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Best discount forex brokers in the United States

Jul 2019
Our top 2 discount forex broker picks
IG
75% of retail CFD accounts lose money
Forex.com
69% of retail CFD accounts lose money

To help you to find the best discount forex broker in the United States, we went ahead and did the research for you. First, we selected only quality forex brokers, then we checked and compared their fees. We went deep, so you won't have to.

4 made it to the top in the United States. We highly recommend all 4 to you. And now, without further ado...

Our top 4 picks for the best discount forex brokers of 2019 for citizens in the United States:

  1. IG is the winner. Easy-to-use web trading platform. Helpful and reliable customer service. Great deposit and withdrawal tools.
  2. Forex.com in the second place. Low forex fees. Great variety of currency pairs. Superb technical research tools.
  3. Ally Invest rounded out the top three. Low trading and non-trading fees. Easy and fully digital account opening. Great education.
  4. Interactive Brokers, numero quatro. Broad product portfolio. Low fees. Great and diverse research tools.
Best discount forex brokers of 2019 in the United States
Broker Info Best in
#1 IG Global CFD and FX broker Best FX broker
#2 Forex.com Global FX and CFD broker
#3 Ally Invest US stockbroker
#4 Interactive Brokers US discount broker Best online broker

All 4 brokers are considered safe. They are regulated by top-tier financial regulators.

What makes a good discount forex broker? Great fees definitely. We checked both trading and non-trading fees. These are easy things to list, but quite hard to figure it out. We test brokers based on ~100 criteria with real accounts and real money. We know what's up.

If you are a beginner, be careful with forex trading. Forex products are complex and very risky, thus not suitable for everyone. You can easily lose all of your invested money. If you don't have a clue how forex trading works, start with forex trading 101.

Not sure which broker to choose? For a tailored recommendation, check out our broker finder tool. Want more details? Compare brokers with this detailed comparison table.

And now, let's see the best discount forex brokers in the United States one by one, starting with the winner, IG.

#1 Best discount forex broker
IG

4.5 5 stars

Best FX broker

IG logo

IG was established in the UK in 1974 and is one of the biggest CFD providers in the world. It is regulated by several bodies globally, including top-tier authorities like the FCA. IG Group is listed on the London Stock Exchange.

IG is considered safe because it is listed on a stock exchange, discloses its financials, and is overseen by top-tier regulators.

IG is primarily a CFD broker. If you are from the US, you can only trade with forex. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFDs are not provided for US clients. Forex trading involves risk. Losses can exceed deposits.

Recommended for traders with any experience level aiming for a great and easy-to-use trading platform

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75% of retail CFD accounts lose money

#1 IG
Forex fees

Forex trading fees

IG forex trading fees are low.

It is super hard to compare trading fees for forex brokers. What did we do at Brokerchooser? Instead of quoting long fee tables, we compare brokers by calculating all fees of a typical trade for two popular currency pairs:

  • EURUSD
  • EURGBP

A typical trade means that you buy for $20,000 using 30:1 leverage and sell it after a week.

This super catch-all benchmark fee includes spreads, financing costs and commission for all brokers.

Here is the verdict:

IG forex trading fees
IG Forex.com Ally Invest Interactive Brokers
EURUSD benchmark fee $12.3 $14.6 $21.0 $23.0
EURGBP benchmark fee $13.6 $15.7 $16.7 $17.0

Non-trading fees

IG has average non-trading fees.

IG non-trading fees
IG Forex.com Ally Invest Interactive Brokers
Account fee No No No No
Inactivity fee Yes Yes No Yes
Withdrawal fee $0 $0 $0 $0

#1 IG
Markets and products 3 stars

At IG, most clients can only trade with CFDs, forex and options. There are literally thousands of CFDs available to trade. The UK and some other clients can also trade with shares.
IG currency pairs
IG Forex.com Ally Invest Interactive Brokers
Currency pairs (#) 94 84 92 105
IG products, beside forex
IG Forex.com Ally Invest Interactive Brokers
Stock Yes No Yes Yes
ETF Yes No Yes Yes
Fund No No Yes Yes
Bond No No Yes Yes
Options Yes No Yes Yes
Futures No No No Yes
CFD Yes Yes No Yes
Crypto Yes Yes No Yes

