Finding a good Forex broker in the US should not be too difficult, right?
With Forex being the most active financial market and the US economy the largest in the world, there should be plenty of choices when you are looking for brokers for Forex in the USA. Well, things get a little complicated here. Due to factors like trading costs and regulation, choosing the right FX broker is not as straightforward as you might think. Find out below what to look out for when picking the right brokers for Forex in the USA.
- Plus500, The best pricing environment for futures traders in the USA.
- Forex.com, Excellent trading conditions + NFA regulation.
- OANDA, The highest-quality MT4 upgrades among USA Forex brokers.
- TastyFX, A low-priced options trading environment from a trusted broker.
- eToro U.S.A., Best copy trading option for U.S. traders.
Plus500
In Summary The best pricing environment for futures traders in the USAPlus500 Futures ranks among my best brokers in the USA listing due to its user-friendly, web-based trading platform and its choice of futures contracts, especially for commodity traders, where it provides broad-based sector coverage for soft and hard commodities. Another benefit for futures traders at Plus500 is trading fees consisting of a commission of $0.49 per micro contract and $0.89 per standard contract.
Cunningham Commodities LLC, a wholly owned Plus500 subsidiary and National Futures Association member provides futures trading at Plus500 to US-resident traders.
Pros & Cons
- Broad asset selection in equities and options
- Free and unlimited demo account
- Advanced free-of-charge analytical trading tools
- Global and regulated fintech platform
- Sub-standard trading platform without support for automated or social trading
Forex.com
In Summary Excellent trading conditions + NFA regulationForex.com, owned by StoneX Group, a publicly traded company on the NASDAQ exchange, meets all necessary regulations that are required of Forex brokers accepting US clients. Forex.com offers its own Advanced Trading Platform with sophisticated features and integrated trading tools designed for serious traders. Algorithmic Forex traders can use the MT4 and MT5 trading platforms, industry leaders in algorithmic Forex trading.
Forex.com is best for regulatory compliance, trading platforms, and trading software that provides ultrafast execution speed and performance transparency. Forex traders also benefit from competitive commission-based fees on 80+ currency pairs with volume rebates for high-volume Forex traders.
Pros & Cons
- Lower minimum deposit
- Islamic account available
- Good reputation
- Choice of account types
- Withdrawal fee
OANDA
In Summary The highest-quality MT4 upgrades among USA Forex brokersOanda brings the trusted MT4 trading platform to the US, which fully supports algorithmic trading solutions and has embedded copy trading services. Oanda upgrades MT4 via its 28-plugin MT4 Premium Upgrade and Autochartist. It also connects social traders to the active TradingView community, where 50M+ traders share ideas and discuss trades, while API trading caters to demanding algorithmic traders. Manual traders can opt for the user-friendly web based Oanda Trade platform. Forex traders get a selection of 70+ currency pairs. Active traders can lower trading fees via a rebate program by up to 34%.
Pros & Cons
- Excellent 28-tool MT4 upgrade package and outstanding trading tools
- Trustworthy broker with more than 25 years of experience
- Competitive pricing environment
- Quality market commentary on the OANDA blog MarketPulse
TastyFX
In Summary A low-priced options trading environment from a trusted brokertastytrade, a subsidiary of industry-leading UK-based brokerage powerhouse and publicly listed company IG Markets, offers traders a proprietary trading platform and a balanced selection of US-listed assets. It provides a quality trading environment for options traders, retirement accounts, and unleveraged buy-and-hold portfolios. tastytrade ranks among the best Forex brokers in the USA.
Social traders can use the tastytrade Follow Feed to see what other tastytrade traders are trading or watch the in-platform Video Feed to watch traders execute live trades and manage their portfolios. tastytrade has no minimum deposit requirement, but a margin account requires a $2,000 balance.
Pros & Cons
- Four trading platforms, including MT4
- Reasonable commission-free spreads and a volume-based rebate program
- Excellent corporate ownership
- Only bank-associated payment processors
- Limited asset selection covering the Forex market
eToro U.S.A.
