US Forex Brokers
With the United States’s status as the world’s largest economy, coupled with a potentially healthy market supported by the country’s large population, one would imagine that there’s a long line of US forex brokers jostling to offer brokerage services to millions of eager traders.
One would be wrong.
For one thing, traders in the US tend to gravitate more towards stock trading, often choosing to acquire shares over currencies. So, even though the New York session tends to have the most significant impact on currency rate fluctuations, the amount of US-based retail traders tends to be relatively small.
However, that’s not the most significant reason for the limited number of forex brokers in the United States. The biggest reason is that the trading environment in the US presents a series of unique challenges to brokers. The Commodity Futures Trading Commission (CFTC) and the National Futures Association (NFA), both independent bodies, tightly regulate forex brokers in the United States, enforcing rigorous restrictions that include a limit on leverage provided.
The regulations also limit US citizens’ ability to trade with brokers that are not domiciled in the country unless they’ve been registered with the NFA.
These regulations were designed to provide more security for the investments of forex traders in the US. The downside is that there’s a shortage of brokers willing or able to provide brokerage services under these conditions.
In this article, we’ve examined the forex brokers in the USA and rated them based on the value and services they offer. We’ve also included the lowdown on the US forex regulations and how they are different from what obtains elsewhere.
- Top 4 Best Forex Brokers For US Clients
- The Forex Trading Situation In The US
- The Dodd-Frank Act
- The Enforcers: The CFTC and the NFA
Top 4 Best Forex Brokers For US Clients
- FOREX.com– Best Platform and Tools
- TD Ameritrade– Great for Beginners
- IG US– Best for Lowest Spreads
- Nadex– Best for Binary Options Trading
FOREX.com markets itself as the leading forex broker in the US, and so far, we’ve not come across anything that disputes that claim. Founded in 2001, this brokerage platform boasts a solid global appeal, counting a smooth and intuitive website, more than proper research and education tools, and a multitude of user interfaces among its numerous strengths. This broker offers a diverse selection of products worldwide, ranging from CFDs to spread betting to futures, spanning a variety of asset classes. However, not all are available in every country it serves. In addition to forex, traders with this platform can participate in the trade of ETFs, individual stocks, indices, commodities, cryptocurrencies, futures, and gold and silver.
FOREX.com is also among the best regulated. StoneX Group, a publicly listed corporation on the NASDAQ exchange, owns Forex.com, and the trading platform is considered low-risk. Traders’ funds are segregated from the company’s accounts, and FOREX.com doesn’t operate a bank.
Fees and Commissions
While FOREX.com’s non-trading fees are remarkably minimal, its trading fees are higher than the industry average on the whole. Traders are offered three account types, with spreads varying across the accounts. On the Standard account, FOREX.com charges an average spread of 1.6 pips on the EUR/USD currency exchange, while the other two accounts (Commission account and DMA account) are commission-based. On a positive note, over 98% of deals on this trading platform are completed in under 1 second, with an average execution time of 0.05 seconds. It also boasts a very high deal completion rate, with 99.99 percent of deals executed correctly.
Platforms and Tools
One area where FOREX.com truly shines is in its provision of platforms and tools to help traders enjoy a seamless trading experience. Traders on the platform get to enjoy the full MetaTrader suite, along with its acclaimed Advanced Trading and Web Trading platforms. Traders may access news, economic calendars, trade/order history, charts, and positions, as well as trading signals, market analysis, and research reports from FOREX.com specialists through the platforms. Clients can seamlessly place trades on the Web Trading platform, browse through markets, and conduct research, assisted by 14 timeframes, almost 100 indicators, and ten chart types.
Research and Education
Traders looking to brush up their knowledge will find it easy to do this. There are hundreds of educational content on the platform, easily accessible to users based on their level of expertise. Beginners will find the materials helpful, although seasoned traders may find FOREX.com’s educational materials unsubstantial. The platform doesn’t pull up any trees in terms of research amenities, although materials are easy to access and well-organized.
