Best Forex Brokers In October 2020

 

 © FrankvandenBergh/Getty Images A picture of dozens of currencies

Trillions in currency are zipping around the world, 24 hours a day, five days a week, making the foreign exchange (also known as forex or fx) markets the world's most active. Fortunes can be won and lost quickly, as brokers routinely let traders borrow heavily to finance their speculations.

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If you're looking to get in on this action, you'll need a broker who deals in currency, and many of the big names in stock trading simply don't offer this feature. And because the markets are so different, you'll also need to evaluate a forex broker on different criteria from what you would use on a stock broker. Below are some top forex brokers, including a couple that allow customers to trade cryptocurrencies.

Here are the best online brokers for forex trading in 2020:

TD Ameritrade

Forex.Com

Ally Invest

IG

Robinhood

What to consider when choosing a forex broker

While you may be familiar with many of the brand-name online stock brokers, only some of them deal in forex trading. Instead, a plethora of more specialized niche brokers populate the space, and they may cater to high-volume currency traders looking for every possible edge.

But regardless of which kind of broker you're targeting, you'll want to focus on at least a few features that are common to any forex broker:

Pricing: Forex brokers have two ways to price their services: by baking the price into the buy-sell spread or on a commission basis. Spreads are often quoted in pips, or one ten-thousandth of a point.

Leverage: How much leverage will the broker let you assume? In general, traders are looking for a higher amount of leverage to magnify the moves in the currency market. The level may differ on the liquidity of the currency.

Currency pairs: A handful of major pairs dominate trading, but how many other pairs (minors, exotics) does the broker offer? The most popular currencies include the U.S. Dollar, the euro, the Japanese yen, the U.K. Pound and the Swiss franc.

Spreads: How wide are the broker's spreads for trades? The larger the spread, the less attractive the trade. Of course, brokers who charge a spread markup will tend to have wider spreads because that's how they get paid.

Investors looking to buy cryptocurrency may be able to do so through some of the traditional stock brokers such as TD Ameritrade or Robinhood. These have been noted below, though the trading works differently from regular forex trading as described above.

One downside for American traders is that many top forex brokers are based in the U.K. And simply won't accept them because of their citizenship. The brokers below are all fine for Americans, however.

Overview: Top online forex brokers in October 2020 TD Ameritrade

TD Ameritrade offers a range of tradable products, and currency really rounds out its portfolio. Currency traders are able to use the broker's highly regarded thinkorswim trading platform, and can also trade on a couple of mobile apps. The broker uses spread pricing and offers 50:1 leverage, which is the legal maximum permitted in the U.S. It offers more than 70 currency pairs, providing plenty of options. TD Ameritrade also allows clients to trade Bitcoin futures, though you'll need to get approval to trade futures, and pricing uses the broker's futures scheme.

(As of November 2019, Charles Schwab has agreed to purchase TD Ameritrade, and plans to integrate the two companies once the deal is finalized.)

Pricing: Spread

Maximum leverage: 50:1 on major currencies; 20:1 on minors

Currency options: 73 pairs

Forex.Com

Like its name suggests, Forex.Com specializes in currency trading (though it trades in metals and futures, too) and it offers a plethora of attractive features. Clients can select the pricing structure that suits them best: spread or commission, or the broker's STP Pro pricing, where prices come from global banks and others with no additional markup. Forex.Com also gives traders access to more than 80 currency pairs, and its success with clients has the broker declaring that it's the No. 1 forex broker in the U.S., in terms of assets held with the broker.

Pricing: Spread and commission, depending on account type

Maximum leverage: Up to 50:1

Currency options: More than 80 pairs

Ally Invest

Ally Invest is better known as a low-cost stock broker (and for its especially good prices on options trades), but currency trading really adds some breadth to its offerings. Ally is a good choice for traders just starting out, and it offers more than 80 currency pairs and easy-to-use charting software, including a mobile app. Ally also allows you to open a $50,000 practice account so that you can see how currency trading works, even if you don't intend to actually trade.

Pricing: Spread

Maximum leverage: Up to 50:1

Currency options: More than 80 pairs

IG

IG is a more specialized broker focused on forex, and it's open to American investors. It's a high-powered broker that nevertheless offers many features, such as a demo account, that may help novice traders. The broker offers a web platform, a mobile app and access to MetaTrader4 and ProRealTime platforms. IG allows spreads as low as 0.8 pips, and says that its pricing is up to 20 percent lower on the euro-dollar pair than the top two U.S. Brokers. The broker also provides an extensive range of charting capabilities across its platforms.

Pricing: Spread

Maximum leverage: Up to 50:1

Currency options: More than 80 pairs

Robinhood

Robinhood doesn't offer traditional currency trading, but it does bring the slick, easy-to-use interface it's known for to the crypto space. Here clients can trade a range of cryptocurrencies, including some of the most popular. Tradable currencies include Bitcoin, Ethereum, Litecoin and Dogecoin, among a total of seven types of cryptos. You'll also be able to get quotes on 10 other digital currencies. Like its core brokerage that offers free trades on stocks and options, crypto trading is also gratis (free) on Robinhood.