Choosing your U.S. Forex broker doesn’t have to be hard. Firstly, there are not very many U.S.-regulated Forex brokers to choose from, so that makes the task easier and quicker. Secondly, they are regulated by the same regulator, so there are not any regulatory differentials to consider. Thirdly, as CFDs cannot be offered for trading in the U.S., Forex brokers offer Forex only. This means that the key point to watch are going to be in cost of trading matters, such as spreads, commissions, and overnight swap rates, which can be investigated relatively easily.Show more
One notable feature of U.S. based Forex brokers is that there tends to be an unusually large difference between them in the choice of trading platforms which are offered. This is mostly because the MetaTrader 4 platform, the go-to Forex trading platform worldwide even after all these years does not suit certain U.S. regulations (mostly FIFO) concerning hedging. Therefore, U.S. Forex brokers offer a wider choice of customized trading platforms and MetaTrader 5, so making sure you are comfortable or can become comfortable with the platforms offered takes on greater importance. Several Forex brokers globally offer a wide range of different account types, but again, this is less of an issue in the U.S. because the variables
are more restricted. The maximum leverage permitted under U.S. regulations is capped at 50 to 1, and choice of assets is essentially restricted to Forex pairs. This means that the main difference in account types offered tends to be between ECN (Electronic Communications Network) and market-maker execution types. However, the market-maker model is by far the more commonly offered.
Finally, while U.S. regulation is relatively tight in global terms, that does not mean that you do not have to do some due diligence. One or two big names in the U.S. market have been fined for misconduct in recent years, and your deposit is not protected by any deposit insurance in the U.S. Despite that, the U.S. Forex industry is seen as relatively safe in global terms.