Best Forex Brokers Comparison Guide

Finding the best forex broker for your needs is critical when currency trading.

Below provides a criteria to help select the best broker.

There are five key areas to consider when selecting a forex broker:

  1. Costs
  2. Platform
  3. Speed
  4. Regulation
  5. Features

Costs

It’s hard to overlook the cost of trading with any currency broker which in the long-term can be higher than other financial products. This isn’t due to the lack of competition but features such as leverage that a forex broker needs to provide. There are two main areas of costs, spreads and commissions.

i) Spreads

Every currency broker has a ‘buy’ and ‘sell’ price. Traditional currency exchange providers (such as those on the airport) display these openly. The largest the distance between these two elements, the more the broker will make. As forex traders want to minimise currency trading costs, find a broker that not only advertises a low ‘minimum spread’ but also a low ‘average spread’ is critical.

Forex Broker Spreads

ii) Commissions

To reduce spreads, some of the best forex brokers offer ECN direct market access options. These allow forex traders to directly access liquidity pools (such as the banks) and the actual live market prices. Brokers in these scenarios charge a commission based on volume to offset their costs associated with customer service, leverage and the platform offered.

iii) Other Costs

Forex trading brokers often have other associated costs for those holding positions over the weekend or overnight. Additional charges may also apply for premium platform and charting options and finally news services.

Platform

There are a plethora of forex platforms but only one or two are offered by each forex broker. For experience traders this will often help short-list the best forex brokers as they won’t want to switch their forex platform. For those new to forex trading, there are two sets of forex platforms to consider.

i) Universal Forex Platforms

There are two forex brokers that are the most popular world-wide and are offered by most of the best brokers.MetaTrader FX Broker Australia Platform

1) MetaTrader 4

MT4 is the worlds most popular forex broker. It is designed for today’s busy trading environment with analytics, in-depth news, real-live charts and quote and the option of expert advisors for automated currency trading. The forex  platform offers secure trading, the option to export data in real time through a DDE protocol and advanced charting.

2) cTradercTrader FX Broker Australia Platform

This forex platform is one of the most innovative in the market for ECN currency trading. The trading platform was built with speed and depending on the forex broker can help traders get access to interbank liquidity required for algorithmic trading systems.

The two platforms above are quite similar but in general, MT4 attracts more users focused on EAs due to improved resources, availability the the online community. cTrader draws those looking to customise the interface with expert order options. Overall, traders often choose a platform they are familiar with or feel uses a similar logic to their own trading styles.

ii) Propriety Forex Platforms

Some brokers offer only their own platform while others offer the choice of a universal platform or their own. There are no issues of using the forex brokers platform (especially if they offer lower spreads) but it will make it difficult long-term to switch forex brokers. It this isn’t an issue for you, then you should consider the forex platform recommended by the forex broker. Some such brokers include:

1) IG Web Trading Platform

IG is Australia’s largest CFD broker and have a web-based platform complemented by apps for Android, Apple and Windows tablets and mobile phones. The big advantage of the IG platform is that you can trade shares, indices, commodities, bonds and even bitcoin. This is worth considering if your looking for an all-in-one platform.

2) Easy Markets Platform

Easy Markets offers MT4 as well as their own platform which has a few unique features including dealCancellation which allows traders to cancel any deal within an hour to recover their losses. There is also guaranteed stop losses at no extra cost. Spreads are fixed with guaranteed rates through the platform ensuring no slippage. There is also negative balance protection.

3) CMC Next Generation Platform

CMC only offers their own platform which has some strong graphing features including price projection tools and the ability to trade straight from these graphs. There is a client sentiment feature to see  real time ‘Position Value’ of other traders. There is also pattern recognition scanners to highlight possible trading opportunities.

4) Trading Station Platform

FXCM has their own trading station platform that is ideal for automated strategies. It allows for back-testing and visually represents trades. The platform provides equity and balance charts and detailed summaries of performance. A unique FXCM feature is also Real Volume indicators which provide strategy support through real market sentiment.