TD Ameritrade stands out among other brokers for its beginner-friendly platforms, offered access to multiple accounts, and a multitude of tools designed to help both beginner and expert traders make the most of the forex market.
Stocks, ETFs, options, mutual funds, annuities, and cryptocurrency trading are among the financial products provided by TD Ameritrade. It supports investors by providing free educational resources, unique tools and software, portfolio management, and excellent customer service.
TD Ameritrade is laying a deliberate claim to be the most advanced forex trading platform in the US, with great offerings like zero commissions trading and over 70 currency pairs to trade. The company operates a strict transparency policy, and traders are invited to open an account on the platform with no minimum balance required.
Is TD Ameritrade Safe?
TD Ameritrade is a member of Ameritrade Futures & Forex LLC, which several Tier-1 regulators regulate in the USA and other parts of the world such as:
- S. Securities and Exchange Commission (SEC)
- National Futures Association (NFA)
- Commodity Futures Trading Commission (CFTC)
- Financial Industry Regulatory Authority (FINRA)
Brokers would have to segregate client funds and have tier-1 banks do so for them to be approved and licensed by these regulators. They would also need to operate rigorous and transparent policies, institute complaints procedures for resolving disputes and put policies in place that guarantee the protection of traders’ funds.
Fees and Commissions
US traders on the TD Ameritrade platform are charged a $0 commission for stock. On the flip side, other investment goods trades and other broker-assisted trades are subject to costs. Here’s a breakdown of some costs to expect on the platform:
- For online stock or ETF trades, TD Ameritrade does not charge a fee.
- OTCBB transactions cost $6.95 each transaction, although most other brokers have made these trades accessible.
- Options transactions have no per-leg commission. Commissions are $0.65 per deal. Contracts with a value of $0.05 or less are exempt from fees. Customers that choose the VIP option can negotiate lower commissions depending on volume in private.
- A 50-options-contract order costs $32.50.
- The cost of a covered call deal of 500 shares plus five contracts is $3.25.
- Outside of the No Transaction Fee program, mutual fund commissions are $49.99.
Platforms and Tools
Traders with TD Ameritrade can choose between two primary trading platforms, each with a mobile counterpart. The first of these, TD Ameritrade.com, is an on-ramp platform that includes almost everything a typical investor needs to find, study, screen, and trade stocks, ETFs, bonds, CDs, and options.
The second platform is called thinkorswim, and it’s been designed with advanced forex, stock, futures, options, and ETF traders in mind. Advanced trading capabilities, a full range of technical analysis tools and studies, customized screeners and charting, backtesting capabilities, real-time news, quotations, market heat maps, and more are some of the features offered on the platform.
Research and Education
TD Ameritrade set the gold standard for the education of traders. With hundreds of engaging educational materials categorized into three skill levels, it’s easy for traders to find resources perfectly suited for them. TD Ameritrade also offers a virtual simulator, known as paperMoney, that provides the chance for traders to get familiar with the platform’s tools and resources in a mock-up of real-time trades. The “Ask Ted” feature is designed to let beginner or advanced traders get specific information about the platform’s tools and other data.
IG left the US market, but since its re-entry in 2019, it has quietly gone about establishing itself as a behemoth in the industry. With over 200,000 clients worldwide, a long and storied history, excellent support, a highly comprehensive learning academy, and competitive prices, IG is rightly regarded as one of the biggest CFD brokers in the world.
Established in 1974, IG has managed to remain a powerhouse in the industry over several decades, with traders particularly drawn to the company’s collection of helpful trading and research tools, easily navigable website, and transparent pricing. Like other brokers on this list, IG is regulated by several tier-1 bodies across the globe. Traders in the US have leveraged access to 80+ currency pairs.
Also read: Forex Educators
Is IG US Safe?
IG has the rare distinction of posting an overall trust score of 99 out of a scorable 99, meaning that this broker is considered low risk. The IG Group is listed on the London Stock Exchange. It is regulated by top-tier regulating bodies across the globe, including the UK’s Financial Conduct Authority (FCA), Federal Financial Supervisory Authority (BaFin) in Germany, the National Futures Association (NFA), and the Commodity Futures Trading Commission (CFTC).
