Forex, or the foreign currency exchange market, can be one of the most opaque sectors of trading today. In part that’s because of just how fast these prices change. The best currency traders make their money in seconds off arbitrage, taking advantage of tiny shifts in prices as economies balance themselves on an ongoing basis. When Americans take vacations in Europe, the forex market imperceptibly shifts. When a Russian family buys a Japanese car, an Australian office leases computer services from Canada or a Brazilian factory sources raw materials from Kenya, it’s reflected in the currency market. In other words, forex tracks the real time story of life around the world.
Most investors will sharply increase their chances of success in forex trading by working with a financial advisor experienced with such securities.
For the people who trade in this market, keeping up with this story requires fast and precise tools. In this roundup we’ll take a look at some of the best platforms for trading in this environment, whether you’re looking for an advantage in price, data, tools or speed.
A Note on Forex Trading Platforms and U.S. Investors
As a threshold matter, many forex platforms do not accept U.S. clients due to SEC regulatory restrictions. This is a particular issue in the forex space because, by definition, foreign currency markets work across national borders.
This includes many outstanding options in the forex trading space, that is itself dominated by the U.S. dollar. In fact many of the platforms generally regarded as the strongest forex platforms on the market cannot accept American traders. We have not included these platforms in this roundup as it is illegal for U.S. investors to use them.
Best for General Trading: thinkorswim Pros:
TD Ameritrade’s thinkorswim platform is, simply put, one of the best investment products on the market. It has already appeared in some of our other “best of” lists for its comprehensive features, and it earns a place here, too.
TD Ameritrade is one of the few full-service brokerages that support forex investment. Most avoid this asset class in general. That fact alone makes this a firm that forex investors should keep an eye on, as you can manage your entire portfolio from one place. However, TD Ameritrade capitalizes on that by offering forex through its thinkorswim platform.
It must be stresed that thinkorswim is one of the best trading platforms on the market today for sophisticated trading. It is a feature- and data-rich investment tool that allows you to manage your assets with a wealth of information and trading tools. It is one of the best ways to trade almost any mainstream asset, and that includes foreign currencies. It’s also why using thinkorswim alone is a reason that any experienced trader of investment securities should consider TD Ameritrade.
TD Ameritrade has two main negatives.
First, thinkorswim is an immensely complicated platform to use well. Now, this should not necessarily be a downside to trading foreign currencies. The forex market is itself enormously complex and incredibly risky. Moving in this space takes expertise, so using a similarly complex tool makes sense in many ways. But thinkorswim adds a steep learning curve to an already tricky trading environment, and you should approach it accordingly.
Second, this is a generalist’s platform. Investors on thinkorswim can trade just about any mainstream asset, but this means that someone looking for a specialized forex tool might not find what they’re looking for. TD Ameritrade offers a large number of currency pairs, but not as many as some of its competitors. It offers a great forex trading environment, but one with tools built alongside tools for trading equities, options and other assets.
This is a terrific platform for managing forex as part of your investment portfolio, but might not be the best one for dedicated forex trading.
Best for Dedicated Forex Trading: Forex.com Pros:
Forex.com manages to live up to its url. This platform is operated by GAIN Capital, one of the largest currency brokerages in the world, and is generally the best all-around platform for dedicated forex trading.
Forex.com offers a well-designed trading space that manages to balance depth of data with ease of use. This is a balance that many forex platforms fail to strike, either erring in favor of limiting the information available to traders or making it difficult to use that information well. On Forex.com you can access nearly 150 different technical indicators that are updated in real time. The speed of this data is particularly important given how quickly currency markets can move, and investors on Forex.com can generally respond in time to take advantage of this volatile market.
Forex.com lacks specialized tools that some traders may want. This is ultimately the problem with being the best generalist platform on the market. While Forex.com has something for everybody, some traders may find its platform wanting. It does not support particularly complex algorithm trading, for example, and its comprehensive educational resources don’t always extend to providing current market analysis. Most traders would never notice these two issues, instead finding themselves more than happy with the dedicated trading screens and thorough tools offered by Forex.com, but particularly technical or fundamental traders will notice the lack.
Best for Data and Research: IG Trading Pros:
Unlike several other entries on this list, IG Trading is a forex-dedicated platform. It does not offer any assets other than currencies. This has allowed IG to build a specialized system that lets its users focus on forex trading.
IG offers some of the best research options on the market, making it one of the most comprehensive platforms for investors who want to learn about the market. The technical data offered by IG is thorough, with a truly impressive range of options. IG allows you to customize your data sets almost endlessly, with an interface that emphasizes technical trading. At the same time IG’s educational resources are comprehensive. Investors can learn how currency investment works through IG, a valuable feature in this very complicated space.
