Whether you’re just learning to trade or you’ve been doing so for years, finding the right bank for you is essential. It’s no secret ForEx is a risky, fast-paced environment where you can end the day with less money. However, there are plenty of success stories to overshadow naysayers. 

The top-rated bank overall, regardless of experience possessed or specifications needed, is CMC market. It’s well-known in the trading community and is a good baseline for a bank. They even let you practice on a demo account to gain experience and keep all of your assets.     

In this article, you’ll find some great banks, as well as explanations of terms and tools. Go ahead and browse the list of best banks for you and your ForEx journey, as well as compatible and useful tools based on your trading strategy!

Banks    

1.   CMC Market    

Specs  

  • Features
    • Account minimum: $0 
    • Currency Pairs: 300  
  • Functions
    • Demo account available? Yes      
    • Best for: Overall

Synopsis  

Due to its extensive range of currency pairs, no account minimum, and a demo account, this is the best all-around for the average trader. There are a lot of features and currency pairs that may intimidate (and be unnecessary) for beginners, but anyone used to trading would be better off for choosing this one. 

2.   Ameritrade     

Specs  

  • Features
    • Account minimum: $0  
    • Currency Pairs: 70+
  • Functions
    • Demo account available? Yes  
    • Best for: User interface & range 

Synopsis  

Ameritrade is the best for any user, both beginners, and experts. It’s easy to use and has plenty of customization available. This means it has the range to meet the needs of many different types of users, and the best part is there are no fees of account minimums. It’s a great standard account, especially if you’re not too familiar with customization and tools that pair to trading platforms.   

3.   London Capital Group (LCG)   

Specs  

  • Features
    • Account minimum: $0    
    • Demo account available? Yes 
  • Functions
    • Currency Pairs: 60   
    • Best for: Beginners  

Synopsis  

They have a reputation for good customer service, which is why this is such a great bank for beginners. If the ability to ask questions and get assistance is what you’re looking for, this is the way to go! The only problem with LCG is that they don’t take U.S. clients, so that could prevent you from using their site entirely.    

4.   X-Trade Brokers (XTB)    

Specs  

  • Features
    • Account minimum: $0
    • Currency Pairs: 48 
  • Functions
    • Demo account available? Yes   
    • Best for: Inexpensive trading   

Synopsis  

XTB is great for people who want to trade passively, as the costs are pretty low. They do have inactivity fees, so you need to trade at a moderate level to keep these fees down. They don’t really ask for too much, but they do have a pretty low number of currency pairs. So, it’s great if you want to concentrate your efforts on minimal pairs. Luckily, they keep spread amounts low on top of the cost of fees, which is truly a rare thing to find in a bank. Their integrity with their clients is unparalleled!  

5.   IG Group (IG)     

Specs  

  • Features
    • Account minimum: $250  
    • Currency Pairs: 80   
  • Functions
    • Demo account available? Yes      
    • Best for: Intermediate/ established traders  

Synopsis  

The IG Group is best for people who have traded for a while and know how it works, considering there’s a steep price for entry compared to other platforms. If you decide to shell out some cash for this bank, you won’t be disappointed, though. They have plenty of currency pairs and are great for U.S. traders. And they still have a demo account if you want to test it out first! 

6.   Pepperstone     

Specs  

  • Features
    • Account minimum: $200 recommended, but not required  
    • Currency Pairs: 61  
  • Functions
    • Demo account available? Yes     
    • Best for: Experience & good demo account 

Synopsis  

The good thing is this platform doesn’t force a fee out of you but instead advises you. Also, their demo account is arguably one of the best, which can give you a lot of experience before you get an actual account. In fact, this is an incredibly popular platform used among trading instructors when they want to show various features and how to work numerous currency pairs.  

Things To Know

Precursor 

Before you even start looking for a bank, you have to ensure you know what you’re doing. Even those who claim to be beginners should have done a few days or weeks of research.

Think of it this way: one online course, a workshop, and a handful of YouTube videos are what typically qualifies you as a “beginner” in this community.

Obviously, these aren’t hard, fast rules, but don’t jump in without doing any advanced research.   