More Visit broker
75% of retail CFD accounts lose money

#1 IG
Web trading platform 5 stars

IG's web platform is great. It is easy to use, has all necessary functions and can be customized. Even first-time users can familiarize themselves with it instantly.
Pros
  • User-friendly
  • Two-step (safer) login
  • Good search function
  • Good customizability (for charts, workspace)
Cons
None
Best discount forex brokers in the United States - IG trading platform
IG trading platforms
IG Forex.com Ally Invest Interactive Brokers
Web platform score 5 stars 4 stars 4 stars 4 stars
Mobile platform score 5 stars 4 stars 3 stars 4 stars
Desktop platform score - 3 stars - 3 stars

IG charting

IG's charting tool is great. You can add several technical indicators, make your own drawings and trend lines and set alerts based on technical indicators. You can also save the charts.

Best discount forex brokers in the United States - IG charting

More Visit broker
75% of retail CFD accounts lose money

#1 IG
Account opening 4 stars

The account opening process is fast, user-friendly, and fully digital. On the other hand, the sales team is quite pushy.
Pros
  • Fast
  • Fully digital
  • No minimum deposit for bank transfer
Cons
  • The sales team is quite pushy, prompting you regularly to fund your account
IG minimum deposit and time to open an account
IG Forex.com Ally Invest Interactive Brokers
Minimum deposit $0 $50 $0 $0
Time to open account 1-3 days >3 days 1-3 days 1-3 days

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75% of retail CFD accounts lose money

#1 IG
Deposit and withdrawal 5 stars

You have several options to transfer money. The transfer process is user-friendly and fast.
Pros
  • Credit/Debit card available
  • Several account base currencies
  • User-friendly
Cons
  • Not transparent on available base currencies
IG base currencies
IG Forex.com Ally Invest Interactive Brokers
Number of base currencies 4 7 1 21

Why does base currencies matter? Because if you fund your account in the same currency as your bank account, currency conversion fees won't be charged.

IG withdrawal fee and options
IG Forex.com Ally Invest Interactive Brokers
Bank Transfer Yes Yes Yes Yes
Credit/Debit card Yes Yes No No
Electronic wallets No No No No
Withdrawal fee $0 $0 $0 $0

More Visit broker
75% of retail CFD accounts lose money

#1 IG
Verdict

IG is one of the biggest and most reliable CFD brokers. It is regulated by several financial authorities around the world. IG Group is listed on the London Stock Exchange.

IG has the best web trading platform Brokerchooser tested. Its customer service is professional and relevant. The deposit and withdrawal conditions are also great.

The biggest drawback is the fee structure. IG is quite pricey, especially when you trade with lower amounts. IG's product portfolio is limited to forex, CFDs and options; however, in the UK and some other countries, stocks are also available. US clients can trade only with forex.

It is quite easy to test IG's first-class trading platform since there is no minimum funding for bank transfer and you can easily open a demo account. 

IG
Summary IG is a CFD and forex. It is listed on the London Stock Exchange and regulated several authorities globally, including the top-tier FCA.
Fees score 2 stars
Recommended for Traders with any experience level aiming for a great and easy-to-use trading platform

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75% of retail CFD accounts lose money

#2 Best discount forex broker
Forex.com

4.3 4 stars

Forex.com logo

Forex.com was founded in 2001 and it is a global forex broker. It is regulated by top tier regulators, like the UK FCA or the US CFTC.

Forex.com is considered safe because it has a long track record, its parent company is listed on stock exchange, and is regulated by top-tier regulators.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Recommended for forex traders looking for great research tools and customer service

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69% of retail CFD accounts lose money

#2 Forex.com
Forex fees

Forex trading fees

Forex.com forex trading fees are low.

It is super hard to compare trading fees for forex brokers. What did we do at Brokerchooser? Instead of quoting long fee tables, we compare brokers by calculating all fees of a typical trade for two popular currency pairs:

  • EURUSD
  • EURGBP

A typical trade means that you buy for $20,000 using 30:1 leverage and sell it after a week.

This super catch-all benchmark fee includes spreads, financing costs and commission for all brokers.

