Trading forex gives you access to the largest and most liquid market in the world, 24 hours a day, five days a week.
Trading with one of the best forex brokers means you’re working with a broker that operates under strict regulatory supervision, offers robust research and analytical tools, provides access to a wide range of assets, delivers strong customer support, and more—all while maintaining transparent, competitive pricing.
We identified 18 forex brokers and evaluated them based on 73 criteria that is crucial for your forex trading success. After hundreds of hours of comprehensive research, data analysis, and hands-on platform evaluations, these are the best forex brokers.
Investopedia’s Best Forex Brokers
Frequently Asked Questions
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Forex, or foreign exchange, is the conversion of one country’s currency into another. A currency’s value can be pegged to another country’s currency, such as the U.S. dollar, or even to a basket of currencies. The country’s government may also set a country’s currency value.
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Beginner investors should spend time learning about the forex market and researching which forex broker is best suited to meet their needs. It’s important to find a forex broker that is regulated in the United States or the United Kingdom (U.S. and U.K. dealers have more oversight). There are some forex brokers registered in countries with more lax regulatory oversight, and this could be problematic for retail investors who don’t have a solid understanding of the forex market. It is also a good idea to find out what kind of account protections are available in case of a market crisis or if a dealer becomes insolvent.
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Forex can be a highly profitable investment, but as with all high-reward investments, there is a much higher risk involved. Forex investing has a very low entry point, sometimes as little as $50, and forex traders can use leverage to their advantage by basing position size on the account balance. Although there’s a lot of money to potentially be made in the forex market, it would be wise to educate yourself extensively about the market. Start small, limit your leverage, and place stop-loss orders to limit your downside risk.
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The foreign exchange market is extremely liquid and dwarfs, by a huge amount, the daily trading volume of the stock and bond markets. According to the 2022 triennial survey conducted by the Bank for International Settlements (BIS), trading in foreign exchange markets averaged $7.5 trillion per day in 2022. By contrast, the total notional value of U.S. equity markets on Dec. 31, 2021, was approximately $393 billion. The largest forex trading centers are London, New York, Singapore, Hong Kong, and Tokyo.
Key Terms
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Forex
Forex is the conversion of one country’s currency into another. A currency’s value can be pegged to another country’s currency, such as the U.S. dollar, or even to a basket of currencies. A country’s currency value may also be set by the country’s government.
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Currency
Currency is a medium of exchange for goods and services. It’s money, in the form of paper or coins, usually issued by a government and generally accepted at its face value as a method of payment.
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Currency Basket
A currency basket is a set of several currencies with different weightings. It is often used to set the market value of another currency, a practice commonly known as a currency peg. Forex traders may also enter basket orders to trade several currency pairs simultaneously.
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Currency Peg
A currency peg is a policy in which a national government sets a specific fixed exchange rate for its currency with a foreign currency or a basket of currencies. Pegging a currency stabilizes the exchange rate between countries. Doing so provides long-term predictability of exchange rates for business planning. However, a currency peg can be challenging to maintain and distort markets if it is too far removed from the natural market price.
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Pegging
Pegging refers to the practice of attaching or tying a currency’s exchange rate to another country’s currency. Pegging often involves preset ratios, which is why it’s called a fixed rate. Pegs are often put in place to provide stability to a nation’s currency by linking it to an already stable currency.
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Basket Trade
A basket trade is a type of order used by investment firms and big institutional traders to buy or sell a group of securities simultaneously.
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Currency Pair
A currency pair is the quotation of two different currencies, with the value of one currency being quoted against the other. The first listed currency of a currency pair is called the base currency, and the second currency is called the quote currency.
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Base Currency
In the forex market, currency unit prices are quoted as currency pairs. The base
currency, also called the transaction currency, is the first currency appearing in a currency pair quotation, followed by the second part of the quotation, called the quote currency or the counter currency. For accounting purposes, a firm may use the base currency as the domestic currency or accounting currency to represent all profits and losses. -
Quote Currency
In foreign exchange (forex), the quote currency, commonly known as the counter currency, is the second currency in both a direct and indirect currency pair and is used to determine the value of the base currency.
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Pip
A pip is the smallest whole unit price move that an exchange rate can make, based on forex market convention. A pip is one-hundredth of 1% (1/100 x .01) and appears in the fourth decimal place (0.0001)
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Standard Lot
A standard lot is the equivalent of 100,000 units of the base currency in a forex trade. It’s one of several standardized trade sizes for buying or selling currencies. Currencies are traded in lots rather than singular units. There are four common sizes: standard, mini, micro, and nano. A standard lot is also referred to as 1 lot and it’s the largest available.
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Currency Symbol
A currency symbol is a graphical representation that denotes the name of a currency. The symbol is usually, but not always, unique to a specific country or region. These shorthand currency identifiers often appear instead of formal currency names in international and domestic markets. The U.S. dollar (USD) uses the $ symbol to represent a dollar amount. However, other countries also use $ to represent their currencies. To clear up any confusion, the symbol may include a country prefix—e.g., US$ for U.S. dollars.
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Forex Market
The foreign exchange (forex) market is where banks and individuals buy, sell, or exchange currencies. It’s the largest financial market in the world, according to the latest reliable data from 2022, when global daily trading was $7.5 trillion. Made up of banks, commercial companies, central banks, investment management firms, hedge funds, retail forex brokers, and investors, the forex trade is in the mid-2020s more than seven times the daily currency value traded at the beginning of the millennium
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Forward Market
A forward market is an over-the-counter marketplace that sets the price of a financial instrument or asset for future delivery. Forward markets are used for trading a range of instruments, but the term is primarily used with reference to the foreign exchange market. It can also apply to markets for securities and interest rates as well as commodities.
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Conversion Rate
A conversion rate is the ratio between two currencies used in foreign exchange markets. It is how much of one currency is needed to trade for the equivalent value of another currency. Conversion rates fluctuate regularly for all currencies traded in forex markets. Forex spot prices are quoted continuously, with one day’s break each weekend. Conversion rates are essential for international trade, travel, and investment, as they determine the relative value of different currencies and impact the cost of goods, services, and financial transactions across borders.
