It’s a well-known fact the United States dollar accounts for close to 90% of all foreign exchange transactions. While there’s no denying the greenback’s dominance internationally, American residents have a limited choice of brokers legally allowed to offer the trading of currencies.
The US government has certainly put some red tape for brokers to operate in the country since the late 2000s after the 2008 global financial crisis. Growing concerns over the speculative nature of online trading and the number of scams, among other things, have made it difficult for brokers to provide their services to US residents.
Fortunately, this article will provide some credible recommendations on the best US forex brokers, along with what’s good and bad about them overall. Additionally, we will briefly cover the regulatory environment of the States, advantages of choosing US-based brokers, and answer some of the most frequently answered questions.
Top 6 US Forex Brokers 2021
|Platform||Founded||HQ||Regulations||Markets||Platforms||Deposit from||Leverage up to||Website|
|1971||USA||CFTC, SEC, FINRA||Forex, Options, Crypto, Stocks, Futures, ETFs, Mutual Funds, Bonds, IPOs||thinkorswim||$0||1:4||visit|
|2001||USA||NFA, CFTC, FCA, ASIC, CySEC||Forex, Indices, Commodities, Stocks, ETFs, Options, Bonds, Crypto||MT4, MT5, NinjaTrader||$100||1:50||visit|
|1978||USA||CFTC, FCA, ASIC, IIROC, MAS||Forex, Options, Stocks, Futures, Metals, Bonds, ETFs, Mutual Funds, Hedge Funds||IBKR Trader Workstation||$0||1:50||visit|
|2004||USA||CFTC||Forex, Indices, Commodities, Binary Options, Events||Nadex, NadexGo||$250||1:500||visit|
|1995||USA||CFTC, NFA, IIROC, FCA, ASIC, MAS||Forex, Indices, Commodities, Bonds, Metals||MT4, Oanda Trade||$0||1:50||visit|
Before reviewing these brokers, it does help to gain some context about the forex regulatory environment in the States regarding the authorities, laws, and advantages of choosing the best US forex broker.
What are the regulations of US forex brokers?
Of all regulators, brokers delivering their services to US clients have a lot more rules to follow. From a business perspective, firms are required to have at least $20 million in operating capital.
Of course, there are numerous laws US forex brokers need to observe. However, the ones most pertinent to traders are the following:
- Maximum leverage of 1:50: Unlike many firms offering leverage north of 1:500, those delivering their services to US clients are limited to between 1:20 and 1:50 depending on the currency pair.
- No hedging allowed: In 2009, hedging in trading currencies was banned in the United States, to which the country is probably the only or one of the few with this limitation.
- Introduction of the FIFO rule: Within the same year, the NFA introduced the FIFO (first in first out) policy, which is related to hedging. This rule refers to the practice of a trader closing out their earliest positions first in scenarios where they have different orders of the same size and pair.
- Like all reputable brokers in other countries, brokerages from the States must hold segregated accounts, a practice separating their operating capital away from their clients’ deposits. This feature is often mentioned on the websites of forex brokers for assurance.
Although the reason for the leverage reduction is understandable, motivations for the latter two exclusions are debatable. Most research suggests the causes for having no hedging and implementing FIFO is due to minimizing the volatility risks of running multiple positions simultaneously.
What are the authorities that regulate forex brokers in USA?
Two main authorities are responsible in overseeing regulation for forex brokers in the States; the NFA (National Futures Association) and the CFTC (Commodity Futures Trading Commission).
Some confusion might exist over the roles of the NFA and CFTC, respectively. Analysts consider the CFTC as the actual regulator while the NFA is an extension of the CFTC responsible for delivering the necessary regulation programs.
Both organizations work conjunctively to conduct due diligence before issuing the relevant operating licenses to financial institutions. The best forex broker in USA will meet the compulsory capital obligations, adhere to the periodic auditory practices, comply with the stated regulations, and be accountable for any fines and sanctions.
Like any respected regulatory bodies, both the NFA and CFTC aim to ensure fair and ethical business conduct to American clients.
What are the advantages of choosing the best US forex brokers?
Choosing the best forex broker in USA provides clients with several advantages, which include the following:
Better understanding of the market
A better understanding of the market is crucial especially for a highly speculative and technical instrument like currencies. US forex brokers will typically provide the most optimal education in this regard to prepare their clients for the real markets.
Traders gain an enhanced comprehension of regulation and its importance, which might be overlooked by some. As currencies are still largely decentralized, many might not know the significance of dealing only with properly licensed entities to prevent any financial malpractice.
It’s not just understanding about the technicalities of the driving forces behind price movements but also the behind-the-scenes.
Guarantee of using a regulated broker
Perhaps the biggest benefit is in using brokers adhering to the strict of regulations in the industry for safety purposes. A vast majority of US-based brokers have been in existence for well over a decade, with some going over two or more.