Here is the verdict:

Forex.com forex trading fees
IG Forex.com Ally Invest Interactive Brokers
EURUSD benchmark fee $12.3 $14.6 $21.0 $23.0
EURGBP benchmark fee $13.6 $15.7 $16.7 $17.0

Non-trading fees

Forex.com has average non-trading fees.

Forex.com non-trading fees
IG Forex.com Ally Invest Interactive Brokers
Account fee No No No No
Inactivity fee Yes Yes No Yes
Withdrawal fee $0 $0 $0 $0

#2 Forex.com
Markets and products 1 stars

At Forex.com, you can trade only with forex, CFDs, and cryptos. Other asset classes, like real stocks or funds, are not available.
Forex.com currency pairs
IG Forex.com Ally Invest Interactive Brokers
Currency pairs (#) 94 84 92 105
Forex.com products, beside forex
IG Forex.com Ally Invest Interactive Brokers
Stock Yes No Yes Yes
ETF Yes No Yes Yes
Fund No No Yes Yes
Bond No No Yes Yes
Options Yes No Yes Yes
Futures No No No Yes
CFD Yes Yes No Yes
Crypto Yes Yes No Yes

More Visit broker
69% of retail CFD accounts lose money

#2 Forex.com
Web trading platform 4 stars

Forex.com web trading platform is user-friendly and extremely customizable. It has also a lot of order types. On the flip side, there is no two-step login and we found a couple of bugs.
Pros
  • User-friendly
  • Good customizability (for charts, workspace)
  • Good variety of order types
Cons
  • No two-step (safer) login
  • Bugs
Best discount forex brokers in the United States - Forex.com trading platform
Forex.com trading platforms
IG Forex.com Ally Invest Interactive Brokers
Web platform score 5 stars 4 stars 4 stars 4 stars
Mobile platform score 5 stars 4 stars 3 stars 4 stars
Desktop platform score - 3 stars - 3 stars

Forex.com charting

Forex.com does a great job in charting. The charts are easily editable and there are more than 80 technical indicators.

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69% of retail CFD accounts lose money

#2 Forex.com
Account opening 4 stars

Forex.com account opening is fully digital and you can choose from more account types. But, the account opening can take more days.
Pros
  • Fully digital
  • User-friendly
  • Many account types
Cons
  • Slow
Forex.com minimum deposit and time to open an account
IG Forex.com Ally Invest Interactive Brokers
Minimum deposit $0 $50 $0 $0
Time to open account 1-3 days >3 days 1-3 days 1-3 days

More Visit broker
69% of retail CFD accounts lose money

#2 Forex.com
Deposit and withdrawal 4 stars

Forex.com deposit and withdrawal are free and user-friendly. However, the withdrawal can take long.
Pros
  • Credit/Debit card available
  • Free withdrawal
  • No deposit fee
Cons
  • Lengthy withdrawal - over 3 days
Forex.com base currencies
IG Forex.com Ally Invest Interactive Brokers
Number of base currencies 4 7 1 21

Why does base currencies matter? Because if you fund your account in the same currency as your bank account, currency conversion fees won't be charged.

Forex.com withdrawal fee and options
IG Forex.com Ally Invest Interactive Brokers
Bank Transfer Yes Yes Yes Yes
Credit/Debit card Yes Yes No No
Electronic wallets No No No No
Withdrawal fee $0 $0 $0 $0

More Visit broker
69% of retail CFD accounts lose money

#2 Forex.com
Verdict

In our Forex.com review, we tested Forex.com thoroughly and here is the verdict.

On the bright side, it has low forex fees, many currency pairs, high-quality research tools, and great customer support.

It has some drawbacks though. The product portfolio is limited, the stock CFD fees are quite high, and the desktop platform is not easy-to-use.

As there is no withdrawal fee and inactivity fee only kicks in after one year, feel free to try it out.

