The Best Forex Brokers in the USA
Finding a Forex brokerage firm is not an easy task. You need to conduct a deep industry analysis before you will be able to make a choice. This requires much time and effort. And what is even more disappointing, you will lose market opportunities during this period of searches. To avoid this situation and to help you to find the Best Forex brokers in the United States, we have prepared several criteria. By using them, you will save time and effort.
Before creating an account with any brokerage firm, it is recommended to learn more about the business model the company uses. There are two main types of order processing:
- Dealing Desk.
- No Dealing Desk.
When a broker uses the first model, the orders are processed on the company’s side without being transferred to external markets. This means that if you click the “Buy” button, you will purchase assets from the broker directly and not from other counterparts.
Dealing Desk brokers offer many advantages as the order execution is way faster as compared to other types of order processing. Spreads can be lower. However, there is one main con that you need always to keep in mind when dealing with this kind of firm. A conflict of interests may arise. This means that if the majority of clients buy an asset and its price goes upper, a broker will have to cover those profits on its own.
It is not a big deal when those profits are low. However, if they are huge, the company may have problems meeting its obligations. This is why most comp[anise choosing DD scheme only end up the same way. Some of them manipulate prices to make customers lose their money and some of them close as they are unable to meet the financial obligations.
No Dealing Desk brokers are intermediates between the market and the trader. This means that once you have placed an order, the broker will automatically transfer it to market makers or liquidity providers. This scheme is more transparent as the brokerage firm can’t influence the price. Moreover, the broker’s interest shifts from your losses to the number of trades you make. How is that?
When you have an account with a DD brokerage company, their main profits are coming from your losses. The more money traders lose, the more money DD brokers have. When it comes to NDD, intermediates have no interest in your losses and profits. They earn money via spreads and other commissions. This means that the more you trade, the more spreads you pay to the broker.
What Type of Trader You Are
Choosing a broker depends on what type of trader you are. Some criteria may be important for all beginner market participants. They are the following:
- Educational materials.
- Unlimited demo account.
- Simple but functional trading platform.
- Market analysis.
- Social trading features.
When beginner traders look at charts it seems for them evident where the price is going currently. However, when traders place orders without any strategy, they lose money in 99.99% of cases. Why is this happening?
Even if you see the current price trend, there is no guarantee it will stay for a long time. The price may reverse at any moment and the trader will lose.
The idea of the education is to provide beginner financial market participants with all the necessary knowledge that will help them to find the best market solutions. Best Us Forex brokers for beginners supply traders with articles, video tutorials, webinars, and other useful features.
Apart from educational materials, those companies offer unlimited access to demo meaning you can open such an account and use it for weeks, months, and even years if you want. This will allow you not only to familiarize yourself with all trading platforms and tools but also to test and improve your trading strategies for free.
When it comes to trading platforms, they should be user-friendly. Trading terminals that are overloaded with information are not the best choice for newcomers. However, those should not be platforms with a lack of functionality. All terminals should be “equipped” with technical indicators and graphic tools at least. Otherwise, you will not be able to conduct even minor technical research with them.
Market analysis is an optional feature. However, when you start trading Forex, it may be useful for you to look through all those market reviews to understand global financial and economic tendencies. Some brokers offer trading signals themselves or provide a subscription to the global leading analysis centers like Trading Central.
If you are a skilled trader, you have other criteria to find a suitable brokerage firm:
- Spread and commissions.
- Level of leverage.
- Range of financial instruments to trade.
Spreads may be fixed or floating. It is up to you to choose which one is better. Fixed spreads and generally higher than floating ones. They are permanent and may start from 2-3 pips for a particular currency pair. When it comes to floating spreads, they may start from 0 pips meaning you will not have to pay at all but along with spreads you need to pay attention to other commissions. Some brokers make spreads lower but they have a fixed commission for each trade you open there.
Choose spreads depending on your trading strategy. If you prefer those short-term fast transactions, you should look for a brokerage firm with lower spreads. Imagine you want to buy EUR/USD, which current spread is 1.5 pips. If you purchase or sell it 10 times per day, you will lose 15 pips. This is a serious amount.
If you are not keen on scalping and all those intraday high-frequency strategies, you don’t need to pay too much attention to spread. If you open one or two positions per week, your losses per seven days will be 3 pips only.
Mid- and long-term traders should be more attentive to swaps. Those are commissions that brokers and banks take for holding your open positions for the next 24 hours. Swaps can be either positive and negative. Positive ones give you money while negative deduct funds from your account.
