Forex means “foreign exchange” and it refers to the trading of one national currency for another one. Changing euros for dollars, for example, can be for practical reasons, like traveling or business. But, many transactions in the forex market are done exclusively for the purpose of making a profit.
While the forex market is very active and one of the largest with more than 5.1 trillion dollars being traded daily, in the US not many brokers are allowed to trade in this market, and Forex trading, in general, is closely regulated by independent bodies.
However, Forex trading in the US is not impossible, and if you’re interested in getting started investing in this market, you should start by checking out the top 10 US forex brokers.
Forex brokers in the US are monitored closely and must follow rules to guarantee the safety of traders and their investments. This is probably the first step when looking into starting investing in Forex in the US: your broker must abide by the national regulations. This is the first sign your broker is serious and reliable.
Forex trading in the US
The Forex exchange market runs almost 6 days a week, 24 hours a day. This means that there are enormous opportunities to make a profit and that at the same time, investors are more exposed to fraudulent operations and scams.
In order to protect traders and their money, there are regulations in place. Most of them concentrate on making sure that the financial intermediaries, like brokers, have measures in place to offer protection and reduce the risk exposure to traders.
We get often the question: Is Forex trading legal in the US?
The answer is yes! But there are some restrictions as to who can invest in this market, and brokers are closely monitored
In the US, these regulations are quite strict and they limit the numbers of brokers that can deal in the Forex market. The Commodity Futures Trading Commission and the National Futures Association are the two entities in charge of regulating Forex brokers.
Compared to other countries, in the US there is a requirement for brokers to have a very high-security deposit. This prevents small brokers to deal in the forex market, making sure brokers can offer security to traders’ money.
How to choose a Forex broker in the US
In order to make sure the broker you have chosen is serious and reliable, there are a few considerations to keep in mind.
There is no discussion that traders’ first worry should be the security of their funds. Users give their money to their broker that acts as a financial intermediary, so they need not worry their broker will steal their money.
This is why there are regulations in place assuring users that brokers are keeping their money safe. Making sure your broker is registered with the appropriate regulatory bodies in the interested country is mandatory for a successful experience in the Forex market.
85% of the Forex market deal in a few main currencies, like dollars and euros. If you’re interested in dealing in one of these pairs, most Forex brokers allowed to operate in the US offer them. However, if you’re interested in exotic or minimal pairs, you want to be sure your broker offers those.
Commissions and Fees
A very important step with choosing a broker, and this is no different in investing in the Forex market in the US, is to check out the brokers’ commissions and fees.
Some brokers may ask for small commissions, while others may have higher percentages. It doesn’t mean that one is better than the other, but when considering a broker in their overall services and features, don’t forget to consider that you may need to keep up with recurrent payments or even hidden fees.