Forex.com
Summary Forex.com is a global forex and CFD broker, regulated by the top-tier regulators, like FCA. Its parent company, GAIN Capital is listed on the New Yorsk Stock Exchange.
Fees score 3 stars
Recommended for Forex traders looking for great research tools and customer service

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69% of retail CFD accounts lose money

#3 Best discount forex broker
Ally Invest

4.5 5 stars

Ally Invest logo

Ally Invest is a US stockbroker regulated by the Securities and Exchange Commission (SEC) and Financial Industry Regulatory Authority (FINRA). Its parent company, Ally Financial Inc dates back to 1911 as the former company, General Motors Acceptance Corporation (GMAC) was founded then. Ally Financial Inc is listed on the New York Stock Exchange and has a banking subsidiary, called Ally Bank.

Ally Invest is considered safe because it has a long track record, regulated by top-tier regulators, and the parent company is listed on a stock exchange and has a banking background.

Recommended for investors and traders looking for low fees and focusing on the us market

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#3 Ally Invest
Forex fees

Forex trading fees

Ally Invest forex trading fees are average.

It is super hard to compare trading fees for forex brokers. What did we do at Brokerchooser? Instead of quoting long fee tables, we compare brokers by calculating all fees of a typical trade for two popular currency pairs:

  • EURUSD
  • EURGBP

A typical trade means that you buy for $20,000 using 30:1 leverage and sell it after a week.

This super catch-all benchmark fee includes spreads, financing costs and commission for all brokers.

Here is the verdict:

Ally Invest forex trading fees
IG Forex.com Ally Invest Interactive Brokers
EURUSD benchmark fee $12.3 $14.6 $21.0 $23.0
EURGBP benchmark fee $13.6 $15.7 $16.7 $17.0

Non-trading fees

Ally Invest has low non-trading fees.

Ally Invest non-trading fees
IG Forex.com Ally Invest Interactive Brokers
Account fee No No No No
Inactivity fee Yes Yes No Yes
Withdrawal fee $0 $0 $0 $0

#3 Ally Invest
Markets and products 3 stars

At Ally Invest, you can trade with different asset classes, from stocks to options, and even with forex. However, the offered products cover only the US market and you cannot trade with futures.
Ally Invest currency pairs
IG Forex.com Ally Invest Interactive Brokers
Currency pairs (#) 94 84 92 105
Ally Invest products, beside forex
IG Forex.com Ally Invest Interactive Brokers
Stock Yes No Yes Yes
ETF Yes No Yes Yes
Fund No No Yes Yes
Bond No No Yes Yes
Options Yes No Yes Yes
Futures No No No Yes
CFD Yes Yes No Yes
Crypto Yes Yes No Yes

More Visit broker

#3 Ally Invest
Web trading platform 4 stars

Ally Invest's web trading platform is user-friendly, easy to customize, and offers a lot of order types. On the negative side, there is no two-step login and does not give a clear fee report.
Pros
  • User-friendly
  • Good customizability (for charts, workspace)
  • Good variety of order types
Cons
  • No clear fee report available
  • No two-step (safer) login
Best discount forex brokers in the United States - Ally Invest trading platform
Ally Invest trading platforms
IG Forex.com Ally Invest Interactive Brokers
Web platform score 5 stars 4 stars 4 stars 4 stars
Mobile platform score 5 stars 4 stars 3 stars 4 stars
Desktop platform score - 3 stars - 3 stars

Ally Invest charting

Easy to use

Best discount forex brokers in the United States - Ally Invest charting

More Visit broker

#3 Ally Invest
Account opening 4 stars

The account opening is fully digital and user-friendly. On the flip side, the account opening is available only for US clients.
Pros
  • Fully digital
  • No minimum deposit
  • User-friendly
Cons
  • It is available only for US clients
Ally Invest minimum deposit and time to open an account
IG Forex.com Ally Invest Interactive Brokers
Minimum deposit $0 $50 $0 $0
Time to open account 1-3 days >3 days 1-3 days 1-3 days

More Visit broker

#3 Ally Invest
Deposit and withdrawal 2 stars

Ally Invest deposit and withdrawal can be improved. You can use only bank transfer, there is only USD as a base currency, and a high fee is charged for wire transfer withdrawals. As a plus, there is no deposit fee and transferring money is easy and user-friendly.
Pros
  • No deposit fee
  • User-friendly
Cons
  • Credit/Debit card not available
  • Only one account base currency
  • High outgoing wire transfer fee
Ally Invest base currencies
IG Forex.com Ally Invest Interactive Brokers
Number of base currencies 4 7 1 21

Why does base currencies matter? Because if you fund your account in the same currency as your bank account, currency conversion fees won't be charged.

