Forex Brokers in the USA
If you are a forex trader based in the USA, you might find your options limited when it comes to buying and selling currency pairs. Whilst you could look towards an offshore forex broker, they cannot offer the same protection that a USA forex broker can. In the United States, two main agencies have been tasked with the challenging job of regulating forex brokers. These two agencies are the Commodities Futures Trade Commission (CFTC) and the National Futures Association (NFA).
Best forex brokers in the USA
Online forex trading and investing has increased in popularity significantly over the years with many online forex brokerages opening up which has given traders a vast choice of brokers who are all competing for their business.
This can make it difficult to choose the best forex brokers in the USA although due to strict regulatory requirements, there are not actually that many brokers who offer trading products to US clients when compared to other countries.
We have conducted many hours of thorough research and analysis into many forex brokers in the USA. This has allowed us to collate what we consider to be amongst the most important factors to consider when choosing a forex broker. We have allocated each broker an unbiased rating based on our findings. You can see a selection of our best USA forex brokers in the table below.
ASIC, BaFin, CFTC, DFSA, FCA, FINMA, FMA, FSA, FSCA, JFSA, MAFF, MAS, METI, NFA
How to choose a USA forex broker?
First and foremost, we ensure that the USA forex broker is regulated and authorised to provide online forex trading services to clients in the USA. Once that has been confirmed, we look at some of the most other important factors including broker fees, spreads, platforms, apps, deposit/withdrawal methods, educational content, trading tools, market analysis and customer support.
Forex Regulation in the USA
We believe that it is of upmost importance that a broker providing forex trading products and services to clients in the USA is authorised and regulated to do so. Using a regulated broker helps to give traders peace of mind that they are using a brokerage firm which is subject to strict rules and regulations put in place to protect investors.
It is worth mentioning that there are some non-USA brokers that still solicit clients located within the USA. There are also USA forex brokers who offer online trading products and services to clients located in some countries outside of the USA. In this instance, it would be a considered a sensible idea to ensure that the broker in question has the relevant regulation within the jurisdiction that they operate from.
Before a broker can accept US traders as clients, they need to be registered as a Retail Foreign Exchange Dealer (RFED) by the financial regulatory body, the Commodity Futures Trading Commission (CFTC). The broker should also be regulated by the National Futures Association (NFA) as a Futures Commission Merchant (FCM).
If a broker has been licensed to operate in the United States (USA), they should be provided with a registration number as proof that they are registered. This number is usually located on the brokers website, near the footer where they state who they are regulated by.
You should check on the relevant regulators website to validate the current status of the broker registration to ensure that it is valid and up to date. It has been known for some scam brokers to fake regulation, some even going as far to clone another brokers website.
When you are looking up the registration number, you should find details of the brokerage firm including their website, contact details and if they have any cases brought against them.
Commodity Futures Trading Commission (CFTC)
The U.S. Commodity Futures Trading Commission (CFTC) is an independent agency of the US government created in 1974, that regulates the U.S. derivatives markets, which includes futures, swaps, and forex trading. The stated mission of the CFTC is to promote the integrity, resilience, and vibrancy of the U.S. derivatives markets through sound regulation and transparency.
The Commodity Exchange Act (CEA) requires certain firms and individuals that conduct business in the derivatives industry to register with the CFTC. CFTC regulations also require, with few exceptions, CFTC registered firms to also be members of the National Futures Association (NFA). The CFTC has delegated registration responsibility to NFA.
All futures professionals that are required to register with the CFTC are only granted registration after a thorough and detailed investigation of their background to determine if they meet the strict standards set forth in the CEA.
National Futures Association (NFA)
The National Futures Association (NFA) is the self-regulatory organization for the U.S. derivatives industry, including on-exchange traded futures, retail off-exchange foreign currency and OTC derivatives. NFA is headquartered in Chicago and maintains an office in New York City. Designated by the CFTC as a registered futures association, NFA strives every day to safeguard the integrity of the derivatives markets, protect investors and ensure members meet their regulatory responsibilities.
Retail Foreign Exchange Dealer (RFED)
A retail foreign exchange dealer (RFED) is an organization that acts, or offers to act, as a counterparty to an off-exchange non-U.S. currency transaction with a person who is not an eligible contract participant and the transaction is either:
- a futures contract, an option on a futures contract or an option contract (except options traded on a securities exchange); or
- offered or entered into, on a leveraged or margined basis, or financed by the offeror, counterparty or person acting in concert with the offeror or counterparty on a similar basis.
Futures Commission Merchant (FCM) Registration
A futures commission merchant (FCM) is an entity that solicits or accepts orders to buy or sell futures contracts, options on futures, retail off-exchange forex contracts or swaps, and accepts money or other assets from customers to support such orders. If a broker is soliciting or accepting orders to buy or sell retail off-exchange forex contracts and accepting money or assets from retail clients, the brokerage firm needs to be designated as a Forex Dealer Member and comply with requirements outlined on the NFA website.
Forex Trading Platforms
The best USA forex brokers should have a variety of different forex trading platforms for multiple devices including desktop, web and mobile forex trading apps. The brokers trading platforms should be user friendly, with plenty of trading tools and advanced functionality for all types of trading strategies.
You will find that there are lots of MetaTrader brokers which is one of the most user-friendly platforms that gives convenient market access for manual and automated trading strategies. If you don’t have the time or skills to trade and want to copy forex trading signals, you should look for a social trading platform.
