Risk Warning: Your capital is at risk. Statistically, only 11-25% of traders gain profit when trading Forex and CFDs. The remaining 74-89% of customers lose their investment. Invest in capital that is willing to expose such risks.

Forex Brokers For US Traders

US Forex Brokers

 With millions of dollars traded every single day, the Forex is the world's biggest financial market with an equally large number of investors and brokers. Generally, the huge size of the FX market means there will never be a shortage of Forex brokers. However, if you are a US resident, you will realize that there are few USA forex firms compared to those in neighboring countries such as Canada.

US Forex brokers are subject to strict regulations and laws that are meant to protect US investors. Nonetheless, a handful of US regulated brokerage companies who provide reliable services, excellent customer care services, and user-friendly trading platforms. Do you seek a reputable USA-based Forex broker? You can easily get a review of top brokers in the table below, where we’ve collected a list of the best forex brokers for US traders:

 

  • Key information
  • Trading
  • Payment systems
  • Trading platforms
  • Trading instruments
  • Support
  • Trading accounts
  • Account settings
  • Spreads
  • Promotion
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Company #LogoForex brokerFoundedRegulatedReviewsPayment systemsBroker type(?)Min. DepositMax.
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Deposit bonusAccount
Forex.com1Forex.com2001
FCA, CFTC

Regulated

1

Payment systems

ECN, MM
0 $1:400N/AN/AN/AN/AN/AN/AN/AN/AN/AN/A-
LMFX2LMFX2015-3

Payment systems

NDD
50 $1:1000N/AN/AN/AN/AN/AN/AN/AN/AN/AN/A-
FXCM3FXCM1999
ASIC, FCA
7

Payment systems

NDD
0 $1:100N/AN/AN/AN/AN/AN/AN/AN/AN/AN/A-
FXDD4FXDD2002
MFSA
1

Payment systems

NDD, ECN
250 $1:50N/AN/AN/AN/AN/AN/AN/AN/AN/AN/A-
OANDA5OANDA1996
ASIC, FCA
4

Payment systems

-0 $1:100N/AN/AN/AN/AN/AN/AN/AN/AN/AN/A-
Interactive Brokers6Interactive Brokers1977
FCA, CFTC

Regulated

1

Payment systems

MM
10000 $1:40N/AN/AN/AN/AN/AN/AN/AN/AN/AN/A-
TradeStation7TradeStation1988
FCA, CFTC

Regulated

0
DMA
5000 $1:50N/AN/AN/AN/AN/AN/AN/AN/AN/AN/A-


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History of Forex Trading in the USA

As an investor, it is important to be acquainted with the Federal Reserve System (Fed). The Fed was created in 1913 by the U.S Congress. Before then, there was no strong regulatory body that implemented monetary policy and the markets are very unstable.

After the crashing of the stock market in 1929, the Congress passed the 1933 Securities Act and Securities Exchange Act in 1934. These 2 laws were deliberately designed to restore the traders' confidence. In 1944, Bretton Woods formulated another legal framework to regulate the financial markets which were designed to prevent recurrence of global depression. However, one of the challenges faced by Bretton Woods was the dollar's inability to maintain its convertibility. For many years, USA Forex brokers were not controlled by any authority. For some, it was a representation of true freedom while for other traders it was a blend of both ugly and good.

Since the introduction of the Farm Bill and subsequently, the Dodd-Frank Wallstreet Reform Act (2010), a lot has changed in the FX sector. Today, FX brokerage companies based in the US or those dealing with US traders are part of and are regulated by the independent NFA and the CFTC. A notable change brought about by the Farm Bill was that Forex brokers needed to meet certain capital requirements of at least $20 million. As a result, many small and relatively new retail brokers who failed to meet this capital requirement disappeared.

USA Forex Brokers Regulations: Getting onto the Basics

NFA Forex USA

Why are Forex regulations important? The foreign exchange market industry has rapidly grown in the past decade with the number of traders equally soaring. Moreover, the number of brokers has also increased leading to increased cases of frauds and scams.  Potential malpractices and frauds are common in countries with little to no regulations.