Fees and Commissions
On a general note, IG’s trading and non-trading costs are competitive. The company is refreshingly upfront and transparent, and you’ll find a detailed breakdown of its pricing on its website.
IG offers spreads of 0.86 pips on the EUR/USD currency exchange, which is comparable with the industry average in the US. There are no charges for deposits and withdrawals, but accounts left inactive for two years will attract a charge of $12 per month.
Platforms and Tools
Traders on the IG platform are offered a wide range of tools and trading platforms to pick from. However, IG’s proprietary web trading platform takes the cake when it comes to simplicity and customizability.
The platform has been pared back in terms of extra features to make it easier to navigate. The trading platform may be readily customized. You can move windows around and save configurations thanks to the versatile design. There is a one-click trading function as well as the ability to establish watchlists. Further, charts may be accessed from virtually every view that displays live market prices or streaming bid/ask rates. There are also several research and trading tools, as well as risk-management modules that are directly linked.
IG also provides third-party Forex trading systems to US Forex traders, including the popular MetaTrader (MT4), Progressive web app, ProRealTime, and L2 Dealer (which offers Direct Market Access). You will have access to a suite of IG’s own proprietary MT4 add-ons as well as the standard indicators if you pick the MT4 platform through IG.
Research and Education
IG ranks among the industry leaders for the provision of market research and educational content. The platform complements its in-house resources (which are excellent) with several third-party providers (such as Autochartist).
IG places a premium on trader education, judging by the sheer scope of educational material on its platform. Traders are offered dozens of content in the format of their choice. Then there’s the IG Academy, where traders can advance through the course as their knowledge and experience levels increase.
Nadex offers something completely different from the other forex brokers reviewed in this list. For starters, it’s not even a brokerage, to begin with. Nadex is an exchange. The company deals in the trade of call spreads, binary options, and knockouts.
Nadex is an acronym for the North American Derivatives Exchange, and the company is based in Chicago. Nadex was established in 2004, and with more than a decade’s worth of experience under its belt, has attained recognition as one of the few legitimate exchanges for binary options around.
Nadex attracts clients to its platform by offering low fees and minimums, a wide selection of tradable markets (commodities, cryptocurrencies, stock indices, forex markets, and macroeconomic events), quality educational materials, and of course, by being trustworthy. The company’s cause is further helped by the intuitiveness of its platform and the easy signup process.
Is Nadex Safe?
The binary options market is notorious for unscrupulous and dishonest practices, especially by brokers. That’s why it’s strictly regulated, with only a handful of brokers permitted to offer the market. Nadex is fully licensed and regulated by the Commodities Futures Trading Commission (CFTC) to operate in the US.
Nadex keeps funds deposited in separate bank accounts at BMO Harris Bank and Fifth Third Bank, never mixing them up with Nadex funds. Nadex institutes technological, physical, and procedural protections that meet and even exceed industry requirements to keep your data safe and secure. Further, the Nadex website discusses its products, markets, trading platform, and price structure in detail.
Fees and Commissions
Nadex calculates its fee on a per-contract basis. Nadex imposes a flat cost of $1 for each contract per party. Nadex will waive the settlement cost if a binary options deal expires worthless. Nadex’s only source of revenue is from trading and settlement fees. This implies they don’t compete with their traders. You can either place a second, opposing trade or let the contract expire to quit a trade.
Payouts can be as high as 100%, but losses are restricted to the amount of money invested. Losses cannot exceed deposits since you cannot trade if you do not have the required amount in your account.
Also read: What Does Gbp Stand For
Platforms and Tools
Nadex’s desktop experience is based on a single web page. Any PC or Mac with a modern web browser and an Internet connection may use the trading platform. To help first-time users get a feel for its platform, Nadex offers a demo account with a virtual balance of $25,000.
The platform is designed to trade binary options and spreads; it has all of the features you’d expect for those products, but not much more. The charts are relatively adaptable, and switching between charting intervals (time and tick-based) and chart kinds is simple (candlestick, line, HLOC, and Mountain).