If you are holding a profitable position with a positive swap, you will get additional money every 24 hours. However, swaps may change over time as they are calculated as the difference between the interest rates.
Leverage is a very important aspect as it allows you to buy more assets with less money. This is a kind of credit that brokers give to traders during their market activities. The amount of leverage depends on a particular broker and the regulator’s requirements. Offshore brokerage firms offer higher leverage, which may be up to 1:1000 and even more. The best US Forex brokers offer lower leverage (up to 1:50) as it is required by the regulatory bodies.
It seems to be evident that the higher leverage is better. However, skilled traders know that leverage has both pros and cons. New traders sometimes overtrade, which leads to significant losses. This is why US regulatory organizations make their licensee companies follow leverage limitations.
And last but not least – the range of assets you can trade. Skilled traders prefer not to limit themselves to currency pairs only. They choose stocks, indices, commodities, and even derivatives.
Choosing Trading Accounts
Best US Forex brokers offer various trading accounts to satisfy all their customers’ needs. You can start with micro packages as the minimum deposit there is up to $100. This is a good opportunity for a trader to start trading without risking significant amounts and to test the platform first.
Skilled traders who have already tested a particular broker can open professional accounts. Their minimum deposit requirements are higher (sometimes you need to fund your account with $50,000 and even more) but those tariff plans offer way more features including personal account manager, daily market analysis, and all those useful things.
Regardless of your proficiency in trading, you might have some questions about the broker’s activities. Best US Forex brokers have fast and responsive support teams to provide you with all information you want to know about the company.
The technical team should be always on guard and in a standby mode to help you to solve all issues you may face when dealing with the platform or other services. Imagine you have placed a trade and the server is down. You can’t cancel the trade, fix your profit or losses to prevent them from growing. This is a bad situation and if you deal with a bad company, they will not be fast to repair everything.
The best US Forex brokers do their best to provide you with top-notch services. They are not limited to colorful platforms or those attractive web pages with bytes of information. Technical teams are always ready to help you to solve even minor issues.
Resuming All Criteria
Now it is time to sum up everything you have read. To find the best US Forex broker, one needs to take note of the following:
- What type of business model a brokerage firm chooses to serve its clients. It is to mention that most companies use a mixed DD+NDD model to cover within the house and to transfer higher amounts to liquidity providers and market makers.
- Trading conditions should be comfortable for you. Depending on your trading style, you may want to have the lowest possible spreads. Take note of swaps and other commissions that may apply.
- Trading platforms. Beginner traders are better to choose those terminals with a simple user interface and a necessary set of tools to trade and to analyze markets.
- Trading accounts. You can start with the lowest amount possible to test the company. If you are sure you are dealing with a reliable broker and you have enough skills to invest more, professional accounts will provide you with many additional features and services.
Additionally to those parameters, take note of the following:
- Payment methods. To deposit or withdraw funds, you can use various payment methods including credit/debit cards, wire transfers, and electronic wallets. The latter offer the fastest and cheapest transactions but not all companies accept PayPal and its competitors. Make sure you are aware of all deposit and withdrawal commissions.
- How safe your funds are. Before creating an account with any brokerage firm, make sure your funds will be stored on a separate account. The company should not have access to it.
List of the Best US Forex Brokers
If you want to save your time and effort, you can look through the following list of the best US Forex brokers to pick one from there:
- OANDA. This is one of the most reliable companies in the United States. Oanda provides services worldwide and is regulated by local US watchdogs. They offer a web platform, iOS, and Android-based mobile terminals as well as Metatrader 4. Oanca’s customers can benefit from deep market research and a well-developed educational program.
- Forex.com. Another US-regulated Forex broker with multiple useful features to offer. Apart from a wide range of trading platforms, they offer top-notch services to customers. You can start your trading career from the very beginning with their educational program and benefit from daily market analysis.
- eToro. This brokerage firm is famous for its social trading opportunities allowing newcomers to subscribe to skilled traders. By doing this you will have more chances to succeed if you haven’t had any previous trading experience. eToro is an international platform meaning you have a good choice of managing traders to select from.
- IG. This company provides its customers with a broad range of financial instruments to trade and o invest in. By choosing IG, you are going to deal with a 100% reliable and reputable brokerage firm as they are regulated in many countries including the United States.
- Interactive Brokers. This one is the oldest brokerage firm that accepts Forex traders. Interactive brokers has many useful services and offers several trading platforms. They have various teaching programs for beginners and plenty of financial instruments for professional market participants.