Forex market averages a daily trading volume of $5 trillion worldwide, which makes it one of the biggest markets. The United States, as the world’s largest economy, has a big share of this volume. Whether it is the huge corporations or banks purchasing and selling currency for operating purposes, or individual traders trying to make a profit by trading Forex in the USA, there is a huge demand on the market. As a result, there are many companies that try to facilitate Forex trading processes. As a trader, you will have to navigate these offers and choose the best one. A lot depends on your choice of a broker. Especially if you are a beginner, your trading experience and intuition will be shaped by the first platform you choose to trade on.
Gearing up to
In order to make the right choice among many Forex brokers in the USA, you will have to learn about a few things. First of all, it is of paramount importance to make yourself acquainted with the regulatory environment in the country. Not only will this help in the search process, but it will also keep you safe after you start trading. Knowing how brokers are regulated gives you more tools to judge these companies. If you are a first time trader, you will also have to learn about the trading tools these platforms have to offer and what they do. When judging the functionality offered by a broker, this will be important to make a decision.
This page also offers a sneak peek into what it means to be a successful trader and will provide a few examples of Forex traders in the USA that managed to acquire considerable wealth through this activity. We will also consider scams and fraudulent companies that pose as legitimate Forex brokers in attempts to defraud users of money or personal data. All of this information will be crucial to your trading experience so we suggest going over it carefully and attentively.
Regulation of Forex trading in the US
Forex trading is probably one of the most unregulated financial sectors in the world, well, aside cryptocurrencies. As a result, it has become a dangerous world to operate in. There are many fraudulent organizations and with the opportunities offered by the Internet, it is not always easy to identify such companies before they manage to harm the traders. With the Internet, it is also possible for a person anywhere in the world to start using a broker in a completely different part of the world. This further complicates the regulatory framework and makes it difficult to control the activity.
Forex trading in the USA is relatively more regulated than it is in some other countries. There are organizations that are responsible for authorizing brokers to operate within the country. These organizations also monitor the operations of brokers and try to uphold certain standards.
Who regulates Forex brokers in the USA?
In the US, there are two main organizations concerned with regulating the Forex industry: the National Futures Association (NFA) and the Commodities Futures Trade Commission (CFTC). It’s mainly the responsibility of NFA to set out efficient and innovative regulations for the industry.
NFA regulates not only Forex but also derivatives industry, ETFs, OTC derivatives and more. It was founded in 1982 and is headquartered in Chicago. NFA is classified as a non-profit, independent regulatory organization. As such, is it not a direct extension of the government. The operation of NFA is financed by the membership and assessment fees of the market participants. Currently, there are 4,000 firms and 55,000 associates in NFA’s membership. It is required by law for companies in the US futures exchanges and the retail Forex market to become members of NFA. This makes finding information about the regulatory status of Forex brokers in the USA easy and fast, but more on that later.
The main responsibility of NFA is to make sure that its member organizations uphold a certain standard and don’t operate against the interest of the customers. NFA also has to make sure that the members follow the regulatory requirements set out by the government agencies. Furthermore, in order for the companies to obtain a license, they have to pass the screening procedures conducted by the organization. This guarantees that the companies operating with a license can be trusted to some extent.
CFTC was established in 1974 with the aim to safeguard the rights of individuals in the trading of futures and commodities. Due to the fact that Forex is a part of the futures market, CFTC regulates it as well. It is the responsibility of this organization to monitor the behavior of brokers and make sure their operations follow the regulations. Without CFTC, the market of Forex trading in the USA would be full of scammers and unreliable operators trying to defraud the customers.
Main points about the regulation of the Forex trading in the US
There’s a limit on leverage when it comes to Forex trading in the country. It is capped at 50:1 on major currencies. This ensures that some investors don’t take too much risk and end up losing all of their money. Since it’s usually beginners that try to overleverage, this law protects customers without being too restrictive. There’s a limitation on minor currencies as well. Leverage for such currencies is limited to 20:1. There are also security deposit requirements. For short Forex options, there needs to be a security deposit equal to the notional transaction value and the option premium received. For long Forex options, the entire option premium will need to be maintained as a security deposit.
Licensed Forex brokers in the USA will have to face other regulatory requirements as well. For example, they will have to hold all the money owed to the customers at the qualifying institutions in the US or in money-center countries. However, they can choose to hold the funds at one place or in different places. Obviously, there are many other regulations that concern these institutions. They are designed to protect customers and to guarantee the safety of their funds and personal information. However, some brokers that you might start using in the US, might not be licensed in the country at all. They might be operating from abroad. This means that the regulations won’t apply to them and you will have to check the procedures of the regulators in the country where it’s licensed to assess the trustworthiness yourself.
How do I know if a broker is regulated in the US?