IG Trading lacks some of the protections and features offered by many U.S.-oriented platforms. Investors do not have some of the account protections offered by American banking laws, for example, nor does IG guarantee the price at which you place a stop-loss order.
This is not the cheapest platform on the market, and IG’s margin costs can add up in the high-volume trading world of forex.
Finally, IG simply lacks the breadth of its more powerful competitors. Tools like Forex.com and thinkorswim offer a depth of customization, trading options and overall sophistication that this platform simply doesn’t match.
Best for Breadth of Features: OANDA Pros:
OANDA’s pitch is simple: “We do all things currency,” and this platform works hard to deliver. Through OANDA you can trade forex, convert currency, transfer money overseas and even look up historic exchange rates. The platform’s goal is to cover virtually any task you could want when it comes to currencies, and that breadth gives it a terrifically varied toolkit.
For forex traders, OANDA is also one of the better deals out there. While the platform’s spread-only prices tend to be high for the industry, its core accounts offer a good deal relative to competitors. The combination of broad features and low prices makes OANDA an excellent platform for investors who want to make occasional currency trades alongside other related business. (This specialty is emphasized by the platform’s outstanding fundamental analysis tools, which provide excellent news and analysis features for making trades based on market and economic conditions.)
OANDA can be very difficult to use, and presents arguably the most poorly designed trading interface on this list. Using OANDA is simply difficult. The data sets quickly become cramped, windows compete with each other for space and if you try to track more than two data sets simultaneously the system quickly becomes very confusing to use.
While a great platform for investors who have to work with currencies anyway, this is not a strong platform for investors who want to make fast-paced or data-heavy trades.
Best for Currency Pairs: Saxo Bank Pros:
At time of writing, the Dutch-based brokerage Saxo Bank offered more than 180 different currency pairs on its platform. This is more than just a bragging right. The foreign currency market is dominated by a handful of pairs. In fact most trading in this space occurs between just four pairs, known as the “major” pairs. (They are, in no particular order: USD/EUR, USD/GBP, USD/JPY and USD/CHF.) As a result, many currency brokerages tend to build their offerings around these four major pairs, as well as a handful of other currencies that dominate the rest of the market.
The problem is that this leaves investors unable to trade against large sections of the globe. Someone who wants to invest based on the Brazilian or Peruvian economies, for example, generally can’t do so on ordinary exchanges. This is where Saxo’s breadth of options becomes such a valuable asset. It lets you diversify the trading currencies in a way that other brokerages don’t offer, this platform lets you trade based on entire economies that you typically cannot invest in. That’s no small thing.
While Saxo Bank offers an excellent brokerage, it comes at a steep price. American traders must invest a minimum of $10,000 to use this platform, and their spreads are in the middle of the pack at the best.
Saxo Bank’s platform is similarly lukewarm. Now, this is not to say that the Saxo trading environment is bad. It isn’t. This is a well-designed platform with a solid range of technical indicators and customization options. However, it does not compete with the other entries on this list. Investors looking for a powerhouse trading experience will be far better served by thinkorswim, while those looking to maximize their research will find a better home with IG. Saxo’s tools are fine, but they’re not best in class by any margin.
The Bottom Line
Investors who want the best all-around platform should head over to TD Ameritrade and download thinkorswim. On the other hand, those who want a dedicated forex experience will find it at Forex.com. Research-oriented investors will find that IG offers an unmatched data experience, while those who want to work with currency across the board can do so with OANDA. Finally, investors looking to access largely overlooked currencies, including some of the strongest, may find their best options at Saxo Bank.
Tips on Forex Trading
As we have mentioned before in these pages, forex means risk. Big risk. Now, that’s not necessarily a bad thing. As an investor you shouldn’t be afraid of taking risks, but you should be suitably cautious. And the best step when it comes to managing risks is to speak with a financial professional. Finding one doesn’t have to be hard. SmartAsset’s matching tool can help you find a financial advisor in your area to talk risk, speculation and how to gamble smart as well as big. If you’re ready, get started today.
The changing value of the U.S. dollar can create a reason for forex trading. If you think the greenback will lose value, say, to inflation, it might make sense to convert some of your assets into other currencies. A free, easy-to-use inflation calculator can be helpful as you watch the currency-based value of your holdings.
If you plan on taking a trip overseas this will come up again and again: How can you pull out the euros you’ll need for a Parisian crepe without paying exorbitant exchange fees? Our guide to the subject of exchanging currencies can tell you all about it. There also are good tips in this guide to low-cost places to exchange currencies.
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