US Forex Brokers – Top USA FX Brokers and Trading Platforms

US flagThe Forex Market is undoubtedly one of the largest financial markets in the world, and the amount of currency that is traded online is phenomenal. The average trade on a single day has now reached to a staggering amount of $ trillion.

The majority of the daily trade comes under “Individual Retail Trading” which is still not large but growing with every passing day.

A majority of Forex traders are US citizens, and FX trading is prevalent over there because some other online investment forms are strictly prohibited.

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Deposit: $50
Leverage: 1000:1

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Some different Forex brokers have mushroomed lately that offer FX trading to the Americans. It includes the operators who are based in the country as well as the brokers who are situated offshore.

US-Friendly Forex Brokers

The Most Traded Currency is the United States Dollar

There is no denying the fact that US Dollar is the most sought-after and most traded currency in the global market. It is to be noted that the currency participates in more than 85 percent of all Forex trade volumes. It is the biggest reason why this currency is coupled with other major currencies. Even the minor currencies are seen pairing up with US Dollar for trading in the Forex market.

    US Dollar is by far the most traded currency in the world

    The trading symbol of Forex for US dollar is USD

    US Dollar is one of the most traded currencies in the currency pair

Preferring the Appropriate US Forex Broker

Some Americans engage in Forex trading primarily because US Dollar is a very powerful and important currency in the global market. A slight increase or the decrease in trade activities in Forex market can have a huge change in the overall value of the dollar. This, in turn, can make a trader rich or he might lose a significant amount of money.

It is a complicated task to recognise the value of one currency and how it rises or falls concerning other currencies. No tool can predict the movement in price the whole time. Accuracy and better decision making come with experience and how often one is trading in the Forex market. To make the most out of your FX trading, it is imperative that you find a legitimate and reliable US Forex Broker.

Legal Issues

The first and the most important thing about US Forex trading is its legal aspect. It is recommended that you do all your trading through a regulated Forex broker who has the license to offer trading services to the US traders. Only then you will be adequately protected from any scam, and you will have your money worth the cause.

NFA or Natural Futures Association is the main body that looks after the regulation of several financial markets including forex trading in the USA. It is a non-profit and independent organisation that was founded way back in 1982. Apart from financial institutions based in the USA and registered brokers, dealers and holdings, Retail Foreign Exchange Dealers (RFED) and Futures Commission Merchants (FCM) are also allowed to participate in FX trading; provided they are registered with NFA.

The duties and functions of NFA are discussed below:

    Issuing license to approved Forex brokers

    Combating scam and tackling fraudulent activities

    Making sure Forex brokers adhere to capital standards

    Ensuring all Forex brokers submit regular reports as required by law

Things to Notice

As stated above, for a Forex broker to provide its services in the USA, it should be registered with NFA. But it is only just a pre-requirement to say that the broker has to adhere to specific standards of being reliable.

There is a legal binding on the part of the US traders not to resort to trading with very high leverage ratios. In this respect, you should not expect a lot of variances. However, some other things need to be taken into consideration which is listed below:

    Accepted payment methods

    Customer support

    Available trade platforms

    Currency pairs

    Spreads

    Fees and commissions

    Welcome Bonus

    Minimum required deposit

The minimum amount that is to be deposited in the trading account varies from one broker to another. If you are planning to start trading by depositing vast volumes of money, there is no issue in finding US brokers. But if you don’t have sufficient capital and can afford to invest say $50 or $100 as minimum deposit amount, then you will have to eliminate brokers that require high deposit amount.

Most of the US Forex brokers offer a special promotion nowadays called Welcome Bonus which is awarded to the concerned new trader after their first deposit. It is to be noted that bonus of lower amount is always profitable if all the terms and conditions are favourable and no strings are attached.

Most Forex brokers do not charge any fee or commission on trade. In fact, they get their profit through spreads. However, there are a few operators that charge a fee if you are depositing specific payment gateways.

The brokers can book the profit from the difference between the two positions or the spread.

Hence, you should always select a US Forex broker that offers lower spreads. Like for instance there is one broker that provides a range of 1.1 on trading EUR/USD currency pair, and the other broker is charging a spread of 1.5, it is always advisable to go with the first option.

These days, most of the brokers are offering multiple trading platforms to the traders. Apart from providing a downloadable and online platform, there is a distinction between mobile as well as the PC based platform. In fact, there is one significant difference that needs to be remembered. A broker can offer a basic set of features with simple or complex trade options. It is always advisable to have an opportunity in mind because it gives you the flexibility to choose. Like for instance, when you get experienced, you will be able to opt for composite trading where you can start with floating spreads and earn higher profits in return.

When we are talking about Forex trading, customer support is not the first thing that comes to mind. You should know that Forex is an online service industry and customer support plays a critical role in it. Traders trust the brokers with all their life because their hard earned money is at stake. So it is expected on the part of the brokers to provide high-quality customer service in return. It will be preferred if the operator offers two to three different kinds of communication like email, video chat, telephone etc. where traders can interact with a broker. Also, timely resolution of the problem goes a long way in making a happy and satisfied customer.

We have already mentioned above that some US Forex brokers might charge some amount of fees for making deposits and withdrawals. But the majority of brokers do not charge any such fees. Brokers accept a wide range of payment methods like electronic wire transfer, VISA, MasterCard, Credit Cards, eWallet services etc. It is to be noted that the trader will have to verify his/her identity before the first withdrawal can be processed. It is binding on the Forex brokers to check the legal obligations before payments can be treated. Also, you need to provide proof of residency, and it goes without the saying that you should be a resident of the USA who is legally residing in the country.

Frequently Asked Questions

1. Are American citizens allowed to trade Forex online?

Yes, it is legal for the US citizens to trade in Forex without any hassles.

2. Are profits generated from Forex trading taxable in the US?

In the past, the majority of US traders were not sure how money profited from Forex trading is taxed. This, in turn, caused a lot of problems for the IRS. Under the present US regulations, all profits from Forex trade are classified as capital gains. Under section 1256, capital gains are taxed in the ratio of 60:40. The first 60% is taxed at 15% and the remaining at basic income tax which is presently 35 percent. In the event, if the year has not gone well, traders might prefer to get taxed under Section 988. The tax options are far more favourable for the losing traders.

If your choice of broker is residing in the USA, then you should be sent a tax form called 1099 at the end of the year that can be beneficial as you would not have to do an extra amount of calculations.

3. Am I allowed to trade Forex currency pairs which do not include the United States Dollar?

Yes, you are free to choose any currency pair offered by your Forex broker, and there is no legal binding that it should include US Dollar.

4. What is the maximum leverage ratio which I can have on major currency pairs?

The maximum leverage that you can avail of your Forex trade is up to 50:1. It is binding on the part of the regulated Forex brokers not to offer higher leverage ratio because there is always a risk involved in losing a reasonable amount of money.

5. What is the definition of a Foreign Exchange trader according to the US laws?

In the USA, each whose net asset is less than $10 million, as well as the small companies, are categorised under “customer”. The law has been designed in such a manner so that the interest of small investors are protected.