Here are USA FX regulatory organizations:

Commodities Futures Trading Commission (CFTC)

The CFTC is a regulatory authority tasked with overseeing the regulation of all future markets including Forex. It operates under the Commodities Exchange Act framework. Non-bank USA Forex brokers working for retail traders are also regulated by this agency.

National Future Association (NFA)

The NFA is a non-profit and independent organization based in Chicago that does not operate on taxpayer money. This makes it difficult for the organization to have a conflict of intrerest. It also has the power to issue fines and can suspend the transactions of a broker. Moreover, it offers conflict resolutions services that arbitrate disagreements between traders and its members. Non-bank FX brokers handling retail clients must be NFA members.

Office of the Comptroller of the Currency

The OCC is a bureau of the Department of the Treasury. It has rules that regulate futures for both local and international banks as stipulated in the Commodities Exchange Act. So how do all these organizations fit together? The OCC set of rules are the most current but were made parallel with the CFTC rules.

Set of NFA Rules for USA Forex Brokers

First, all brokers are required to promote the integrity of the financial and FX markets by practicing transparent market practices. NFA allows fair competition among brokerage firms but all promotional and advertising materials should give information that will not mislead traders.

All NFA members should also have at least $20 million as the operating capital. This is higher than many regulatory agencies across the globe. Higher operating capital ensures superior traders' liquidity and prevents any major financial pressures.

In addition, NFA-regulated brokers are required to issue financial statements on a weekly basis. These financial statements give a clear picture of client account balances, cash flow amounts, and broker's expenditure. Besides that, the brokers also submit annual audit reports which are later published on the regulatory agency official website.

USA Forex brokers should also employ competent and experienced staff.

What Happens if USA Forex Brokers Violate the Regulation?

The National Futures Association has put in place a process that handles brokers' frauds and financial indiscretions. It looks for the alleged brokerage firm and takes the trader's complaints seriously. The organization is renowned for issuing out heavy penalties as well as sanctions against brokers caught manipulating clients.

Why choosing a regulated USA Forex broker doesn't mean you have Enough Protection

A significant number of Forex brokers have a history of violating US FX regulations. In most cases, Forex brokers have deliberately violated these regulations where the violations with an aim of making more money. There are also other USA Forex brokers who have never been sanctioned by the NFA over the many years they have dealt with retail Forex clients.  Although it may appear that they operate an honest business. This is not always the case. A number of companies have been flagged for engaging in deceptive or even abusive execution acts to the detriment of the Forex client.

What kind of Forex broker do you want? Continue reading this article to find examples of the best Forex brokers in the USA. 

Becoming a Forex Trader in the USA

Forex trading USA

Forex trading may be a tedious and overwhelming undertaking but at the same time it can be very rewarding. Its rewards may include an opportunity to make good money whule also acquiring useful social networks with other traders. Having a good understanding of what it takes to become a Forex broker will enable you to trade independently.

Understand the Forex market

Read as many web posts and books as possible. It will help you understand trading styles, mechanisms, players and how Forex works.  You will also be knowledgeable with regards to both technical and fundamental analysis as well as getting to know the macroeconomics factors at play in currency trading. You will also learn how to check order conventions, pricing and other basics that you may require when assisting investors to decide on the best transactions.

Understand the role of USA Forex brokers in the contemporary trading environment

Get to understand what it means to be a Forex trader. Understand the trading rules, operating hours for popular trading markets and even the role of your Forex broker. Alternatively, you can search for online Forex forums and credible review sites.

It is important to note that with the advancement of technology, the role of the modern broker has also expanded to offering Forex information to traders. While some brokers offer trading platforms without offering relevant trading news, contemporary brokers offer a plethora of services including news and even trading tips. A competent broker should ensure that the clients' trading software platforms are always functional, orders are processed efficiently and the company's pricing algorithms have an appropriate bid spread.

Ensure your broker has a professional certification

To become a Forex broker in the US you have to pass Series 3 license (also referred to as National Commodity Futures Exam). Forex is regarded as one of the most uncertain categories of investments; as a result, a separate exam is set to test the eligibility of those sell it.

