There are hundreds of brokers around the world that provide access to trading in the forex market. Brokers offer their clients terms and conditions that can vary significantly: some offer lower commissions for buying and selling assets and depositing and withdrawing funds, while others offer a wide range of trading pairs and types of financial instruments. Forex traders are interested in:
- How reliable is a broker?
- Is there a support service, and how does it interact with individuals?
- What currency pairs and other assets are accessible for trading?
- How high quality is the service that the company offers?
- What bonuses does the broker offer to traders?
Forex trading is associated with high risk: it happens that inexperienced traders choose low-quality brokers, losing money rapidly due to high commissions and spreads or low liquidity.
About Forex.com and Robinhood
The startup Robinhood was launched relatively recently: the company only appeared on the scene in 2013 and is still very young compared to other big brokers, but thanks to its innovative service, it was able to gain the trust of traders and became one of the biggest brokers in the world in a very short time. Robinhood was one of the first to launch its own mobile app in 2015, offering exchange funds (ETF) and securities trading without commissions.
In 2021, Robinhood’s customer base surpassed 31 million, and this broker successfully completed an IPO on the NASDAQ exchange, raising $2 billion — one of the most sensational events of 2021.
Forex.com is the largest broker founded in 2001 and provides services to traders from the United States. Its own GAIN Capital is listed on the NYSE. Forex.com traders can trade in the spot foreign exchange market and derivative financial instruments (derivatives), such as CFDs.
What to look for when choosing a broker
Before you open a trading account, you should familiarize yourself with the terms and conditions of the brokerage firms you are interested in. In order to compare forex brokers, we need to highlight a set of main criteria based on which we will evaluate the company. The more a broker meets these criteria, the higher its rating will be.
In this article, we will compare Forex.com and Robinhood brokers and determine which broker offers its clients the more loyal terms. Both brokers enjoy a high reputation among traders, so it will take some time before we can decide which one is the best.
These brokers work with the major liquidity providers in the forex market. Finarm helps companies find suitable providers so that they can offer their clients a better service for trading in the financial markets.
Commissions and fees
One of the most important criteria when choosing a forex broker, in addition to the quality of service and reliability, are the fees for servicing retail investor accounts and trading assets.
Like Robinhood, the broker Forex.com does not charge fees for exchange-traded funds. The company makes a profit on the trading spread between the buy and sell prices. In highly liquid markets like the forex market, the most actively traded pairs tend to have low spreads. But even when trading other assets with the Forex.com broker, you will find that spreads are low: spreads for the XAU/USD pair, for example, are $0.11. There are no fees for deposits and withdrawals.
This broker offers trading in stocks and exchange-traded funds (ETFs) with no commissions. Robinhood earns its main income from interest earned on the balance of client funds and from margin loans. But there are incurred costs to cover the work of regulatory services (FINRA): they are $0.000119 for the sale of stock and $0.002 for the sale of an option through the trading platform but do not exceed $5.95.
In addition, traders incur service charges ranging from $2 to $50 per month. For margin loans for gold trading, users pay $5 if the amount is less than $1000 and 5% if it is higher. For transfers to other accounts, the broker charges a one-time commission of $75. Robinhood charges interest on unused balances in the trading account at the rate of 0.30% per year.
Note: margin trading carries a high level of risk and is only suitable for experienced traders. If you trade with leverage, you run the risk of losing all your capital.
Another factor to look out for is the number and type of financial instruments available on the broker’s trading platform. The brokers under consideration are characterized by a wide range of markets available for trading.
This broker used to offer traders access only to the forex market, but not long ago, it expanded the list of available financial instruments and added currencies with other types of assets. In total, there are over 4,500 financial markets available on Forex.com, including currencies, indices, commodities and cryptocurrencies. For each trading account, forex traders can use the maximum leverage depending on which jurisdiction they are located in.
Securities, ETFs, options, gold and cryptocurrencies are available through the terminal. Users can also transact in currencies and receive passive income at the cost of funds that are not used for trading.
Reliability and Reputation
Both brokers have the best reputation and are among the most reliable in the forex market. The reputation of the companies is evidenced by numerous user reviews and high positions in forex trader ratings. Nevertheless, it is better to play it safe and make sure that the service continues to meet high standards and has the necessary licenses to provide brokerage services.
The broker offers services based on the license of the Cayman Islands Monetary Authority. This means that the company is registered in an offshore zone, which reduces confidence in such services. However, GAIN Capital has been in business for over 20 years, and during this time, it has earned a good reputation among beginners and experienced traders.
One of the main advantages of Robinhood is that the broker is a member of the Financial Industry Regulatory Authority (FINRA). The presence of such a large regulatory body indicates the high reliability of the company. This means that clients will receive legal assistance in case of any problems with the broker. For this reason, traders often prefer brokers that are licensed by non-offshore regulators.
