Forex traders residing in the US typically have a harder time locating a Forex broker that accepts their business. I also imagine you may be shopping for a new broker now after the FXCM business, we’ll see more about that later. Whatever your reason, you still have plenty of options, and these are the top forex brokers that will help you with trading within the US and regulated by the CFTC and NFA.
At the moment, Forex.com could be considered the largest Forex broker in the US. This used to be FXCM’s position, but it has now been barred from operating in the US. So, about Forex.com, the brokerage is a subsidiary of Gain Capital Holdings Inc., and it was launched in 2004. By the year 2016, there were mentions that Forex.com had about 140,000 clients in its books, which is a great number for any Forex broker.
Features of Forex.com
There are many features offered by this broker that made it such a popular choice. Among them:
- Favourable minimum deposit of $250 or the equivalent in other currencies
- True ECN broker which eliminates a conflict of interest and assures customers that the broker is not trading against them
- Variety of trading platforms including their own proprietary software FOREXTrader PRO, MetaTrader, mobile trading, and even a web trader to use from your internet browser
- Low commissions and tight spreads
- Excellent customer support, regular trading tips and even Forex training through webinars
You will also be glad about the fact that they offer negative balance protection of up to 50,000 in your account base currency. Negative balance protection means that a client’s account does not go below zero in the event of a highly volatile situation. You may have notices that all Forex brokers warn clients as they sign up that ‘losses could exceed the initial investment’. Such an event can occur in a highly volatile situation with plenty of slippage that leaves your account with a negative balance.
However, Forex.com promises to cover your negative balances up to 50,000 depending on your currency. This is a great safety net for clients because it ensures you’re not in debt in case of such an event.
All these features, plus the guarantee of dealing with an established and highly regarded broker make Forex.com an excellent broker.
About FXCM and its clients
It’s important to mention FXCM here, because it used to be the largest US Forex broker, but has now transferred its clients to Foex.com. According to CFTC data on December 2016, the market share by US-regulated Forex brokers was as follows:
Now, with FXCM out of the picture, Gain Capital seems to be the largest remaining broker in the US.
Operations at FXCM have not been very smooth for the past 2 years. Even before that, the company weathered several court battles from both the CFTC and the NFA, but these were not enough to bring the company down. The first major setback for the company was back in 2015 on the 15th of January when the SNB de-pegged the Swiss franc from the euro.
This event caused many companies to experience losses, and FXCM found itself lacking $300 million to achieve the NFA’s regulatory requirements. Soon thereafter, FXCM secured a loan from Leucadia National Corp. which kept the brokerage going, but only barely.
Financial statements by the company revealed that most of their earnings were repaying the loan by Leucadia. A case against the CFTC settled only on the 13th of February this year proves this. The CFTC claimed that FXCM was under-capitalized in January 2015, and FXCM was fined $650,000.
The final blow to FXCM’s US operations came on the 6th of February when the CFTC found FXCM to be violating several laws and fined them $7 million. First, it was making false statements to the NFA about how it related to its liquidity provider. The company’s liquidity provider was Effex Capital LLC which seemed like a 3rd party but which was actually a subsidiary of FXCM. In addition, there seemed to be a system where Effex Capital would give kickbacks to FXCM for sending client trades their way. This relationship showed that FXCM was not an actual ECN broker the way they claimed on their website, further compounding to their list of violations.
With FXCM no longer operating in the US, they sold their client list to Gain Capital, and transferred their clients’ funds to Gain Capital. For every trader that places a trade in the first 76 days since the 6th of February 2017, FXCM gets $500. From the 77th to the 153rd day, FXCM will get $250 for every client that makes a trade within that time. After this 153-day-period, FXCM will not be compensated for selling the client’s account.
We can’t be sure how many US clients FXCM had, and how many choose to move to Forex.com, but there is no doubt it was a huge number.
This is another well-known Forex broker based in the US. The company was founded in 1996, but their Forex brokerage business started in 2001. Back then, they were among the first companies to offer currency trading over the internet.
Since then, the company has expanded to become not only a leading Forex broker in the US but also worldwide. Over the years, it has received numerous awards for their services, and they remain a favourite among many Forex traders.
Oanda, too, has received clients from other brokers. In March 2016, IBFX sold its 2,000 customers residing in the US to Oanda after IBFX was barred from operating in the US for being underfunded. This is not a huge number as Forex.com got, but it’s still worth a mention.
First off, they are regulated by the CFTC and registered with the NFA, which is a requirement for all brokers operating in the US. Besides knowing that they are regulated, they have not been fined by the regulators for any of their practices, which says a lot about a broker. They don’t offer negative balance protection, though, which might be a bummer for most traders. This means that it is possible to have a negative balance in the case of a highly volatile market situation like the Flash Crash in 2010. On the other hand, these events are rare, which makes such a situation unlikely.
- True ECN broker, so the broker does not trade against you and you get actual market prices. Despite routing your trades to a liquidity provider (LP), the execution speeds are still excellent, protecting you from slippage.
- No commissions. The broker makes a profit from spreads alone, so there are no extra charges
- Zero minimum account opening deposit
- Various tradable instruments. Besides Forex, you can also trade commodities and CFDs for indices and stocks
- Variety of trading platforms from their own proprietary software, MetaTrader 4 and mobile trading
- Excellent customer support and Forex training through webinars
Another Forex trading giant, this company was founded way back in 1971 to offer ETFs, options and future. They later started to offer Forex trading when the industry started to grow, and now have a large customer base both in the US and the rest of the world.
Why TD Ameritrade?
This broker has also had few, if any, run-ins with the US regulators which shows that they are straightforward in their operations. Some of you may be disappointed that they don’t offer MetaTrader, which is the most popular trading platform. Instead, they have thinkorswim, which is their own proprietary software. The software is indeed great and packed with features to help in your trading, some of which may not be even available on MetaTrader. Still, it may take you some time to adjust if you’re used to MetaTrader. There is also a web trader for use within the internet browser, and also accessible on smartphones.
Other standout features include:
- Fixed commission, which may be unsuitable for some traders but also minimizes the cost of trading for large trades
- Access to mutual funds, options, equities and even bonds
- Trading training and reliable customer support
A major Forex broker in the US and worldwide, IB is also a reliable broker for US residents and anyone else seeking to trade the Forex market. For its client base, it seems to target high net-worth traders as you can tell from their minimum deposit of $10,000, which leaves out most retail traders.
However, you get quality service from the broker with:
- ECN trading
- Low commissions without spreads
- Multiple tradable assets apart from Forex currencies like stocks, futures and bonds
- Reduced cost of carry and overnight swaps
- Excellent trading software, FXTrader, with lots of features
Started in 2005, the company dealt primarily with stocks, options and bonds. Their Forex trading business only started in 2015 when the company acquired MB Trading. Since then, this broker has also risen in popularity by the US market because of their features.
- Zero account opening minimum deposit
- Tight spreads and no commissions
- Numerous tradable instruments including bonds, stocks and options
Their one setback remains to be the lack of a downloadable trading software. Instead, all trading has to be done on the web-based platform. You can still perform all the basic functions and there are also some useful tools, but it would have been best to create a downloadable software, or at least, get a license from MetaQuotes.
If you have still not found the broker that tickles your fancy, then you can still check out these ones:
- ATC Brokers
- CMS Forex
- Fortress Capital
For those traders who are not is USA – there are way less limits. You can take a look at several good directories with forex brokers:
Cover Image via edmond c. valerio