In Summary Best copy trading option for U.S. traderseToro USA is the best US Forex broker for copy and cryptocurrency trading. It is also an excellent choice for long-term buy-and gold stock and ETF portfolios thanks to its user-friendly, web-based trading platform and mobile app. Traders can benefit from commission-free equity and ETF trading. Cryptocurrency traders pay a flat fee of 1% of the deal value on each buy and sell transaction. Low-cost option trading is also offered.
Copy traders can either copy Top Traders or take advantage of in-house managed eToro Smart Portfolios, which are theme-based or strategy-based portfolios. The eToro Academy provides beginner education.
Pros & Cons
- Competitive Spreads
- Crypto Wallet Service
- Cryptocurrencies Only
- No Choice of Platforms
Compare the Best US Regulated Forex Brokers & Trading Platforms that Accept US Clients
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Regulators | ASIC, CySEC, FCA, FMA, FSCA, MAS | ASIC, CFTC, CIMA, CySEC, FCA, FSA, IIROC, NFA | ASIC, BVIFSC, CFTC, FCA, FSA, IIROC, MAS, MFSA | CFTC, NFA | FinCEN |
Year Established | 2008 | 2001 | 1996 | 2019 | 2018 |
Execution Type(s) | Market Maker | Market Maker | ECN/STP, Matched Principal Broker | Market Maker | Market Maker |
Minimum Deposit | |||||
Average Trading Cost EUR/USD | 1.3 pips | 1.1 pips | 0.9 pips | $7.00 | N/A |
Average Trading Cost GBP/USD | 1.7 pips | 1.3 pips | 1.3 pips | $12.00 | N/A |
Average Trading Cost Gold | - | $0.63 | $0.30 | Not applicable | N/A |
Trading Platform(s) | Proprietary platform, Web-based | MetaTrader 4, MetaTrader 5, Proprietary platform, Trading View | MetaTrader 4, MetaTrader 5, Proprietary platform, Trading View | Other, MetaTrader 4, Proprietary platform, Trading View+ | Other+ |
Islamic Account | |||||
Negative Balance Protection | N/A | ||||
Get Started Visit Website82% of retail CFD accounts lose money | Visit Website | Visit Website | Visit Website | Visit Website |
How to Choose a Forex Broker as a US Trader
Here is a checklist you can employ for yourself, to use when evaluating the best Forex brokers for US traders.
Trading Costs: Spreads, Commissions, & Leverage
Spreads and commissions (if charged) can make a substantial difference to your overall cost of trading, as these are going to be the biggest cost you face by far, unless you make very few trades and hold for the long term. It is important to be sure that you really know what spreads and commissions are going to really be – do not rely upon what you see in a broker’s demo account.
Leverage – the amount that a broker will let you borrow to trade – is another critical issue. It is important to check the maximums allowed asset by asset.
Account Types
Some Forex brokers in the USA will offer their clients a choice of different types of accounts.
Some general rules about which account type is going to be most suitable for you:
- A Micro Account accommodates deposits lower than $500.
- A Mini Account accommodates deposits lower than $10,000 and will be the more suitable vehicle for most retail Forex traders with more than $500 to deposit.
- A Standard Account is most suitable for more experienced traders with more than $10,000 to deposit.
Minimum Deposit
Minimum deposits required by the top Forex brokers in the USA tend to be low and affordable for most Americans, at ranges between approximately $100 and $250.
Trading Apps
Every Forex broker in the US will offer a dedicated trading app, such as an Android or Apple app, to cater to mobile and social traders. The most advanced US trading apps include one-swipe trading, and many integrate with TradingView for its charting capabilities and social trading functions.
Customer Service
Person-to-person customer service is something that you will probably never need, but you do want to know that if you need it, it is there and of a high standard.
All Forex brokers for US citizens today have automated FAQ searches which should troubleshoot a solid majority of any operational difficulties you might encounter.
Is Forex Legal in the US?
Yes. As a US trader, it is legal for you to trade Forex. US regulators exist to make sure Forex brokers accepting US clients are properly monitored to act ethically and lawfully.
Understanding the US Forex Market
With the popularity of Forex trading, the competition among US-based Forex brokers intensified. I have created an in-depth analysis of all US regulated Forex brokers in the USA and narrowed down the list to our top US Forex brokers, so you can choose the best broker for you.