Account types and minimum deposit requirements
Most modern forex brokers support different kinds of accounts, such as ECN, MAM or DMA, and offer the possibility to start trading with small amounts — from $10 to $100 — and some companies do not require a minimum deposit at all.
The minimum amount for a Forex.com account is $100. The broker supports 3 types of trading accounts:
- Standard account. Suitable for traders who use standard forex trading features and tools.
- Commission account. This account type allows you to trade with extremely tight spreads at a fixed rate per trade -.$5 for 100,000 lots. For example, the spread for the EUR/USD pair is only 0.2 points.
- Direct Market Access Account (DMA) for large traders who perform transactions with large volumes in the foreign exchange market. The minimum deposit for DMA accounts is $25,000, and the minimum transaction amount is $100,000.
Robinhood offers its clients free trading accounts and subscriptions for $5 per month. Paid accounts allow leveraged gold trading on margin. The broker has no minimum deposit requirements, and you can invest with as little as $1. A single account in the Robinhood app is used for trading any asset.
Forex brokers provide access to exchange trading through trading terminals provided by other firms or created by the firm itself. Most brokers use the MetaTrader 4 and 5 trading platforms, but some companies also allow trading through other programs.
The company’s clients have access to trade the financial markets with the latest version of MetaTrader 5, which offers advanced settings for price charts. MetaTrader is one of the world’s most popular trading platforms for traders and investors, available on desktop and mobile devices.
Users have access to wealth management and mobile trading mobile app released by the company, through which traders can access all of the broker’s features and financial markets. Traders can also make trades through the desktop trading platform.
Ease of use
The ease of use of the interface plays an important role for beginners who are not familiar with advanced trading tools and will not use them for forex trading.
The broker uses the MetaTrader 5 trading platform, which provides traders with advanced trading tools for forex and exchange trading. The interface of MT 5 may seem daunting to beginners, but Forex.com offers its clients access to advanced financial tools and various order types such as limit orders. Demo accounts are also available on the MetaTrader 5 platform, allowing beginners to test trading strategies without much risk.
The broker provides traders with a simple and convenient Robinhood app that is suitable for both novice and experienced users. The mobile application is designed to help a trader complete a trade as quickly as possible. The user interface of the Robinhood app is much simpler than that of MetaTrader 5, which is geared more towards experienced traders and is, therefore, best suited for beginners.
The support service helps users resolve contentious issues and problems encountered while trading or accessing a trading account. It is also important how fast the support works and through which channels it offers help to clients.
Customer support is available via email or live chat. The service is open 24 hours a day during the trading week, from Sunday 10 AM to Friday 5 PM. A support phone is not available, but live chat is sufficient as this channel is used for quick communication with customers.
Support can be contacted via email, or you can request a call in the mobile app. At Robinhood, there are no chat rooms and phone numbers for quick communication with customers. This is one of the main drawbacks of the broker, as email is not the best communication channel for quick problem resolution.
While Robinhood offers a detailed FAQ section for resolving most issues, Forex.com stands out on this criterion with its live chat with customer support. However, you can request a call through the Robinhood app. In this case, a support representative will contact you when it’s your turn.
Negative balance protection
When forex traders use leverage, they risk not only losing all of their capital but also becoming indebted to their broker if the broker does not provide protection against a negative balance.
Forex traders from the United States cannot benefit from the negative balance protection feature, as well as stop-loss orders used to avoid unexpected losses. However, Forex.com maintains a low level of leverage, capped at 50: 1 in accordance with the strict requirements of the Financial Industry Regulatory Authority ( FINRA).
If you trade with leverage, Robinhood can sell some of your assets (stocks or cryptocurrencies) to cover the margin. In other words, the broker does not offer forex traders protection from a negative balance.
Brokers offer additional services to traders: training, analysis, financial market overviews, etc. This helps especially beginners to quickly monitor the situation with assets.
Users can customize their newsfeed to receive timely and important information on monitored financial instruments, view webinars and an economic calendar. Forex.com has its own group of experts who produce analytical reports on various assets: Currencies, Stocks, Commodities and Cryptocurrencies.
In the Snacks section, you will find daily newsletters with summaries of the most important forex and stock market news. In addition, Robinhood has partnered with Morningstar, which provides regular in-depth analysis of securities.
Robinhood also offers a learning section with a large number of articles from The Wall Street Journal, Forbes, and Bloomberg, among others.
The choice of a broker depends primarily on the trader’s individual preferences, so only you can decide which company is best for you. The purpose of this article is to provide, in a practical form, comprehensive information about the conditions that Forex.com and Robinhood offer their clients so that users can independently compare and determine the most suitable broker for them.
It is worth noting that Robinhood is geared more towards beginners in retail and allows you to trade even with small amounts, while Forex.com offers its clients advanced tools for forex trading and advanced DMA accounts for those who make large trades.