Speed

The ‘top 10’ forex brokers in Australia all have one elements in common, they have the technology and platforms to provide fast execution speeds when online trading. Generally, there are two ways the best brokers maximise speed:

Equinix Forex Server LocationThird Party Servers

Most Australian forex brokers user offshore server companies that are located close to exchanges. For US liquidity the most popular provider is Equinix’s NY4 center. Through the Equinix Financial eXchange, the high performance data centres exchange data with strategic partners near wall street. This leads to a maximisation in liquidity from a variety of partners and fast execution speeds due to their close proximity.

The other popular provider is the LD5 IBX Equinix Data in London. While the NY4 centre is used by MetaTrader 4, this data centre is utilised by cTrader. This has close proximity to the London Internet Exchange providing fast access to not only UK liquidity but other European countries liquidity.

Providers Own Servers

Only a handful of the largest retail brokers can afford to have their own servers. Examples include IG who have a worldwide network. It’s hard to quantify if these are faster then the specialist technology companies so it’s worth noting the execution speeds our recent analysis found.

Regulation

There are a number of regulators worldwide such as the fca and cysec. For Australian forex traders when comparing the different brokers, the key element to look for is if they have an Australian Financial Services Licence (AFSL). If they have an AFSL, it means they are regulated to trade in Australia with requirements to segregate client deposits, complete audits and reach a level of training. Exchanges such as cysec may have lower requirements and many forex brokers reviews highlight this face.

All the forex trading brokers listed in our comparison site have an AFSL and have been established in Australia for some time.

Features

The final element are the unique features that some of the best forex brokers provide traders. Five such features include:

1) Guaranteed Stops

Almost all online brokers offer stop-loss features but few offer guaranteed stops. This feature ensures that you can’t lose more that the predefined amount placed even in turbulent market. This can help protect against slippage which can be significant when large movements occur.

2) No Negative Balance Guarantee

A handful of brokers have a ‘no negative guarantee’ which means you can’t lose more than your deposit. This is a critical risk management tool as in extreme events you may otherwise lose more than your deposit and have to pay back the broker large sums of money.

3) Fixed Spreads

Spreads for most brokers will vary every minute that currency markets are open. Fixed spread brokers will ensure you know your trading costs upfront providing certainty in an uncertain market. It should be noted that in the long-term, variable spread brokers offer lower fees. The feature here is transparency and reliability (not lower costs).

4) High Leverage

Leverage is critical for any trader as currency movements are relatively slight compared to other financial products. Higher leverage means higher risk but many traders strategies rely on high levels. It’s critical therefore to understand the level of leverage you require and find a broker that matches this level.

5) Online And In-Person Training

Training for those new to currency markets or looking for advanced strategies is always a good idea. Most currency brokers will offer free online training and modules but only a few will offer a dedicated account manager, webinars and in-person training. It’s worth understanding your needs and ensuring the broker will meet your expectations.

Our List Of Australian Forex Brokers

Below is a list created in August 2016 for Australian forex brokers which have an Australian Financial Services Licence (AFSL). Each one has an office in Australia but some have their headquarters overseas. The list below is in alphabetical order and not by the number of Australian forex traders on their books. To view our recommended brokers view our forex trading comparison table.

  1. Admiral Markets
  2. AETOS
  3. Alpha Broking
  4. AvaTrade
  5. AxiTrader
  6. BMFN
  7. City Index
  8. Core Liquidity Markets
  9. DMM FX
  10. eToro
  11. Easy Forex
  12. EightCap
  13. Forex.com
  14. Forex FS
  15. FP Markets
  16. FXCM
  17. FXOpen
  18. Global Prime
  19. GO Markets
  20. Halifax Investment Services
  21. Hantec Markets Australia
  22. IC Markets
  23. IG
  24. Invest
  25. Pepperstone
  26. PhillipCapital
  27. Synergy FX
  28. ThinkForex
  29. USGFX
  30. Vantage FX

Australian forex traders should consider an appropriate broker from the list above.

 

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