Ally Invest withdrawal fee and options
IG Forex.com Ally Invest Interactive Brokers
Bank Transfer Yes Yes Yes Yes
Credit/Debit card Yes Yes No No
Electronic wallets No No No No
Withdrawal fee $0 $0 $0 $0

More Visit broker

#3 Ally Invest
Verdict

Ally Invest is one of the biggest US stockbrokers regulated by top-tier regulators.

Ally Invest has low trading and non-trading fees and offers a good product range. The account opening is easy and fully digital. We liked the quality of the educational tools.

It has some drawbacks though. Ally Invest doesn't provide credit/debit cards and electronic wallets for money transfers. The research tools are really basic, it lacks sophisticated screener tools and diverse recommendations. The product portfolio covers only the US markets.

As the fees are great, no inactivity fee is charged, feel free to try Ally Invest.

Ally Invest
Summary Ally Invest is a US stockbroker, regulated by top-tier regulators, the SEC and FINRA. The company is listed on New York Stock Exchange and has banking background.
Fees score 4 stars
Recommended for Investors and traders looking for low fees and focusing on the US market

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#4 Best discount forex broker
Interactive Brokers

4.8 5 stars

Best online broker

Interactive Brokers logo

Interactive Brokers was founded in 1978 and it is one of the biggest US-based discount brokers. It is regulated by several regulators globally, including top-tier authorities like FCA and SEC. Interactive Brokers Group is listed on the New York Stock Exchange.

Interactive Brokers is considered safe because it has a long track record, is listed on a stock exchange, discloses its financials, and is regulated by top-tier regulators.

Recommended for traders who prefer low fees and a professional trading environment

Visit broker

#4 Interactive Brokers
Forex fees

Forex trading fees

Interactive Brokers forex trading fees are average.

It is super hard to compare trading fees for forex brokers. What did we do at Brokerchooser? Instead of quoting long fee tables, we compare brokers by calculating all fees of a typical trade for two popular currency pairs:

  • EURUSD
  • EURGBP

A typical trade means that you buy for $20,000 using 30:1 leverage and sell it after a week.

This super catch-all benchmark fee includes spreads, financing costs and commission for all brokers.

Here is the verdict:

Interactive Brokers forex trading fees
IG Forex.com Ally Invest Interactive Brokers
EURUSD benchmark fee $12.3 $14.6 $21.0 $23.0
EURGBP benchmark fee $13.6 $15.7 $16.7 $17.0

Non-trading fees

Interactive Brokers has high non-trading fees.

Interactive Brokers non-trading fees
IG Forex.com Ally Invest Interactive Brokers
Account fee No No No No
Inactivity fee Yes Yes No Yes
Withdrawal fee $0 $0 $0 $0

#4 Interactive Brokers
Markets and products 5 stars

Interactive Brokers allows you access to a very wide range of markets and you can trade with all product types. IB's product range is the widest available.
Interactive Brokers currency pairs
IG Forex.com Ally Invest Interactive Brokers
Currency pairs (#) 94 84 92 105
Interactive Brokers products, beside forex
IG Forex.com Ally Invest Interactive Brokers
Stock Yes No Yes Yes
ETF Yes No Yes Yes
Fund No No Yes Yes
Bond No No Yes Yes
Options Yes No Yes Yes
Futures No No No Yes
CFD Yes Yes No Yes
Crypto Yes Yes No Yes

More Visit broker

#4 Interactive Brokers
Web trading platform 4 stars

The Interactive Brokers web platform is simple and easy to use, even for beginners. On the negative side, it is a bit complicated to customize.
Pros
  • User-friendly
  • Clear fee report
  • Two-step (safer) login
Cons
  • Limited customizability (for charts, workspace)
Best discount forex brokers in the United States - Interactive Brokers trading platform
Interactive Brokers trading platforms
IG Forex.com Ally Invest Interactive Brokers
Web platform score 5 stars 4 stars 4 stars 4 stars
Mobile platform score 5 stars 4 stars 3 stars 4 stars
Desktop platform score - 3 stars - 3 stars

Interactive Brokers charting

The charting features are almost endless at Interactive Brokers. There are more than 100 technical indicators, however, just like the trading platforms, the charting tool is also not user-friendly.