Research and Education
Research materials are pretty scant on the platform, and Nadex does not integrate with third-party platforms to provide research tools. However, what the platform lacks in research and insight, it makes up for in education. Nadex takes great pains to explain what binary options and spreads are and how they operate to its consumers. Nadex makes it simple to comprehend and trade these products, and the provided ebooks are pretty comprehensive, just like the videos and webinars.
The Forex Trading Situation In The US
To explain the complexity of the forex trading situation in the US and how radically different it is from other places, let’s first examine the norm in the EU.
More relaxed regulatory laws in Europe guarantee brokers the right to offer their services to traders across the EU, as long as they receive a license from any European regulators.
What it means is that a broker that’s regulated by the Cyprus Securities and Exchange Commission (CySEC), for instance, can accept traders from countries that identify as members of the European Union.
Like we said earlier, the rules are wildly different in the US because US-based forex brokers play by more stringent regulations. US clients are off-limits to brokers with an EU license. So, brokers willing to operate in the US must first get the required license from the National Futures Associated (NFA) and be prepared to face stricter regulations and harsher punishments.
Also read: Best Forex Trading Platform
The Dodd-Frank Act
Recent forex traders in the US may have found themselves wondering why the regulations are so much stricter for American brokers. Here’s the reason.
The Dodd-Frank Act Wall Street Reform and Consumer Protection Act was signed into law in 2010 by then-President Obama. The act became necessary after scores of traders suffered immense losses to financial institutions and brokers. The new act set a higher threshold for brokers, revolutionized the space, and encouraged financial institutions to be more transparent and accountable.
Predictably, many retail traders and brokers, unable to cope with the new reality, left the country, changing the outlook of the American retail scene profoundly. Nowadays, only a limited number of brokers operate in the UK. It’s for this exact reason that there’s a shortage of forex brokers accepting US clients.
The Enforcers: The CFTC and the NFA
The CFTC and NFA are responsible for the enforcement of this law and the regulation of the US forex market.
Forex brokers must first register with the CFTC to operate in the United States. Not only do forex brokers based in the United States have to register with the CFTC, but non-US-based forex brokers can also do so if they want to serve US clients.
The NFA is a division of the CFTC that administers regulatory programs to protect the integrity of the Forex market, and US Forex brokers must register with the NFA. The NFA’s mission is to ensure that individuals and businesses involved in the financial industry in the United States follow fair and ethical business practices.
Both organizations collaborate to ensure that member US forex brokers’ activity complies with their rules. In the event of a consumer dispute, the NFA and the CFTC will judge the case the way they see fit and recommend and enforce punishment.
Q: Forex brokers who accept US clients?
A: In spite of the Dodd-Frank Act, there are still several brokers willing to accept clients from the US. Brokers such as Forex.com, OANDA, IG, TD Ameritrade, Nadex, eToro, and CedarFX are open to US traders.
Q: Non-US forex brokers who allow US clients
A: Several off-shore forex brokers still accept US clients. Here’s a detailed list of them:
- 1Billion Forex
- AAFX Trading Company
- AL Trade Inc
- ATC Brokers
- ATS Markets Global
- Capital Street FX
- DV Markets
- Eagle FX
- Evolve Markets Ltd
- Forest Park FX
- Forex Broker Inc
- Fullerton Markets
- FX Trading Pro
- FxPlayer Ltd
- GAIN CAPITAL
- Interactive Brokers
- Nova FX Trading
- PCM Brokers
- TD Ameritrade
- Turnkey Forex
- Uniglobe Markets
Q: What forex brokers that accept US citizens trade gold?
A: Due to the Dodd-Frank act that proscribed the trading of CFDs, US citizens cannot trade gold.
Q: What are the best US forex brokers?
A: The best forex brokers in the US are FOREX.com, AD Ameritrade, IG US, and Nadex.
Q: How to trade with forex brokers that do not serve US clients?
A: It’s possible to trade with offshore brokers that do not serve US clients. Simply register an account with them, fill in your details, fund your new account, and you’re good to go.