Finding a solid, upfront, and honest broker can be a difficult search. There will be hidden fees with various brokers. Some are regulated in the U.S., but some aren’t. And when dealing with investor relations overseas, it makes it that much harder to communicate effectively.

As a disclaimer (mostly for you), make sure you find a firm that’s regulated by NFA and CFTC. 

If you lack experience and struggle to decide on a good bank (and perhaps don’t know enough about trading yet!), it may also be beneficial to try doing mock trading.

This will give you experience without breaking the bank. It will allow you to develop your technique, to try out different strategies, and to learn about what to (and what not to) do.  

Trading Secret 1: How To Choose The Best Bank For Your Needs 

(Your) Experience 

Factor in how much the platform will actually help you.

Check reviews for customer support and how promptly they will get back to you. It’s easy to be lured in by low costs or lots of currency pairs, especially if you don’t know what you’re looking for.

Beginners may need something more simple, and experienced traders may have specific banks they’re looking to switch to. Bonus points if they help educate you on their site or in their demo accounts!     

Features

If you’re a little more experienced, then you should start thinking about trading platforms with more features than simply the buying and selling capability.

Look for platforms with browser extensions or add-ons within their site so you can find exactly what you’re looking for.

You will also want an easy-to-navigate interface that’s user-friendly and well organized!

You can always outsource this to something that doesn’t come with your platform (see Toolbox section). But, it’s nice and convenient to have everything in the same place when trading for hours on end.    

Budget 

Almost all the banks listed had a $0 account minimum. If a budget is something you’re concerned about, XTB is the way to go.

Make sure you also look at the spreads of each bank you’re considering, as that is more of an ongoing cost than an upfront fee.

However, since ForEx is such a temperamental form of trading, it’s important to make sure you don’t stretch your savings too thin due to the risk factor involved. 

You also have to keep in mind there are lots of little hidden fees in trading:

  • Inactivity fees
  • Commissions
  • Spreads
  • Things like that

Brokers try to make money through these fees and, that may not be obvious at first glance. 

Mobility

If you are more of a traveling trader than an office trader, a desktop-only may be limiting for you.

Try to see if your trading platform offers some sort of app that you can put on your tablet or cellphone. Make sure it’s up to par (or comes close to) the quality of the desktop app before you start traveling, though! 

Trading Secret 2: Tools 

Tools are the secret weapon of traders. Anyone can trade based on a single pattern or clip of news, but not everyone knows how to interpret tools and charts to form an unshakeable strategy.

Tools allow you to truly know what’s going on and what to look for, to make more informed and better decisions. Some tools basically do the work for you – if you have a strategy, you can make notifications go off when you’re at a point you think is good to trade.

When considering which bank to trade from, look at the tools they make available. Your success truly depends on what tools you need, as you aren’t going to need all of them.

In this little cheat sheet called “Toolbox” featured below, you can become well-versed on the items that will truly step up your game, and decide which you need.

Tool Box  

ForEx trading tools are broken down into two main categories: fundamental analysis and technical analysis. Among strategies, these two are the most common and easy to understand. They’re sort of the umbrella for other ForEx strategies.   

  • Technical analysis looks at patterns and the prices themselves. A pip calculator tool is perfect for this strategy. 
  • Fundamental analysis is when you look at factors that affect the currency price, such as social and political policies and politics in general. Therefore, something like an economic calendar is a great resource for this strategy.

Therefore, where technical analysis looks at the market directly at what it’s doing (through graphs and patterns), fundamental analysis looks outside the market at what influences it (political and economic policies).

Both types of these tools are pretty easy to find. There are also plenty of options when it comes to deciding between variations of the same tool. 

Where To Find

You can find plenty of tools online or within your trading platforms. This is a pretty easy and standard way to do it.

Babypips, a well-known website and service in the trading industry, offers a few tools on their site that are the most relevant for traders. You can also see a couple of similar tools on Mataf. 

Both Mataf and Babypips are frequently used and spoken about amongst traders.

You can also look for tools on websites that specialize in ForEx news. You can use:

  • Apps
  • Webpages
  • Computer programs
  • Or a combination

For simplicity, this section will list types of tools based on your primary trading strategy, a few for both types of traders, and explain how they all work and what they’re good for.