Best discount forex brokers in the United States - Interactive Brokers charting

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#4 Interactive Brokers
Account opening 3 stars

The account opening process is fully digital, but slow and complicated.
Pros
  • Fully digital
  • No minimum deposit for most accounts
Cons
  • Slow
  • Not user-friendly
  • Confusing messages throughout the process
Interactive Brokers minimum deposit and time to open an account
IG Forex.com Ally Invest Interactive Brokers
Minimum deposit $0 $50 $0 $0
Time to open account 1-3 days >3 days 1-3 days 1-3 days

More Visit broker

#4 Interactive Brokers
Deposit and withdrawal 2 stars

Interactive Brokers offers a lot of base currencies and one withdrawal per month is free. On the negative side, only bank transfer is available.
Pros
  • Several account base currencies
  • No charge for the first withdrawal each month
Cons
  • Credit/Debit card not available
  • Slow withdrawal - over 3 days
Interactive Brokers base currencies
IG Forex.com Ally Invest Interactive Brokers
Number of base currencies 4 7 1 21

Why does base currencies matter? Because if you fund your account in the same currency as your bank account, currency conversion fees won't be charged.

Interactive Brokers withdrawal fee and options
IG Forex.com Ally Invest Interactive Brokers
Bank Transfer Yes Yes Yes Yes
Credit/Debit card Yes Yes No No
Electronic wallets No No No No
Withdrawal fee $0 $0 $0 $0

More Visit broker

#4 Interactive Brokers
Verdict

IB is one of the biggest discount US brokers regulated by top-tier regulators. If you like low-cost trading and easily navigate on a really complicated platform, Interactive Brokers is for you. We mainly recommend IB for traders.

It has low trading fees, a wide range of product portfolio, and diverse research tools. 

On the flip side, only bank transfer is available for deposit and withdrawal. The account opening and the desktop platform are not user-friendly and complicated.

Interactive Brokers is definitely recommended if you want low fees, a lot of products and you are experienced to cope with a complicated platform.

Interactive Brokers
Summary Interactive Brokers is a US discount broker. IB is listed on stock exchange and regulated by several authorities, like the top-tier FCA and SEC.
Fees score 4 stars
Recommended for Traders who prefer low fees and a professional trading environment

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Best discount forex brokers in the United States
What makes a good forex broker?

Trading with forex has become really popular over the last decade. Keeping your eyes on important criteria like fees helps you to find the best forex broker for you.

We tested brokers based on more than 100 criteria. Below, we will show you the 5 most important criteria to take into account.

5 important criteria for the best forex brokers in 2019
1. Fee structure The overall cost of a typical forex trade can be up to 10-15 times higher at one forex broker than at another, so it is worth checking the fees.
2. Markets and products You want to invest in NZD/USD and EUR/TRY currency pairs? They might not be available. Check the product coverage before opening an account.
5. Web trading platform A user-friendly and well-equipped trading platform can significantly increase your trading comfort. The charting tool is your best friend when trading FX.
4. Account opening Some brokers require a minimum deposit, some don't. Check what the best forex brokers require.
5. Deposit and withdrawal Transferring money to your account can be up to 5 times longer and more expensive at one forex broker compared to another.

Best discount forex brokers in the United States
Forex broker fees

Fees, fees, fees. We bet this is at the top of your mind when you're looking for the best discount forex broker. It can be complicated. Let's see how we did it.

It is not easy to compare forex broker fees, but we are here to help. Forex brokers can charge commissions, spreads and financing fees.

For trading fees, there are two versions forex brokers use:

  1. All trading fees are included in the spread except the financing rate. Basically, think of it as the broker giving you a wider spread than it gets from the market.
  2. You get the market spread, but you pay a commission based on the traded amount. This model is usually used by ECN brokers.

The latter is more transparent, but this doesn't mean the first method cannot be cheaper.

When you trade forex on leverage and hold your position overnight, a fee can be charged. This fee is called a rollover or overnight or financing fee. The financing rate depends on the currency pair and the broker.