The Series 3 examination has a testing duration of 150 minutes and consists of 2 parts. Part one has 85 questions and tests one's market knowledge. It also tests price limits, essential orders and accounts, calculations, margin requirements, and basic hedging. The second part, on the other hand, has 35 questions and it tests regulations. Some of the topics covered include CPO (commodity pool operator) or CTA (commodity trading advisor) regulations, different arbitration methods, and Commodity Exchange Act.

You should be knowledgeable and familiar with different regulation in order to pass. There are many detailed preparatory materials of this test online. To take the real test one has to pay $115 and be sponsored by a licensed Forex brokerage company. The multiple-choice exam is administered by Financial Industry Regulatory Authority (FINRA) and can be taken any day at websites across the U.S and internationally.  The passing mark is 70% on both parts of the test.

In some cases, some people may not be allowed to sit for Series 3 test but may be permitted to take other tests. Therefore, it is important to check for proficiency requirements at the NFA official website. Also, exceptions may be allowed for some brokers depending on the firm's business.

Limitations and Comparison to other countries/scams

US traders

Forex trading regulations in the United States of America are not the same as those enforced in many parts of the globe. These laws are quite stringent and this explains why the US has few brokers licensed by  the NFA.

Some of the US Forex regulations that are different from those in other nations include:

  1. Leverage

  2. Hedging

  3. Ability to authenticate the broker

Leverage

Forex is what it is today because of leverage; it allows traders with small amounts capital amounts to trade with more funds hence magnifying the profit or even loss.  The regulatory agencies can, however, direct how much leverage is appropriate. The Dodd-Frank Act, 2010 regulations limited leverage to 50:1 on major currencies and 20:1 on minors. This was done to lessen the amount of risk taken by traders who don't understand the disadvantages of leverage.

Hedging

A trader has three options when operating a losing trade and one of them is hedging which is placing the order in the reverse direction. It is a very effective strategy that reduces losses. However, the USA regulations do not allow hedging. Instead, your previous order will be closed irrespective of your profits or losses, if you place a new order on the identical currency pair.

Ability to authenticate the broker

Since most brokers operate online platforms, they can claim to be under a certain regulatory authority even when they are not. All NFA members have a distinct license code that investors can use to cross-check with the agency's database. All US-based brokers are also members of CFTC. In the event that the broker is not present in either databases, the firm is not allowed to handle US retail traders.

NFA also offers an outstanding online resource with profound information on brokerage scams, banned companies, penalties, and not forgetting essential information about U.S financial markets.

Other regulations revolve around deposit security and storage of clients' funds.

2018 Top USA Forex Brokers Reviewed

Here is a list of the best US-based brokers that will enable you to decide which brokerage firm to trade FX with. The list has been developed after putting key factors such as technology, safety, trading conditions and support in consideration.

Forex.com

Forex.com is currently the one of the largest and reputable online USA Forex brokers. It is owned and managed by GAIN Capital Company. Traders partnering with Forex.com receive benefits like expert advisors hosting, free education, tight spreads, 24/7 customer care service and market research.

North American Derivatives Exchanges (NADEX)

NADEX is popularly known for binary options exchange that is regulated by CFTC. It is the globe's first online regulated exchange for futures markets. Nadex has 2 trading platforms. Nadex trading platform is a web-based platform and can be accessed with any browser while the mobile trader has direct market access. 

OANDA

Founded by Dr. Richard Olsen and Dr. Micheal Stumm, OANDA is one of the first online FX brokers. It is also estimated that it deals with approximately 20% of the world's Forex trades. It is also an NFA regulated and long-established company.

Some of the benefits reaped by those using it include innovative trading practices, transparent pricing, tight spreads, user-friendly trading platforms and quality support.

Choosing the best USA Forex brokers can be frustrating and overwhelming, given the fact that there are numerous factors to put into consideration.  With all the choices that traders have, it is likely to find unscrupulous Forex brokers who may deliberately cheat you out of your funds for more profits. Getting a reliable forum such as topbrokers.com can help you find the perfect USA Forex Broker


Risk Warning: Your capital is at risk. Statistically, only 11-25% of traders gain profit when trading Forex and CFDs. The remaining 74-89% of customers lose their investment. Invest in capital that is willing to expose such risks.
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