities are important to you so that you can avoid wasting your time and money on the brokers that aren’t suitable for your needs.
A lot of traders have been burned by low-quality Forex brokers, but this doesn’t mean that they won’t try again with another company. The bottom line is that there are several factors to consider before opening an account at a regulated Forex broker.
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