To make your life easy, we calculated a all-in-one fee for you. We call this the benchmark fee. This captures your overall fee if you take a $20,000 position, hold it for a week then close it. We used a 1:30 leverage.

You have seen this benchmark fee for the EURUSD and EURGBP currency pairs for discount forex brokers.

Best discount forex brokers in the United States
Forex trading 101

Forex trading looks simple, but it carries serious risks. Before trading, understand the basics and ask yourself: is this for me?

Understanding the forex market

Forex, FX, foreign exchange or currency market: you have probably already heard one of these expressions. They all mean the same: a market where you can exchange currencies or bet on the price movement of currency pairs.

The forex market has several outlets, from the currency exchange booths on the street to the currency trading desks of big banks.

For a layperson, a non-professional individual as you probably are, the easiest and safest way to trade forex is by opening an account at a reliable online broker.

The vast majority of currency transactions are conducted on OTC (over-the-counter) markets. An OTC market is a non-regulated market. On a non-regulated market, you have to assess for yourself how safe your counterparty is. For example, when you travel abroad to an exotic country and you need to exchange some money, you usually go to a bank branch instead of changing money on the street. This is how you minimize your counterparty risk. You have to do the same risk minimization when you select your online broker for trading forex. You should always choose a reliable broker.

Forex trading is very tempting for the following reasons:

  • everybody has an opinion on where the currencies are going

  • on first sight, the forex market is relatively easy to understand compared to other markets, like the stock market

  • by using leverage, a trader can easily trade with 100 times more money than they have on their trading account and thus also increase profits (or losses!) 100 times

  • the market is open 24 hours a day, 5 days a week

  • it is the most liquid market in the world, meaning there are huge numbers of transactions every second and you don't have to worry about not finding a partner to trade with

Although it looks easy, trading with forex can be risky if you don't know what you're doing. By using high leverage irresponsibly, you can easily lose all of your money within a couple of seconds. So you better start off slow, learn and open a demo account first. If you want to study more, check out our blog post about the best trading apps for learning.

Forex market trading hours

The forex market is open from 11:00 PM on Sunday until 11:00 PM on Friday, London time.

The highest trading activity within each day is when London and New York are open.

Best forex brokers - market trading hours

It is good to know that there is a difference between currency conversion and forex trading.

The end result of a conversion is basically changing one currency into another. Imagine that you receive your salary in euros (EUR), but you spend it in British pounds (GBP). In this case, you exchange the euros to pounds. Before the transaction you had euros, and after it you will have pounds.

When you trade with currency pairs there is no physical conversion happening. Imagine that you have an online broker account in US dollars and you want to bet on the price movements of the EURUSD. In this case, you effectively never convert your dollars to euro. If your bet was correct, the profit from your trade will be booked to your account in US dollars. If you were wrong, the loss will be deducted from your account in dollars as well.

Breaking down the forex trading jargon

When you trade forex, you bet on the price change of a currency pair, for example, the EURUSD.

EURUSD bid price EURUSD ask price
1.1700 1.1705

First of all, you need to understand what the bid and the ask prices are. Let's take the EURUSD again as an example. The 'bid' is the price at which you can sell the EURUSD, or in other words to go short in it. If the price goes lower, you will generate a profit. The 'ask' price is the opposite. If you want to bet on the price increasing, you can open a trade at the 'ask' price. The mid-price is usually halfway between the two, but this is just a theoretical price that is not used for trading.

The actual bid and ask prices together are called the quote.

A long position is when you bet on the price going up, while a short position is when you profit from the price going down.

The spread is the difference between the ask and bid prices. In the example above, the spread is 0.0005, which is calculated as 1.1705-1.1700.

The pip is the smallest amount of a currency pair. One pip is equal to 0.0001 for most of the currency pairs. In case of our example, the spread is 5 pips, or 5 times 0.0001, equalling 0.0005. For some currency pairs like the USDJPY, one pip is 0.01.

Leverage allows you to take bigger positions than the amount of money on your account. Imagine this as a multiplier of your profit or your loss. This can be as high as 300. Imagine you have $1000 on your account and your applied leverage is 100. If you open a long position by using all your $1000, this means you open a trade for $1,000*100, or $100,000. If the price decreases 1%, you will lose $1000 (1%*$100,000), that is, all of the money on your account. And the price of a currency pair can very easily decrease by 1%. In case of EURUSD, this would mean a price decrease from 1.1705 to 1.1588.

