Almost everyone has heard of Forex trading and they probably know Forex means Foreign Exchange. But do they truly understand what it is?

The Forex market is a global platform where national currency pairs are traded against each other. As of 2019, the Forex market had up to $6.6 trillion in daily turnover. The market’s trading volume and liquidity in 2019 were valued at $2.409 quadrillion…now, that’s a lot of zeros (15, if you’re counting).

Who’s the Forex Market for and Why is it So Popular?

Forex is for anybody old enough to generally understand how this works. Statistics show that 49% of Forex traders are people aged between 25 to 44 years with over 72% of them being inexperienced in the market before joining.


This is a huge difference compared to when most Forex traders were trained and experienced.


There are several reasons why the market is growing exponentially in popularity. First, it's very easy to access. No certifications or licenses are required. All a potential investor needs is a good computer, a strong Internet connection, and a little capital.

Who’s the Forex Market for and Why is it So Popular?

Benefits of Investing Money in Forex

Even though the market is valued at a few quadrillion dollars, an average trader is likely to be concerned only with what’s in it for him. Here are a few things the Forex market will offer you:

  • Leverage


    In Forex, this term implies that a trader can use a relatively small amount of capital to control large amounts in the market. This typically comes in the form of 50:1, 100:1, 200:1, and 400:1, etc.


    Leverage allows most traders to see up to a 10% movement in their accounts in a day — something that might not even happen in a year if leverage was not available.

  • Market hours


    The Forex market operates 24 hours a day for five days a week (9 PM Sunday to 10 PM Friday GMT). And because Forex trades are made directly between the parties involved (aided by a Forex broker), the time base of a centralized system is not applicable here.

  • Volatility and liquidity


    One might argue that these terms sound like they should be on the list of disadvantages a platform has, and conceptually that could be correct. However, with Forex, they are a good thing. In Forex, liquidity means that transactions take place very quickly, resulting in low spreads (transaction costs).


    As for the volatile nature of the market, it implies that a trader can make large profits by correctly speculating on price movements.


    Volatility and liquidity are connected in some ways as the more liquid currencies, such as EUR/USD, are often less volatile.

  • A trader can profit from either movement of prices


    Just because currency prices are falling does not mean one has to pull out immediately. This market supports directional trading. Therefore, if a trader envisions a potential rise in value, they can purchase it (going long), or sell it (going short) if they think it’s about to drop in value.

  • There are many currency pairs to invest in as well as great tools to help trade them


    The availability of so many options allows you to trade different pairs depending on global events that could affect them as well as the strengths of each pair.


    The availability of trading tools and a variety of technological innovations such as trading algorithms and global connectivity make it easy to trade.

How to Invest Money in Forex?

Learning how to invest in Forex takes more than watching a few videos or reading a few articles online. Indeed, one of the benefits of investing in Forex is the volatile nature of the market. However, this can have unfortunate results for a novice if things go wrong. Nevertheless, everyone can get in on the Forex market.

To get started, there are a few key things you must do:


First, find a reputable Forex broker. These are firms that give traders access to a platform where they can trade in the Forex market. Brokers also provide their clients with good training conditions, platforms, and the support they need.


A good tip before selecting a Forex broker is to look them up on a database to ensure they’re legitimate and registered with a Forex Regulatory Organization.


Next, you should educate yourself on the Forex market. There’s a ton of free materials available. Finding a professional trader to take you under their wing and teach you the nitty-gritty of the market is a good way to start.

How to Invest Money in Forex?

Before trading, a newbie should always demo trade before risking real money. A demo account allows you to develop your strategies and get a feel of the market before investing.


Also, the use of economic calendars to keep up with the latest in Forex and other economic events will help a trader make informed decisions on which currency pairs to trade. After these preparations, a potential trader is ready to start investing.

Best Brokers for Investing in Forex

  • Are you looking for the best broker for active trading and passive investing?

  • Are you looking for companies with good trading conditions and reliable regulations?