The brokers should provide USA forex traders with a wide range of currency pairs and other trading instruments across multiple asset classes including Forex, Commodities, Cryptocurrency, Stocks, Indices, Options, ETFs, CFDs and Futures. The more choice that the broker has, the easier it would be to expand your portfolio in the future, should you wish to do so.
When you place a trade position with a forex broker, you will usually need to pay the spread which is the difference between the bid and ask prices at the time of executing your order. In general, the lower the spreads, the cheaper the trading costs can be and the better the prices you may have your trade executed at. Although, this can also be dependent on other factors such as the brokers liquidity, slippage and execution model.
Many NFA forex brokers will charge a small commission fee for each trade that you place with them. The lower the commission fee per trade, the lower your overall trading costs can be in the long term. Some trading strategies actually depend on low commissions. Thus, the best USA forex brokers should have the most competitive commissions. If you use a dealing desk forex broker you might not need to pay a commission fee but could end up with higher spread mark-ups to compensate for this.
In addition to the spreads and commissions that brokers may charge, there can be additional fees. These include overnight swap fees, funding fees, platform fees, trading tool fees, educational resource fees, etc. Any other fees charged by the broker should be competitive and transparent to the trader. You can potentially save on forex trading fees by using a discount brokerage.
The execution speed can determine the price your order will be executed at. Instant execution should mean that the order is placed as close to your desired price as possible. The best USA forex brokers should have rapid execution speeds with minimal slippage so that traders get the best available prices more often than not. Some trading strategies such as scalping are dependent on reliable execution speeds. I find that ECN forex brokers tend do have the fastest execution and tightest spreads because they have no dealing desk.
The best forex brokers in the USA should have top liquidity providers (LPs) with deep liquidity pools so that they can offer competitive bid/ask prices along with reliable trade execution speeds. If you use a direct market access forex broker you can get your positions executed straight through to the forex market at the best prices available.
Forex Trading Tools
Whilst the trading platforms offered by brokers will usually have more than enough trading tools for the average trader, there are some forex brokers who offer additional trading tools such as economic calendars, trading calculators, forex market analysis, forex signals and more. The best NFA forex brokers in the USA will usually offer some additional trading tools to support traders with their daily trading activities.
Educational resources can help traders to improve their trading skills and knowledge. They also encourage informed trading. The best forex brokers will usually offer clients a range of free educational materials such as tutorial videos, forex trading guides, forex eBooks, trading glossary, FAQs, webinars and seminars. If you are new to trading and need as much guidance as possible, you might want to explore our best brokers for beginners.
Forex Account Types
Forex Trading brokers can have a variety of different forex account types that are designed to cater to the differing needs of clients. The accounts can vary according to the minimum deposit required, leverage offered, execution type, spreads, commissions, instruments, additional services and more.
The best CFTC USA forex brokers should have a selection of account types for different experience levels and trading strategies. Free forex demo accounts can be useful to practice trading online with virtual funds whilst Islamic accounts that comply with Sharia law support Muslim traders.
Account Funding Options
In order to trade forex online, you will need to be able to deposit and withdraw funds to and from your forex trading account. Brokers can offer a range of different account deposit and withdrawal methods. This will often include bank transfers, credit/debit card and online payment processors such as Skrill, Neteller and PayPal. The best forex brokers in the USA should have a variety of convenient funding options. It is worth considering the time taken and any fees involved for processing funds.
Most NFA forex brokers can be reached via telephone, email and live chat. It is worth ensuring that the broker can be reached in a way that is convenient for your needs. The brokers customer support team should be prompt, polite and efficient in their responses to all clients general and technical questions. You may wish to consider if there is any different between your time zone and the brokers support hours, as this could have an impact on response times.
Is forex trading legal in the USA?
The regulatory landscape for brokers doing business in Europe is rather straightforward. A broker can simply welcome traders from all EU nations after it has secured a license from one of the European regulators. In other words, a broker regulated by the UK Financial Conduct Authority may accept clients from Bulgaria, the Netherlands, Germany, and other EU members.
However, European licenses simply do not function in the USA broker must be subject to NFA, or National Futures Association, regulation in order to accept traders from the US. There are brokers that hold numerous licenses, such as those from CySEC, the FCA, ASIC, and others. Why then would they not obtain a new license to offer services in the US? The explanation is really straightforward: capital requirements. While a broker needs to have between $100,000 and $500,000 in locked money to receive a license in Europe, the NFA needs at least $20 million in capital to be authorized to operate in the US.
This sum solely covers the deposit that a broker must make; it does not cover any legal costs related to getting licenses, hiring attorneys to be listed on the register, or paying executives. In other words, operating in the US market is expensive.
Despite the fact that some brokers are profitable enough to afford it, $20 million is a sizable sum to set up only for a license. The 15th-largest broker in the world typically makes less than $10 million USD in profit per year; dedicating a profit of two years for the right to work in one nation is therefore a very serious expenditure.
Back in 2008, there were several brokers accepting US clients, and the situation with capital requirements was very different. However, there are currently just a few forex brokers who work with US clients like those listed in this article.
Conclusion: should I trade with a USA forex broker?
If you are based in the USA, then you can get protection and peace of mind when you trade with a USA forex broker that is regulated by the NFA/CFTC to serve US traders. If you were to open an account with a broker overseas, you might be able to get access to additional forex trading products and services, but then you might not have the same protection in place if something was to go wrong. With some of the best forex brokers being in the USA, there is plenty of choice if you are looking to trade forex online.
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