A lot is the standard number of units of a forex contract. It is usually 100,000 units of the base currency. The base currency is the first currency in a currency pair. For EURUSD, the base currency is the EUR and one lot is €100,000. A mini lot is 10,000, a micro 1,000 and a nano 100 units of the base currency.

In forex trading, you can encounter three types of contracts: spot, forward and futures. The spot forex contract is the type that is traded by most people, and this also what you trade when you use an online broker. A spot contract by definition is settled two days after the trade. Settlement means that the counterparties who traded are converting their currencies between each other at the price of the trade made two days earlier. Imagine the settlement as a currency conversion made at a money exchange office on the street. The only difference is that this happens two days after the price was agreed on.

However, in most cases, the settlement doesn't actually happen, because spot contracts are rolled over before the settlement. This is always the case when you trade forex with your online brokers. The rollover happens because when you are betting on the direction of a currency pair, you do not want to actually convert money into the other currency, you just want to bet on the price movement. The rollover ensures that the conversion will not happen.

When your position is rolled over, your online broker in the background basically closes your current spot position and opens a new one. This is not visible for you, but it has a fee, called the rollover or financing fee. The rollover fee is calculated from the interest rate difference between the two currencies you are trading. In some cases, you may also receive a fee from the broker, if the interest rates you trade are in your favor.

A forward forex contract is a contract made on the OTC market. The specifics of the contract, like the term, the price and the settlement are defined by the counterparties case by case. For example, imagine a company which will need $100,000 in 30 days for paying its employees, but it will receive its revenue in euro. Since it wants to specify the exact exchange rate it can get in 30 days, it will seal a forward contract with a big bank at a fixed price, let's say 1.1710. After 30 days, they will exchange the currencies and the company will receive €85,397 ($100,000/1.1710). In this case, the settlement actually happens.

A futures forex contract is traded on a regulated market, for example, a commodity exchange, like the Chicago Mercantile Exchange (CME). When you trade futures, your counterparty is the exchange and the specifics of the contract are predefined by the exchange. When your counterparty is a regulated exchange, you don't need to check your counterparty risk, as this is one of the safest modes of trading. However, the exchange requires a large amount of initial money for trading, so this is not suitable for you if you have little money to invest. For example, if you want to trade one EURUSD futures contract on the CME, you need to have more than $2000 on your account.

What drives the forex market price?

As we said above, everybody has an opinion about the forex market, because it seems simple. However, currency markets are among the most unpredictable ones in the world.

Everything from monetary policies and government spending to politics and wars can influence the price change of currency pairs. So many different factors can affect prices that it is difficult to make a prediction on which way they will move.

Nevertheless, economic calendars can help, so at least know about the scheduled events that could have an effect on the forex market.

Best discount forex brokers in the United States
Bottom line

You saw the details, now let's zoom out. Here are the best discount forex brokers of 2019 in the United States:

Best discount forex brokers in the United States
IG Forex.com Ally Invest Interactive Brokers
Award Best FX broker Best online broker
Account opening score 4 stars 4 stars 4 stars 3 stars
Deposit and withdrawal score 5 stars 4 stars 2 stars 2 stars
Markets and products score 3 stars 1 stars 3 stars 5 stars
Web platform score 5 stars 4 stars 4 stars 4 stars
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75% of retail CFD accounts lose money
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IG is our winner, the best discount forex broker in the United States in 2019. Easy-to-use web trading platform. Helpful and reliable customer service. Great deposit and withdrawal tools.

All brokers are considered safe, and a great choice. Watch out, FX can be risky. If you know enough and are good to go, pick your winner and take the next step in your trading journey. Let us know what you think in the comments section.

Still unsure? Use the broker finder and find the best broker for you.

AUTHOR

Gergely Korpos
Gergely Korpos
Co-founder, CPO
Gergely's aim is to bring more clarity into personal investing. He has 10 years of experience in financial markets with GE Money, KPMG and MOL. He concluded thousands of trades as a commodity trader and financial portfolio manager
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