  • Are you interested in PAMM investing, social trading, and algorithmic trading?

We’ve chosen the best investment brokers for you from those who have consistently ranked among the TOP 30 European and American independent rating lists based on various criteria.

Their principal advantages:

  • some tools like STP (Straight-Through Processing) and ECN accounts have instant order processing. Transactions in standard and professional accounts are sent to external liquidity providers and ECN systems. The average order execution speed is about 100 ms;

  • Trading tools include manual, algorithmic trading, and passive investing. Analytics from Trading Central allows free access to ZuluTrade (the independent social trading platform), auxiliary templates, and MT4 and MT5 platforms, volatility calculators, correlations, lot calculators, and a host of other management tools;

  • a wide choice of trading assets include risk diversification, conservative and high-risk strategies, and strategies for implementing direct and inverse correlation. You can trade in currency pairs, cross rates, stocks, cryptocurrencies, futures, and options;

  • all transactions including terms, conditions, commissions, spread calculation rules, and swaps are transparent;

  • prompt cash withdrawals through banks, electronic wallets (E-wallets), and other financial agencies are available.

You’ll find reliable partners while opening an account with the best brokers that are interested in a long-term cooperation and are eager to help you to succeed because your success is in their interest.


Choose the best!

Best invest Forex brokers — Top-5

Broker Investment program type Minimum deposit Regulator Extra charge from the Traders Union
FXTM FXTM Invest (social trading, investment in strategic management) 100 USD/EUR/GBP for standard accounts CySEC, FSCA (RSA) $8 per lot
RoboForex

CopyFx (social autotrading)


RAMM (copying transactions with a built-in risk management system)

10 USD/EUR for standard and cent accounts IFSC 40% of the broker’s profit
InstaForex

ForexCopy (copy trading system)


PAMM system (investment using an account manager)

1 USD for standard and cent accounts BVI FSC 1.6 pips per lot
Tickmill MyFxBook AutoTrade (copying trades using the MyFxBook monitoring service toolkit) 100 USD/EUR/GBP for Classic, Pro accounts FSCA $8 per lot
IC Markets MAM/PAMM (passive investment service) $200 CySEC $8 per lot

Top 5 Investment Options

There are several different trading options available for Forex to suit your needs. It’s advisable to acquaint yourself with these options and weigh the pros and cons of each before making your selection.

  • 1

    Self-trading account


    This is usually run by traders who have the time and desire to manage their trades on their own. Forex doesn't require an education in economics, but having one will provide some additional benefits in the market.


    Also, these types of traders show above-average proficiency in trading currencies. To begin, they have to develop a trading plan to help them identify their goals, do thorough market research, take objective positions, and manage their trade properly.


    Using this do-it-yourself option, a trader has the potential of succeeding as long as they take sensible risks, manage their account well, and are strategic in their approach.

    The best brokers for Forex trading
    Broker Types of accounts Minimum deposit Broker’s regulator
    LiteForex Classic, ECN $50 Marshall Islands Business Corporation
    FxPro MT4 Instant, VN4 Market, MT5, cTrader, VIP $100 FCA, CySEC, FSCA (RSA)
    AvaTrade AvaTrade, MT4 $100 ASIC, FSCA
  • 2

    Managed accounts


    This is an investment option where a trader hires a professional to seek signals and trade currencies on their behalf. Because they believe these professionals are experts who make the best possible decisions, they invest a lot of money and expect a significant return.


    Typically in this arrangement, the investor does not pay the account manager (which could either be an individual or a firm). Instead, they agree on a Return on Investment (ROI) percentage. At the end of a fixed period, everyone gets their agreed-upon percentage.


    This is a good plan for people who want to get in on the market but have no experience or no time to monitor the account. Also, it’s excellent for companies who intend to expand their business into Forex without having to do the work.