Tools for Technical Analysis 

Pip Calculator  

First, you need to know what a “pip” is in trading. A pip is essentially a way to evaluate the base level for trading.     

According to this article on Investopedia, they explain a pip like this:

  • “ForEx currency pairs are quoted in terms of ‘pips,’ short for percentage in points.
  •  In practical terms, a pip is one-hundredth of one percent, or the fourth decimal place (0.0001).
  • Currency base pairs are typically quoted where the bid-ask spread is measured in pips.”

So, a pip acts as a gauge. It measures the change in an exchange rate for a given currency pair (which is the whole concept of ForEx). It uses the last decimal point in the series.

The pip calculator takes out the legwork and calculates this decimal percentage for you. It also helps you decide as to whether the pip is worth it in the local currency.

It has the function to show the relation of pip value for a currency pair!

It’s pretty easy to use:

  • You just enter the information it prompts you to.
  • It calculates the currency pair’s value in each position and allows you to manage the amounts of each of your positions.    

One great pip calculator is the Babypips’ version. This one is easy to use and has a great user interface.

It’s also pretty quick to load! This is one numerous traders in the industry use due to its reliability and ease of use!

Currency Correlation 

“Currency pairs” make up the ForEx exchange market. These are things like EUR/USD (Euro/U.S. Dollar). The relationship between these currencies can be calculated with an online tool.

Basically, you have a positive (same direction) or negative (opposite direction) correlation. As long as the currency you have is doing better than the paired one, you are making money.

You can find these currency correlations on your trading platform’s website more often than not, and usually, the information is free as well. 

A really good version of the currency correlation tool is the one by Mataf.

Mataf has some great tools, as the “Where To Find” section will direct you to. Like Babypips, this one also has ease of use and is quick to load. It’s slightly more complicated than some sites, but it gives you enough precision that you’ll need. You just need to take a little time to learn how to do it. 

Volatility Calculator

In trading, volatility measures the fluctuation of price in a period of time. To actually profit off the ForEx market, the market needs to be volatile.

You also need to make sure the pairs you’re trading with are volatile as well!     

Basically, a volatility calculator looks over the past exchange rate details and predicts your specific currency pair’s volatility as it is the day of calculation. You can also get a time span to refer to past details, like a short-term of a week or long-term of a year.

You can then compare how volatile the currency pair is now compared to how it’s historically been and decide if you want to trade that pair. 

Volatility is great for potential, but the caveat is the amount of risk associated with it.

If you want to be a more conservative trader, you will need to look for less volatility. Your key takeaway should be that higher volatility equals more opportunities to earn but also implies more risk.   

A good platform for solely technical analysis is called MetaTrader 4.

In this article, four great volatility indicators that MetaTrader 4 has to offer are outlined and explained. It’s a great platform that includes nearly every type of indicator you need to trade.

It is great if you focus the most on technical analysis and are dedicated to learning all the charts and their meanings. It’s not a platform for the “casual trader.”

It’s also compatible with other online brokers, which makes a smooth transition for your use and provides an element of standardization among the many different tools you’ll be managing.

There’s also a lot of customization built into the program. You can get custom elements that would be slightly more standardized within other software and trading programs.   

Tools for Fundamental Analysis   

Economic News Calendar

Even if you lean more towards a technical analysis approach, there’s no denying that the economic news calendar is one of the best resources out there for traders.

Traders that use a technical analysis approach tend to pay little attention to news and such as it fluctuates so much. However, this calendar provides definite dates where there’s no denying the impact of an event.

It’s basically a list of relevant news related to trading and when the events occur. It also provides predictions, political and economic news, financial policies, and bank statements.  

Impact and type of release are the bread and butter of an economic news calendar. It’s important to know how to read them, so here’s a brief overview:   

  • Type of release 
    • Type of release included
    • Previous release’s outcome
    • Market’s expectation for the upcoming release  
  • Impact (of release)
    • Significant
    • Medium
    • Low
    • No impact

A release’s impact is basically how much it changes from the market’s expectation for the upcoming release. The lower the impact, the more confidently you know what will happen based on the expectations.

