Forex Market Trading USA
If you are a Forex trader looking to trade in the USA then you may have already discovered that your options are limited. The laws that govern financial trading in the USA are so strict that only brokers that are regulated by the NFA or CFTC are allowed to offer their services to residents. This means that international brokers are not allowed to solicit their services.
You can of course look further afield yourself but many Forex brokers don't offer their services to residents of the United States because of the strict regulations. Because of this you will struggle to find one that isn't US based and that trades in a reliable and trustworthy manner! That said there are many benefits to trading with a home-grown company.
Although there are tough regulations you will find a choice of brokers that offer their services to you, as a United States resident, all that score highly when it comes to the critical elements of trading. We carry out a thorough review of all Forex brokers to ensure that they operate within the regulations of the country and that they offer what you need.
If you are new to Forex trading or looking to change brokers, in this guide you will learn:
- The various elements to look out for from a USA Forex broker
- All taxes and fees that you will be subject to paying on profits
- How we research the marketplace to bring you the best brokers
Our Top Recommended Websites Updated: October 2018
Local Broker Benefits
With Forex trading in the USA being strictly regulated you will find less international brokers then you would normally find. This isn't because trading is prohibited, but because of the criteria required to be able to obtain a license. This has limited the number of brokers offering their services to US residents. Despite this there are still a good choice of regulated brokers. Here's what you should look for:
Because of the demands that the NFA and CFTC place on brokers that want to offer Forex trading service in America, you need to ensure that you choose a licensed one. There are some that will ignore the regulations and try to trade under the radar. To ensure that you are trading with a broker that is operating within the licensing requirements look for the NFA/CFTC symbols and check out our recommendations and reviews.
Bonuses And Deals
Often used to encourage you to open an account, welcome bonuses take one of two forms. There is the non-deposit bonus or the deposit bonus. As the name suggests the non-deposit bonus doesn't require you to spend any of your own money. The bonus will normally cover the first few trades. A deposit bonus is often worth more but requires you to make a deposit first.
As one of the main global currencies, the USD features in many of the "main" Forex pairs available to trade in. in addition to the main pairs you have the "minors" and "exotics". These pairs tend to be less easy to predict but the spreads are often greater. If you want to have the choice of pairs then you need to find a broker that offers more than the main ones.
As a new trader, or new to the broker, then you want to ensure that you can get hold of someone if the need arises. If you have a question or query how do you get hold of customer support? There are often many ways to get in touch with someone. Make sure the broker that you choose is visible and can be contacted.
Legal And Regulation
There is quite a lot to know about the legalities and regulation of Forex trading in the USA. It is one of the more complicated trading markets in the world. In most European countries, you need to apply for a license and meet certain criteria to obtain one. In the USA however it is much more stringent.
The main issue for brokers is that they are required to have a large amount of capital to be granted a licensed by the NFA/CFTC. This requirement prohibits many brokers from applying for a license to trade and you will notice that most of the large global brokers don't accept US traders.
Because of this you can be reassured that the brokers who do have a license are serious about protecting their client's investments. When you choose a broker that is licensed by the NFA/CFTC you are picking a reliable and trustworthy one. That's not to say that many of the global ones aren't, just that the capital required is too restrictive. Be careful though, there are those brokers who will claim to have a license that don't so make sure you check it out.
Paying Taxes And Fees
The tax payable on Forex trading profits is subject to tax but this can be applied in one of two ways and this is where it can get complicated. There are two IRS contracts; 988 and 1256. 988 is the tax payable on spot trades which are settled within two days. These are subject to income tax.
Then there is the 1256 contract which applies to future contracts. These are subject to capital gains tax. If you are confused as to which applies to you, and if you do a mixture of short term and long-term trades, then it is advisable to seek the advice of a tax professional.
When it comes to fees there are a few to consider:
Before you select your broker, it is worth taking a look at the fees that they charge so that you know the true cost of trading. Consider how you can reduce the fees by making fewer withdrawals and payment transactions.
How we Recommend Brokers
Our job is to make your trading experience better. To do this we offer a selection of the best US Forex brokers. Each broker is tested on a number of criteria to ensure that the service that they offer is of the best quality.
We test a number of elements of trading to ensure that they not only offer good welcome bonuses or a good mobile trading experience but that they offer a holistic experience. We look at their customer service, their payouts, the number of assets they offer, welcome bonuses, whether they offer a demo account and much more.
Our team of experts are experienced in Forex trading, many of them have been professional traders for a number of years themselves. They know exactly what to look for and will place several trades to make sure they can establish the suitability of the platform. We then take these findings and score the broker on each of the applicable trading features.
These findings are presented to you in the form of comprehensive and detailed reviews, designed to help you make an informed decision. All you need to do is find the brokers that best suit your requirements and decide who to open an account with.
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Frequently Asked Questions
Is Forex trading in the USA legal and safe?
It is legal to trade in Forex in the USA despite the lack of international brokers that accept US traders. The reason for the low number is the regulatory requirements. Each broker is required to hold a 50:1 ratio of capital to obtain a license. This is done to protect client funds which makes it one of the safest countries in the world to trade. While you may have a limited choice, it is entirely legal to trade in Forex.
Do I need to pay taxes on my trading profits?
Yes, you will need to pay tax on your Forex trading profits. The question is which type of tax you will need to pay. As the tax rules differ for spot trades and future trades it is best to seek advice from an accountant before you submit your tax returns. You may find that you are liable to two types of tax; both income tax and capital gains.
Can I test brokers before trading with real money?
There are two ways in which you can test Forex brokers before depositing real money. You can either use a demo platform or you can use a no deposit bonus. The demo platform is a virtual trading environment with virtual funds and a simulated version of live trading. The second method is to use a no deposit bonus to try the platform before you deposit your own funds. You may only get a few trades though depending on the cost of a minimum trade
Is it easy to make deposits and withdrawals?
Making deposits and withdrawals is simple. All you need is a way of depositing online funds. Most brokers accept major credit and debit cards and electronic forms of payments. Once you make your deposit your funds should be available immediately. To withdraw funds, you simply request your withdrawal and the money is returned to the source of deposit however you may be charged a small fee.
Can I trade using my mobile or tablet device?
The answer to this all depends on whether the broker offers a mobile friendly solution. Do they offer an app? Many brokers do. If not they offer a mobile responsive website. This means that whichever device you are, the website will deliver the optimum version of the website for you. This allows you to trade on the go as long as you have a mobile device and an internet connection.
Our Top Recommended Websites Updated: October 2018
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