    The best brokers for Trust Management
    Broker Types of trust management programs Minimum deposit Broker’s regulator
    AxiTrader AxiTrader Money Manager Solutions $100 FSA
    Libertex Ready-made solutions of "Trading systems", "Investment concepts" are mixed systems of trust management and copying transactions From $500 (depends on terms of the trading system) CySEC
    Swissquote Trust management $1,000 FINMA
  • 3

    PAMM account


    Percentage Allocation Management Module or Percentage Allocation Money Management (PAMM) is another option for investing money in Forex. It’s essentially a system where different investors come together and pool their funds as capital for trading.


    The key players in this setup include the Forex broker, the money managers (traders), and the investors. The arrangement is overseen by the brokerage firm to maintain a secure platform for the trading activities as well as to allow reasonable interaction between the investors and money managers.


    Usually, the investors sign a Limited Power of Attorney (LPOA) stating that they are willing to take the risk and give the manager the power to trade using their (the investor’s) capital while applying the manager’s trading strategy.


    At the end of the deal, if all goes well, the investors get their profit and capital while the trader gets the percentage that was agreed upon initially. This is advantageous for people who have little capital but would like to invest a larger amount.

    The best PAMM brokers
    Broker Type of investment programs Minimum deposit Broker’s regulator
    InstaForex PAMM system $1 for standard and cent accounts BVI FSC
    FP Markets MAM/PAMM Account $10 ASIC, CySEC
    IC Markets MAM, PAMM, and LAMM $200 CySEC, FSA
  • 4

    Copy Trading


    This is a rather unique form of investing in Forex that is particularly great for people who don’t have much experience in trading. Just as the name implies, it’s a system where a trader can directly copy the positions taken by another trader/manager who is a more experienced trader.


    They usually connect their platforms with that of the professional trader. That way, whatever position they take in the market is replicated on the investor's terminal.


    If you choose this option, you’ll still retain control of your account and modify it however you like. This is a great way to use another trader’s expert knowledge and make profits based on their skills.


    It requires no advanced knowledge of the Forex market. All you need to do is select a trader you'd like to copy, find a copy trading platform, and invest your desired amount of capital. The platform then automatically replicates the expert’s positions in your account.

    The best brokers for autotrading (copy trading)
    Broker Copy trading tools Minimum deposit Broker’s regulator
    FXTM FXTM Invest

    100 USD/EUR/GBP for standard accounts


    10 USD/EUR/GBP for cent accounts

    CySEC, FSCA (RSA)
    eToro eToro (social trading platform) $200 ($50 for USA and Australia residents) CySEC
    Tickmill MyFxBook AutoTrade 100 USD/EUR/GBP for Classic, Pro accounts FSCA
  • 5

    Automated trading


    This is a method of trading in Forex that uses a computer program (algorithm) to make the necessary calculations. The system is then able to automatically trade foreign currencies based on the algorithm.


    Therefore, the trading depends on pre-programmed instructions to account for variables in the market and thus determine whether to sell or buy. This is an excellent way of trading because it eliminates biased or emotional trading.


    However, it’s not a perfect system. If it were, nobody would ever trade without automated software. The system can still fail so a trader needs to keep an eye on it.

    The best brokers for algorithmic trading (using EAs)
    Broker Services for algorithm trading Minimum deposit Broker’s regulator
    Admiral Markets MT4 Supreme Edition $100 except for Invest.MT5 FCA
    AMP Global API for algorithm trading US$100 CySEC
    FXCM API Trading, Forex Python US$50 Bermuda Regulator

Ultimately, foreign exchange is a fluid market. It has some very attractive prospects, but don’t go in with plans of coming out a billionaire. Be cautious and prudent.


However, the possibilities in this market are endless, and more and more people are giving it a try. So, go ahead dive in, just be smart about it, and know when to stop.


Good luck!

Reviews by Investors

There was a time when I tried to actively work on high-frequency trading strategies, but then I gave up on that idea. When I switched to a conservative trading style, I opened an account with FxPro. The conditions of the broker suited me perfectly. I chose an account with a fixed spread. You can trade only currency pairs on it, but this is enough for me. The main thing is that the broker allows the use of advisors, and there are no additional trading commissions like with other companies. I don't think the minimum deposit of $100 is too much to start trading. Moreover, the broker is licensed, so the risks are minimal.

