By James Hunt
If you’re thinking about getting involved in forex, you’ll likely have seen how vital trading platforms can be to success. You need to find one that suits your trading style and preferences, along with a US or offshore forex broker you can rely on.
The right combination of platform and brokerage trading account can give you everything you need in terms of market access and the functionality necessary for executing successful trades.
In this article, we’ve gathered the top platforms and compared their pros & cons. We’ve also put together key considerations for US traders when searching for a forex broker.
The big three trading platforms
MetaTrader 4 (MT4)
MT4 is the platform used by most forex traders. It boasts the most extensive user base and provides tools to achieve almost any practical trading objective. Traders can open a wide variety of market entry and exit orders, use risk management tools, and tailor their trade management strategies.
ZuluTrade is a pioneer in ‘social trading’, where traders keep tabs on other successful traders and aim to benefit from their successes. ZuluTrade offers retail forex traders a system of consulting and copying other traders’ trades in real-time — an attractive alternative for many novice traders out or those who don’t have time to conduct detailed technical and fundamental analysis in every trading session.
NinjaTrader is another popular option used by both currency and derivatives traders. It offers advanced analytics and serves close to 50,000 users worldwide. The platform has an excellent reputation for customer service and speedy trade execution.
How to choose a US or offshore forex broker
As crucial as trading platforms are to forex success, having a broker you can trust is just as essential. As a US citizen, the range of choices can be limited or confusing. An offshore broker can give you more options, but regardless of where they’re based, there are vital considerations when choosing the one that’s right for you.
Access to forex markets doesn’t come for free. Brokers charge fees for their services and interest on any leverage you take advantage of for the duration of the market exposure on any position. Depending on the broker you trade through, these costs can eat away at a healthy portion of trading returns.
Understanding charges and how they’re levied against your trading activity is vital, as fees cut into your profits. Forex traders also have to be aware of the financing charges that longer-term positions accrue. That will help you set the optimal time frame for each trade. You need to understand the thresholds for breaking even and profiting on an individual trade.
The level of service you’ll receive from different brokers varies from one to the next, and some charge more to reflect the degree of input they have on the trading process. If they offer more in terms of advice and guidance to traders, expect to pay more. In these situations, traders will pay higher costs that are more or less proportional to the broker’s comprehensive service offering.
In addition to commission, brokers also pass on their financing costs, creating another income stream for the brokerage along the way. To provide the leverage necessary to fund different leveraged positions that traders open, a broker will offer to lend enough money to bridge the gap between a position’s value and the amount of money the trader has in their trading account.
Because it’s a kind of loan, it comes at a price — initially to the broker but eventually to the trader. Interest is typically charged on positions that rollover from one trading day to the next. These kinds of financing costs are calculated on the value of the entire transaction (including the margin amount — the difference between the value of the trade and the amount of money in the trader’s account)
Most brokers use an annualized rate and apply it daily. As such, the longer a position stays open, the more interest the trader has to pay.
The commission you pay in forex trading is wrapped up in the spreads offered by different currency markets. The spread is the difference between the bid and the asking price offered by the market at any given time, and the gap is calculated into the proportion of each trade that the broker keeps as its commission. Spreads are calculated differently from broker to broker but usually appear as fixed, floating, or percentage-based spread pricing.
Which broker is best for US traders?
Looking for forex brokers accepting US clients that you can trust? Each one has its own fees, rules, policies, and services. Before you choose one, you’ll need to dig a bit deeper.
Particularly for offshore brokers, look on Capterra or Trusted Reviews to work out which ones have the highest trader satisfaction ratings. Then make a shortlist and choose one or two to try out first.
Then sign up for a demo trading account, which allows you to start trading currency and getting to grips with the broker’s trading platforms straight away, but in a simulated environment so that no real money is at risk. Demo accounts are hugely popular as they enable novice traders to get practical trading experience and ‘feel’ what it’s like to make trading decisions that can lead to gains or potentially put funds at risk.
That freedom to gamble with pretend money is vital to refining your trading skills and preparing for the day when you put your own capital at risk. Even if a bad trading decision tanks your funds, the loss is virtual. You can notch it up to ‘lessons learned’, and you’ll identify the weaknesses in your approach, allowing you to change tack.
Since no actual cash is at risk, there’s no limit to how many demo accounts you can set up. However, keeping yourself to one or two will allow you to give the demo accounts enough attention for learning.