The US dollar is the world’s largest currency and is considered the world’s reserve currency. Oil, gold, and most other commodities are priced in US Dollars. The term “major pairs” are Forex pairs containing the USD, for example, EUR/USD, USD/JPY, GBP/USD, etc. That said, US Forex brokers usually offer Forex pairs that do not contain the US Dollar, for example, EUR/JPY, CAD/JPY, GBP/NZD, etc. Forex pairs not containing the US Dollar are known as “crosses.”
US Forex Market Regulation
If you are being offered services from a US Forex broker, they must be regulated by the Commodity Futures and Trading Commission (CFTC) and be a member of the National Futures Association (NFA). The NFA offers an online verification system called Background Affiliation Status Information Center (BASIC), where Forex brokerage firms can be verified for having the necessary regulatory compliance and approval.
What is the US Market Regulation?
If you are being offered services from a US Forex broker, they must be regulated by the Commodity Futures and Trading Commission (CFTC) and be a member of the National Futures Association (NFA). The NFA offers an online verification system called Background Affiliation Status Information Center (BASIC), where Forex brokerage firms can be verified for having the necessary regulatory compliance and approval.
How a Regulated Market Benefits You
Forex regulation in the US benefits you in two ways. Firstly, it ensures that regulated US Forex brokers are well run and capitalized, which helps lower the probability that your broker will collapse and leave you waiting to get your deposit returned while you wait for bankruptcy proceedings to be concluded. Secondly, it ensures that your broker cannot unfairly take advantage of you and must offer you a fair market, and the trading conditions which their advertising promises.
How to Verify Your Broker is Regulated
All regulated Forex brokers in the US publish their regulators’ information at the bottom of their homepage and sometimes at the bottom of every page within the website. Forex traders can use the FINRA Broker Check or the NFA BASIC Database to confirm if their brokers are regulated in the USA and to get the regulatory history, which includes regulatory actions, NFA arbitration decisions, CFTC reparation cases, and regulatory fines.
Dodd-Frank Act
The Dodd-Frank Act, a set of US regulations passed in 2008 in response to the financial crisis, had a huge impact on US Forex brokers. Many feel that the stringent regulations resulted in US Forex brokers moving operations offshore or closing their doors completely. Those US Forex brokers that remain now face some of the most stringent capital requirements required by Forex brokers anywhere in the world plus hefty licensing costs.
It is worth noting that the Securities Exchange Commission (SEC) does not have authority over the Forex market because it does not consider currency pairs securities.
US Forex Trading Platforms- Pros & Cons
The Pros:
- Strong regulation
- Forex brokers for US citizens have worked very hard to meet all the regulatory requirements.
- Well-capitalized
- Excellent compliance
- No regional or state-level differences.
The Cons:
- Stringent requirements have made it difficult and costly for Forex brokers to accept US clients.
- Limited choice of Forex brokers accepting US clients.
Forex Trading Times in the US
The US Forex market for retail traders concentrates around the eastern time zone. Although there is no hard line that defines when the Forex market opens for US traders as it runs 24 hours a day, five days a week, it is widely agreed that the US opening time for Forex is at 8 a.m. Eastern Time. The first couple of hours of the US open is typically the most liquid during any 24-hour Forex period because London and other European centers are still operating at that time.
Is Forex Taxed in the US?
As a US-resident Forex trader, you must have asked yourself: do I have to pay tax on Forex trading in the USA? The answer is yes, but applicable taxes depend on various factors, as the US tax code is complex. Per Internal Revenue Code 988, The IRS treats all Forex spot income and losses as ordinary income. Futures and options income and losses are short-term and long-term capital gains under Internal Revenue Code 1256. Tax benefits exist for traders who qualify under the IRS “Trader Tax Status” category.
Tax rates range between 10% and 37% for ordinary income and 0% and 20% for short-term and long-term capital gains. Given the complex nature of the US tax code, Forex traders in the USA will be well advised to consult a licensed professional for tax advice, income classification, and tax optimization.
Bottom Line
The US does have a few regulated Forex brokers, and they are subject to the most stringent regulatory conditions anywhere in the world. Trading with the best US Forex brokers can ensure that US-resident Forex traders benefit from a secure trading environment, cutting-edge trading platforms such as MT4 or MT5 and others, low minimum deposit requirements, a balanced choice of Forex derivatives, and reasonable trading fees.
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