Existing this long in forex means that a particular company has sustained operations through both prosperous and difficult times, drastically decreasing the likelihood of bankruptcy. It also suggests the broker is far less likely to partake in fraudulent activities, the consequences of which are hefty and overwhelming from a business perspective.
The CFTC explicitly mention some warning signs of some behavior from brokers that may be looked upon unfavorably, such as limited time offers, outlandish promises and obscure products. The best forex broker in USA exhibit none of these in their marketing.
Supporting national companies
The importance of supporting national companies for any proud citizen goes without saying irrespective of the type of business. By trading exclusively with a primarily US forex broker, the money paid for services circles within the American economy instead of elsewhere.
What are the best forex brokers in USA?
Let’s take a look at the best forex brokers in USA with a brief overview and pros and cons. A unique selling point is next to the name of each broker so readers can distinguish over the distinctions amongst this selection.
TD Ameritrade: The All-In-One Trading And Investing Broker
Having existed for 50 years already, TD Ameritrade has positioned itself as one of the foremost leaders in both trading and investing services for a wide range of traded products like currencies, mutual funds, annuities, ETFs, and much more.
TD Ameritrade is one of the oldest CFD providers on the globe and has been the subject of numerous mergers and acquisitions, the most recent of which was falling under the publicly-listed Charles Schwab Corporation in 2020.
With branches in almost all 50 American states, TD Ameritrade provides US clients the peace of mind for recognition, reputation, and security. For a different trading experience, TD Ameritrade offers its proprietary trading charting package, thinkorswim, which has been around in some form since the early 80s.
All in all, TD Ameritrade is one of the best forex brokers in USA for professional trading services.
- Subsidiary of an NYSE-listed company
- Wide choice of forex markets available
- Been around since 1971
- No minimum deposit, but states needing at least $2000 for certain margin conditions
- No provision of MetaTrader platforms
- Deposit and withdrawal charges
- Card and e-wallet payment options not available
Forex.com: Best US Forex Broker For TradingView Users
While Forex.com might have initially begun offering currencies since forming in 2001, the brokerage is more than just its namesake. Research has suggested Forex.com processes at least $15.5 billion in daily trading volume, among the highest across all brokerages worldwide.
As now a division of the NASDAQ-listed financial services company, StoneX Group Inc., clients have peace of mind in the broker’s stature, trust, and capitalization. Forex.com is one of the select few brokers allowing their clients to trade through TradingView aside from MetaTrader.
Those in the know of TradingView appreciate the marvel of the platform’s charting superiority, depth of data, extensive assortment of tools, and access to a wide range of financial instruments.
- Regulated in numerous countries
- Part of a publicly-traded entity
- Reasonable $100 minimum deposit
- Accounts connectable to TradingView
- Extensive range of forex pairs available
- Comprehensive educational material included
- Has different account types
- Inactivity fee applies
- Few methods of depositing available
- High minimum deposit
- Deposit and withdrawal fees levied
Interactive Brokers: Best US Forex Broker With The Largest Selection Of Currencies
When it comes to sheer size and dominance, Interactive Brokers has achieved both in the delivery of currencies, funds, bonds, options, futures, and equities trading and investing services since 1978.
Interactive Brokers is a multi-national, multi-regulated, and NASDAQ-traded brokerage firm for individuals and institutions with one of the most substantial daily average revenue trades in electronic trading within the US. The brand has seen and utilized every technology shift within the sector to remain ahead of the curve.
Through deep liquidity from several FX dealers, low commissions, real-time quotes, and professional tools, forex traders have access to well over 100 currency pairs, one of the largest portfolios globally.
Overall, aside from the broad selection of currencies to trade, Interactive Brokers ranks up high in the list for one of the best brokerages for trading and investing in multiple financial instruments.
- NASDAQ-listed, multi-licensed brand
- Been around since 1978
- Zero minimum deposit for most accounts
- Has 24 offices in 14 different countries
- Available for usage in over 200 countries
- No card or e-wallet payment options
- No zero spread account obtainable
- Does not provide any MetaTrader charting packages
NinjaTrader: Providing The Best Of Both Worlds In Brokerage And Charting Services
Most traders know NinjaTrader as one of the most advanced and utilized forex trading platforms, renowned for its sophisticated charting functions, and other special state-of-the-art tools.
Few may realize NinjaTrader is also a CFTC-regulated brokerage for currencies, options and futures trading. The brand was established in 2003 under the NinjaTrader Group, a software development firm based in Chicago.
Some of the large US-based brokers on this list like Forex.com, Interactive Brokers, OANDA, and TD Ameritrade also support trading on the NinjaTrader software, an added benefit for American clients.
NinjaTrader seeks to empower traders with award-winning customer support, and industry-leading charting capabilities through its proprietary software. Overall, NinjaTrader provides the best of both worlds in brokerage and trading platform services.
