Best Online Forex Brokers 2021
Online Forex trading has become a growing phenomenon in the digital age. To accommodate this new age of investors, a new breed of online brokers emerged to fulfil this function. Optimized for a seamless web and mobile experience, online Forex brokers have grown more sophisticated by increasing the ease of access into the markets for clients who have demonstrated that they like to trade any time, any place.
There are many options for traders nowadays but the best online Forex brokers standout by offering good customer service, low fees and a reliable/ easily accessible platform. Choosing a Forex broker can be extremely difficult however the information below aims to make this process simpler for you.
What Is an Online Forex Broker?
An online broker is a provider that allows its clients to open and close positions in financial markets using a digital platform. Online brokers offer lower fees than bricks-and-mortar brokers. They usually also offer resources for educating users on the basics of do-it-yourself investment trading. There are various types of online brokers, from CFD brokers, binary options and even traditional stockbrokers now have an online presence.
The Emergence of Online Brokers
With the emergence of the Internet, traditional brokers have been unable to compete with online brokers in terms of affordability, diversity of offerings and global reach. After the 1980s where the first batch of online brokers were introduced traders quickly realized the myriad of benefits they offered. Initially, the focus of online brokers was on inexpensive and simple trading. Since then, they have become more sophisticated and targeted.
Online brokers were able to replace traditional Forex brokers mainly due to two technological advantages the Internet offered: less expensive trade execution than their offline counterparts and access to superior information.
Online Brokers have brought Trading to the Masses
All in all, online brokers have contributed to a rise in the number of people who trade. As younger generations spend more and more time online, online brokers provide the ultimate trading experience. Their platforms are built specifically to be fast, accurate, safe and user-centric to facilitate trading and bring it to the masses. As a result, they can handle thousands of transactions at the same time, opening up financial trading to more people than anybody could have expected.
Furthermore, by creating databases of resources and educational materials, online brokers encourage the emergence of online communities around their platforms with common interests and financial goals.
Pros and Cons of Online Forex Brokers
Trading with online Forex brokers offers unique benefits but it carries some risks as well. To determine if this is the route for you, check out some of the pros and cons of using an online broker.
- Lower fees
- More control and flexibility
- No brokerage bias
- User-centric trading experience
- Access to online tools and resources
- Real-time monitoring and alerts
- Risk of losing a lot of money too fast
- No personal relationship with brokers
- Addictive nature
- Errors due to software glitches
Online Scam Brokers
With the rise of the popularity of online brokers, there has been an increase in the number of unscrupulous brokers, most of which are unregulated. Scams are common with the National Fraud Intelligence Bureau, which is a division of the City of London Police, logging an average of 27 complaints relating to unregulated binary options brokers every month since 2016.
Trading with reputable online brokers seems like a no-brainer but it’s easier said than done as many scam artists build legitimate sites and even post fake positive reviews about their business on different social channels.
Spotting a suspicious online broker is not the easiest of tasks but there are various red flags. Slow order execution times may be an indication that the broker is waiting for the market to move significantly in the broker’s favour before executing the order. Charging egregious trading commissions, fees or spreads or charging hidden fees to customers for unclear or ‘extra’ services. Freezing trading platforms or suspending trading during busy market hours are popular ways to prevent a customer from executing an order at the desired price. Many unscrupulous online brokers also make withdrawing funds from their platforms unnecessarily difficult with additional KYC procedures, longer verification times and absurd withdrawal fees.
When choosing the best online Forex broker, traders can learn a lot about a broker by reading and researching the firm’s website before they open an account. Online reviews and clear, detailed information about margin requirements, leverage, products offered for trading mean that the online broker is more likely to be reputable.
Should an online Forex broker be regulated?
Yes. A reputable broker should disclose which agencies regulate it. Ideally, it should also list the registration and license numbers under which it operates.
Can I have accounts with multiple online brokers?
Yes. There are no restrictions on the number of accounts one person can have with different online brokers.
What market coverage should the online broker offer?
Traders should be able to trade any FX pair or product of their choice/preference.
Is trading experience as important as pair diversity?
Yes. If not even more. You have to move funds to and from the broker, quickly and preferably cheaply. Many online broker platforms are configurable, so they can be tailored to suit you. Personal preference will play a large part here, as many trading platforms offer very similar services, but look and feel very different. It is important to have access to a mobile platform desktop web trading platform that is easy-to-navigate, secure, fast and reliable.