Forex Trading in the US

When it comes to the largest and most liquid market worldwide, forex tops the list. Unlike stocks/commodities, it's the market where you can exchange foreign currencies. At present, about 43% of millennials are involved in forex trading.  

The best thing about forex is its liquidity, as it ensures a smooth transaction. It also offers competitive pricing for smart money, where traders can trade good volume without any significant effect on the price. 

Like the entire world, forex trading is legal in the US, but it comes with strict operational and reporting guidelines. Here's a brief: 

How to Do Forex Trading in the US?

The first step to US forex trading is choosing a professional and well-regulated broker recognized by US forex regulatory agencies. 

US Forex Regulatory Agencies

The US has two forex regulatory agencies that manage, regulate, and control forex trading:

Commodities Futures Trade Commission (CFTC): Keeps the people safe from any foul practices related to commodity sales and financial futures/options.

National Futures Association (NFA): NFA's role is to protect investors and ensure that they follow their regulatory roles and responsibilities. They work as a self-regulatory body that manages the US derivatives industry. 

All the rules/regulations set by these professional regulatory bodies are applied to counterparties, so investors can stay protected.  

Once you are done selecting an authentic broker, understand the psychology of trading for a better grasp of the market. It'll help you get good returns in the long term. Then, follow the below steps:

Account setup: According to the forex broker you have chosen, follow the steps to set up your account. Make sure to read all the terms and conditions before starting off. 

Deposit Money: After a successful account setup, deposit money to the brokerage account as per the payment options available. You can select any method for money deposit at your convenience. 

Demo account: Use the demo account of your forex broker to learn about the platform. It'll give you a better idea about how you can use it and get the best results. 

Go for it: Once you are confident in the demo account, you can enter into the real action. You can select your trade size and open a long/short position. 

Make sure you have a good trading plan to get the best benefits and avoid any risks. Also, keep yourself updated with tips for a successful investment journey. 

US Regulated Brokers for Forex Trading

You must connect with US-regulated brokers for forex trading in the US. At present, one of the top US-regulated brokers in the country is forex.com. It allows you to trade around 80 forex currency pairs and assets in the market. If you want to try out the platform, get a complete overview of Forex.com for a reliable forex experience. 

Besides forex.com, here are some other brokers that offer legal forex trading in the US:

• IG

• OANDA

• Interactive Brokers

• Trading.com

• TD Ameritrade

Key Provisions of US Forex Trading 

The US forex market involves the following rules and regulations:

• For major currencies, like USD, British dollars, Japanese Yen, Euro, etc., the available leverage is 50:1. On minor currencies, it's limited to 20:1. 

• Any rules under the individuals with assets of less than $10 million and most small businesses, categories are indicated to the small investors. 

• Standard regulated forex brokerage accounts are not for high-worth investors.

• The security deposits for both short and long forex are different. For short forex, it's notional transaction value plus the option premium. Meanwhile, for long forex, the option premium is the security deposit. 

• Forex trading in the US works under the first-in-first-out (FIFO) rule, where any trades that are opened first get closed first, too. The FIFO rule is best to prevent any hedging during forex trading. 

Does US Forex Regulation Emphasise Safety?

Yes. In the US, the regulatory bodies input extra focus on everything related to the forex trading website/firm. They look into the status, ownership, and even location of these platforms. 

As a US forex trader, you must know that if you're getting offered high leverage and low brokerage charges, it may not be authorized by the concerned authority. That's because such leverages show that the platforms are from outside the US. Their rules and regulations are different from what's followed in the US. 

That's it. We hope now you know everything about forex trading in the US.