- Provides one of the most recognized trading platforms in the industry
- No inactivity fee
- NinjaTrader’s software is also supported by some of the largest US-based brokers
- Mobile app available
- Limited selection of accounts to open
- $400 minimum deposit
- Withdrawal and inactivity fees applied
- ~ The platform premium features come at a cost
Nadex: Best US Forex Broker For Binary Options
For traders exclusively looking to trade currencies through binary options instead of the spot market, Nadex is one brand to consider. Binary options involve a betting-style type of trading where traders predict if a particular market will be below or above a certain price before a defined expiry date.
The North American Derivatives Exchange (Nadex) has been a well-established binary options provider since 2004, with specialization in forex, indices, commodities, and even high-impact news events like Nonfarm Payrolls.
They provide this service transparently on a simple-to-use platform available as a web and mobile platform. The regulatory space in binary options is less lax than forex. Fortunately, Nadex is quite strong in this regard, making them a credible choice for traders worldwide.
- IG Group subsidiary
- Recognized as one of the best binary options providers in the States
- Fee-free deposits
- Mobile app available
- Not many forex pairs to choose from
- No spot trading provided
- Minimum deposit of $250 might be too much for some
- Limited range of depositing and withdrawal choices
- Binary options are still quite hard to trade and succeed in
- Levies inactivity fee
OANDA: Great For Traders Looking To Take Advantage Of OANDA’s Order Book
Since 1996, OANDA has been one of the most far-reaching US forex and derivatives brokers generally, now providing trading access to indices, Bitcoin, metals, equities, and commodities.
A multi-regulated brokerage, OANDA delivers many benefits to traders globally like having no minimum deposit, several fee-free payment choices, the provision of the popular MT4 platform, a fixed spread account, and more.
Perhaps where OANDA shines above the rest is by providing an order book indicator on MT4 (not obtainable in all countries). This indicator shows where OANDA’s clients have placed their positions on a selected range of popular currencies, a great method for traders using supply and demand and support resistance concepts.
Although this tool is a clear advantage not found with many brokers, OANDA offers far more for the serious forex trader.
- Been in business for 25 years
- Regulated in multiple jurisdictions aside from the States
- Provides an order book tool through MT4
- $0 minimum deposit
- MarketPulse, great resource for market news, technical analysis, and more
- Provides numerous commission-free payment options
- Accounts are connectable to TradingView
- Has a zero spread account
- Slightly limited range of forex pairs compared to other US brokers
- Levies inactivity fee
- No MT5 platform
What are the best forex brokers in USA overall?
Every service provider will have their flaws, meaning there is no universally best forex broker. Different companies provide distinct products catering to a variety of needs and clients. The summary below lists the main selling points of each reviewed broker:
- TD Ameritrade: best for traders also looking to invest with an experienced brokerage
- Forex.com: suitable for traders with low capital who’d also like to use TradingView
- Interactive Brokers: best for traders looking for the biggest selection of forex pairs
- NinjaTrader: preferable for NinjaTrader users with experiencing utilizing the platform
- Nadex: best for traders looking to trade forex through binary options
- OANDA: great for traders seeking to take advantage of OANDA’s order book
What is the best US forex broker for beginners?
Here, we need to consider the minimum deposit and the platforms being provided. Beginners will want to choose providers with a low or no minimum deposit, to which OANDA excels. Additionally, the broker also provides the MT4 platform, a recommended choice for newer traders or beginners.
Another alternative is Forex.com also offering MT4 and MT5 with a reasonable minimum requirement of $100.
What is the lowest initial trading capital that a US forex broker requires?
It all depends on the broker since there is no specific minimum requirement. Luckily, OANDA and TD Ameritrade have deposits starting from $0. However, it’s typically recommended that any trader funds with enough to cover all the margin of their positions to prevent a margin call.
The starting capital will also depend on someone’s disposable income and experience in trading.
What is important when choosing the best US forex broker?
As already mentioned, regulation is the starting point before looking at other factors. A US forex broker will need to have regulation from the CFTC and registration with the NFA. The next element to consider is the trading costs.
Brokers nowadays have competitive spreads across the board. Yet, spreads could still be worth observing, particularly for high-frequency traders and those trading exotic pairs. This group could perhaps consider the zero spread account to lower these costs.
While not directly related to the actual trading, the best forex broker in USA will have minimum extra charges with deposits, withdrawals, and other things. The selection of markets is also crucial; the more, the better.
These don’t apply to only forex but with other non-forex instruments for clients looking to diversify in the future who prefer sticking with one provider.
Lastly, an excellent broker will provide the most accessible customer support, primarily through a responsive live chat function available during business hours, a few telephone lines, email support, and other beneficial channels.
Is forex banned in the US?
No, forex is not banned in the US. The only distinction is only a few brokers are legally allowed to offer their services to residents in the country because of the red tape regarding the expensive license, lower leverage, no hedging, etc.