This also makes each trade riskier, but potentially more profitable as there will likely be greater fluctuations with an unstable (or highly impacted) market.

You may be able to find a release impact provided from your trading platform, and if not, there are websites specifically about finance and trading news. 

If you’re a fundamental analyst, it is best to mark the releases on your calendar when they come in, which is usually about a week prior.

Pro Tip: Just make sure you don’t check it once and leave it, as sometimes things get changed or postponed.

You don’t want to be in the dark, as you’ll be confused about why the market is going a different direction than you thought.

An informed trader is an effective trader. 

More News Resources

Besides the official news calendar, you can get regular news through various sources, as many fundamental analysts do. The Wall Street Journal tends to be a common source used.

Big names are great for overall news and fluctuations about foreign countries, such as learning about Brexit or elections. You can get a little more specific if you’re looking for that information with independent sources specializing in niche content! 

Besides each country’s political news and events, you can also look at the news regarding their banks and financial situations. This part of the news is equally, if not more, important.

Pay special attention to when these institutions publish things from press conferences and implement (or plan on implementing) new policies.    

Tools for Technical or Fundamental Analysis 

Time Zone Converter

As there are different time zones and you’ll be trading across them, it’s important to track what’s going on and when. You can use two primary methods to monitor this: manual or graphed.

A web page, smartphone, graph, or manual clock are all tools you can use, just base them on what you need with your situation. 

A ForEx Time Zone Converter is a helpful tool. Just plug in the time you’re in and look at the time you’re trading in. This is the long way to do it, as you need to calculate each location’s time.

For more convenience, you could bookmark this page, so it’s quick to reference as well. It’s probably easier if you trade over longer periods of time or only have one or two pairs to check.

If you typically trade the same currency pair, you can simply keep a time zone clock in your office or put a widget on your smartphone. If you trade multiple, you can actually keep a map of the world with spliced time zones and just do a little math without having to pull up a lot of webpages. 

If you decide to keep a reference graph, mark the biggest markets, and emphasize them (London, New York, Tokyo, and London).

This will be especially easy if you’re trading within those currencies for simplicity’s sake.

Pay attention to the windows of overlap, as the most difference in trade will be made during those times.

Broker Spread Comparison

Before you trade, you want to consider the spread.

The spread is the difference between how much you buy for and sell for.

You can think of it as a built-in fee instead of charging a full fee per trade.

No matter if you are using the technical or fundamental type of analysis, each trade will have a spread associated. 

A “tight” spread is less expensive for traders, so it’s something to look at. Essentially, it reduces your “expenses” per trade.

Usually, it’s better to have tighter spreads if you’re a short-term trader, as you’ll have to pay less per trade. You can take a look at the average spread quoted for popular currency pairs.      

You can browse averages among sites like this one.

Spreads are something to consider when you’re still deciding which bank to choose for your ForEx trading. You don’t want to look after you’ve chosen a bank because you will usually stick to one bank when trading.

So browse a few now based on things like currency pairs you wish to trade.

Documentation

This can be used for any trader, no matter the strategy, if they trade on stock exchanges or the foreign exchange.

Your best bet is to keep track of what you do.

You’ll learn a lot along the way, and you can remind yourself of what works, and details from your notes will remind you of why it works.

This is an effective measure that plenty of professional traders swear by to track:

  • Their wins and losses
  • Best currency pairs
  • When they sold
  • What tools they used
  • The volatility of the market at the time
  • The events of the economic calendar going on at the time   

Not only can you remember what to do, but you can also remember what not to do!

You can build strategies, things to look out for, and any little “secrets” you gather from research.

Just make sure you review your notes after a day of trading and summarize so you won’t forget.

You can make flashcards for things you forget while trading and even use Quizlet if you’re on the go!

And make sure to refresh your memory on old summaries every once in a while. 

The Takeaway

ForEx is a tricky business.

Between deciding on a bank, learning what tools to use, and honing in on a strategy, it’s a lot to juggle. Not only that, but the stats for trading can be really low for the average trader.

However, with persistence, education, experience, tools, and a good bank, you will be on your way to stacking money in no time. Stay educated, be careful, and have fun in your pursuit of happiness (and money)!