Murugan

New Delhi


Roboforex is one of the few brokers that offer the opportunity to earn CFDs on stocks. In the arsenal of more than 10 thousand shares (via the R Trader platform). Such a list can only be seen on the stock exchange or with traders working in the United States. The stock market and indices are more predictable. There are screeners like Finviz or Investing, where you can see the current overbought/oversold stocks, and catch the moment of release of quarterly reports, etc. Group by filters and immediately open deals on the shares of interest in Roboforex. If anyone knows of another such broker with an optimal spread and commissions, tell me!

Markian

Salzburg


FxPro got me interested in its small spread, but at first, the minimum deposit seemed high. On the other hand, the broker has small leverage under the requirement of the regulator. And to open a minimum lot of 0.01 for the same EUR/USD pair without leverage, you need $1,200. That’s why with the maximum declared leverage of 1:20-1:30 (although for some jurisdictions 1:500 is also allowed), the entry threshold of $100 is quite logical. The company works with popular e-Wallets. Funds can be withdrawn by bank transfer and without additional fees. In general, on a 5-point scale, FxPro is a solid "4".

Klaus

Cologne


I believe that RoboForex is the best broker for investing in PAMM accounts. There is a huge selection of high-yield accounts. I started with just $10. I wanted to check the broker's service and withdrawal speed. First, I copied trades through the CopyFX platform, then decided to invest free funds into PAMM accounts. I have been trading with a broker for two years because its conditions completely suited me. The leverage reaches 1:500, there are a cashback program and classic bonuses. RoboForex supports many payment systems where you can instantly withdraw your earnings.

Anna

Vienna


I like the Tickmill broker. Orders are executed quickly (unless you open deals on the economic calendar). No trading limits or tight spreads. If there are any problems with platform optimization, the Support tells you which checkboxes to click and what to update (or vice versa, roll back the build). There is no sudden widening of the spread and there are no groundless order rollbacks. Even if I accidentally violated the terms of the offer through ignorance, first I would receive a notification from Support warning me not to make that same error again. Such loyalty bribed me. I've been trading with Tickmill for 6 months and I'm not going to be looking for another broker soon.

Ethan

Melbourne

About the Author

John Mayer

Mr. John Mayer graduated with a master’s degree in Data Analytics from one of the top business schools in the UK. Since then, for the last ten years, he has been working as an analyst in the foreign exchange market.

During his time as an analyst, he has worked with several clients. His years of experience in the field led him to want to share what he has been able to learn.

FAQs Regarding Investing Money to Earn Income

How do I manage my risks in Forex trading?

Forex markets are not risk-free. Regardless of the precautions you take, you should be prepared for possible losses down the line. To minimize your risks, here are a few tips: start with a demo account, understand the market, create a solid trading plan, set a risk-reward ratio, use stops and limits, don’t be aggressive, and watch out for news and updates on the market.

How can I start trading in Forex?

Foreх is an easily accessible market. Just find a reputable Forex broker and create an account with them. Choose a trading option. Then you can begin to invest with help from your broker. Most people prefer automated or semi-automated options. This isn't a bad idea especially when you're new to the market. You can program the software to notify you of prospective trades to make, or better still, initiate the trade itself.

What is the best Forex trading strategy?

Forex strategies are different sets of entry and exit moves a trader can use while investing in the market. There are numerous strategies based on different criteria, however, no strategy is the ‘best’. Some are suited for a particular period or currency pair. A solid background in different strategies is a great way to know what strategy to use and when to employ them.

How much money do I need to start Forex trading?

A great feature of the Forex market is that you don’t need a lot of money to start. Because of leverage and day trading opportunities, you can start with any amount of capital you want, with as little as $10. However, the amount of capital determines how much profit you make. Typically, the more money you invest, the greater returns you get.