Top 10 Forex Brokers in the World

If you want to compare the top 10 forex brokers in the world, you should look for the following criteria. Here are all forex broker bomparison criterias:

Minimum deposit

In order to open a securities account, each Forex broker requires a minimum deposit, which can vary greatly in amount. Generally, however, an account opening between 100€ – 200€ is possible with most brokers.

Regulation

A good Forex broker is regulated by one of the major regulatory authorities such as BAFIN. This ensures that everything is above board and that your money is in safe hands.

Support

Especially if you choose a foreign broker, you should make sure that the support is also in German, so that the forex trading does not fail due to language barriers.

Spread

For the use and provision of the trading platform, the forex trader is usually not required to pay any forex fees. The financing of the Forex broker, who provides the trading platform online, is in most cases done by the so-called spread, which is retained for each trade. While the selling rate of the forex is called the bid and the buying rate of the forex is called the ask, the spread is the difference between these two rates that ultimately benefits the forex broker. The difference between the buy and sell rates is usually so small that it only amounts to a few pips.

A pip, in turn, refers to the amount that represents the fourth, and rarely the third, digit after the decimal point. For example, if the buy rate is 1.5404 and the sell rate is 1.5409, the Forex broker receives a spread of 5 pips from the Forex trader for providing its services. Depending on the provider, the amount of the spread can be either variable and adjusted accordingly to the price fluctuations or fixed. The amount of exchange rate fluctuation is also set in pips. For example, the rate of the euro has increased by two pips if it was recently at 1.5304 and is now at 1.5306.

In addition, there may be other fees for using a Forex Managed Account. In a Forex Managed Account, a professional Forex trader takes over the task of trading on behalf of the investor acting as principal. However, even in this case, no flat fee is charged, but the Forex broker in charge of the Forex Managed Account receives a pro-rata commission in case of profit. If the trade has brought a financial loss, then in this case the Forex broker also goes empty-handed. Therefore, for selfish reasons alone, the commissioned Forex brokers try to achieve the highest possible profit and thus influence the amount of the commission in their favor.

By the way, beginners who use a demo account do not have to pay any fees for this in most cases. Since only play money is traded here, no real spread is due.

Margin

Every trading account must have a minimum margin. This reserve is retained for security, similar to a pledge. As soon as a position is opened, a certain percentage, i.e. a margin accrues as security capital. As long as a position is not closed, the margin remains and may not be used.

PIP

Profits from trading on Forex are made on the basis of the smallest differences between the purchase price and the sale price. These differences are called spread and are measured with the unit Pip. In addition, terms such as points or points are also represented. The pip represents the smallest possible unit within currency trading. Thus, it measures the incremental change in the fourth decimal place of a rate. Since changes within the first two decimal places occur very rarely, it has become common practice among Forex traders to use this unit as the basis of calculations of profits or losses. Despite these minor changes, it is possible to make huge profits or losses with the use of leverage.

Banks and providers that give access to Forex make their profits by mostly 2 to 3 pips, which are not remunerated to the trader. Thus, a price change of more than 3 pips is necessary to make profits. Especially in connection with leverage effects, this makes the prospect of profits again lower for the customer. When choosing a provider, the number of pips until a profit distribution should therefore also be considered.

Price changes in the single pip range can occur every second. Therefore, especially without using stop loss strategies, only active trading makes sense. If, on the other hand, one only trades “on the side”, this can lead to rapid losses. This is particularly evident with low capital very strongly. Losses can then not be covered, which leads to the automatic closing of a trade.

Performance results of trading systems are also measured in pips. These are specialized for trading on the Forex market.

Leverage

Another important feature when choosing brokers is the maximum leverage. When trading Forex, most investors use a large financial lever to achieve measurable profits. This is integrated within the platforms, and is usually courted with the highest leverage. This principle of trading with a lever has also been used in professional trading for a long time.

However, when opening a trade on Forex, the trader must have sufficient capital to trade. Although this does not correspond to the full capital of the position, if the balance is undercut, the trade is closed prematurely. For this, the levers provide liquidity for trading, which usually only banks have. Usually, only up to 2 percent of the trading volume of a position must be available on the account of the user of the platform for a trade.

The benefit for the trader is obvious. The leverage makes it possible to trade large amounts with a manageable stake. This can be best illustrated by an example. If the trader has to deposit 1 percent of the trading volume with his leverage, he can already trade with 100 Euro stake with 10,000 Euro at Forex.

Thus, it is already possible to pursue a trading strategy for daily trading with an account balance of 1,000 euros. A single trading position should never exceed 5 percent of the account balance. Thus, in the event of a loss, the entire account is not empty. Then it is also possible to compensate the loss in the course of further trading. This system is similar to the bankroll management in poker.

When using leverage effects, it is therefore all the more important to observe the price trend. Even a change in price by only 1 percentage point can lead to a total loss of the position and thus also the capital invested. Basically, it is recommended to use a suitable leverage for trading.