When you are looking for the best Forex brokers in the USA, you will want to know whether they are regulated in the country or not. Although the website of the broker might say it is, it’s always a good idea to double check with the regulator itself and the NFA provides the resources for you to do so easily. It has set up an online verification system, which is called the Background Affiliation Status Information Center. You can use the tool to type in the NFA ID, company name or individual name to check the regulatory status of a Forex broker based in the US. When you do this, be careful to indicate the name the company is registered under. In many cases, brokers will have one registration name but will be known to the customers under a completely different brand name.
Trading tools and terminology to help you with Forex trading in the US
In order for you to be able to choose among the best Forex brokers in the USA, you will need to know the basics of Forex trading tools. If you are an experienced trader, this information might be redundant for you, but beginners should definitely go over it to make sure that they are well-equipped enough to judge the platforms they have to choose among. This section will present some of the tools and Forex terminology that should be helpful to you in the process.
Leverage is a tool used in trading that allows traders to open positions with ‘borrowed money’. This means that even if you have a $100 to invest, you can open a position worth $10,000 in case of a 100:1 leverage and if your trade turns out to be profitable, you will make a profit equivalent to investing $10,000 in the first place. The way this works is that your broker will extend you a loan on your margin account. Say the leverage offered by the broker is 50:1. This means that you can deposit $1,000 into your margin account and you will be able to trade $100,000 of currency. In general, leverage size varied from 50:1 to 200:1, but as we saw US regulations cap it at 50:1. It’s still a lot large than what you would be able to get for equities or futures. When you are involved in online Forex trading in the USA, be careful with the leverage you use. Let’s say you invest the $100,000 in a currency with 50:1 leverage. So, you put up $1,000 of your money. However, the currency moves in the opposite direction than expected. Your losses will be amplified by a huge margin. Although you won’t lose any more than your initial investment, you could zero out much faster. That’s why leverage should be used wisely.
Stop-loss order is another tool often used by experienced Forex traders in the USA. It gives you the ability to limit your losses. Put in simple terms, a stop-loss order lets you set a trigger price and if the asset you have invested in drops to that price, it will be automatically sold. If you purchase a currency and it drops in value quickly, you could lose a lot. However, if you have a stop-loss order in place, your losses will be limited to the difference between the purchase price and the trigger price. While appealing and very useful, stop-loss orders can be expensive too, which is why not all traders use it all the time.
Using charts for tracking currency pairs is extremely useful and widely adopted. It allows you to conduct more thorough technical analysis and give more accurate predictions for the future movements in price. The broker you sign up on should have some type of charting software. Usually, it will be the built-in software that comes with the Metatrader package. There are also independent companies that provide paid charting software. These include Ninja Trader, Sierra, and Tradestation. Most Forex traders in the USA will probably use the Metatrader one. However, there are those that prefer other providers.
Technical indicators are also important in Forex trading. They provide a way to easily assess the movements of a currency pair and forecast the future. Sometimes traders tend to put too much trust into these indicators, which is unwise as they are just a helpful tool to help with the analysis and not a foundation to base your strategy on. Usually, traders choose one or two favorite technical indicators and mostly look at that indicator for guidance. One of the most popular technical indicators are the trend lines. Trend lines are drawn to follow a pattern of movement in the price. There are usually two lines drawn which could be converging or moving in the same direction. This indicates the general trend in the price movement. Support and resistance lines are drawn to show the levels above and below which the price is unlikely to move. If these lines are breached, it usually gives a strong signal in either direction and leads to a sell-off or a buying spree.
There are two main prices you will be concerned with when Forex trading in the USA. The first one is the bid price. This is the price at which you will be able to sell the currency to the market or your buyer. There’s also the ask price, which shows at what price level the market is willing to sell the currency. The difference between these values is the bid/ask spread. In order for you to break even on the trade, the position has to move by at least the amount equal to the spread in the direction of the trade. Otherwise, you’ll buy the currency at a higher price and sell it at a lower currency thus incurring a loss. The difference in the rates is very small and is usually measured in pips. A pip indicates the smallest increment in the movement of the price of a currency. Depending on the currency pair, it will have a different numerical value.
How to pick a Forex broker in the USA?
When you’ve learned about the regulations Forex brokers in the USA have to face and made yourself acquainted with the trading tools, you can move on to considering the criteria for evaluating different brokers. Naturally, you will prioritize some of the features listed below over others, but it is important to consider all of them at least to some extent in order to make a satisfactory decision.
The main reason you are looking for a Forex trading platform is to trade currencies and make a profit. In order to be able to do this, you will have to have access to currency pairs on the platform. By definition, all Forex brokers will give you access to some currency pairs, but the selection will be different from one platform to another. In Forex, people mainly refer to three classes of currency classes. There are the major, minor and exotic pairs. Major currency pairs include the US dollar and another one of highly traded currencies. There are seven major currency pairs: EUR/USD, USD/JPY, GBP/USD, USD/CHF, USD/CAD, AUD/USD, NZD/USD. These pairs are extremely liquid and trading with them is very easy. They also have some of the lowest spreads on the market.
Pairs that are made up of highly traded currencies but don’t include the US dollar are called minor currency pairs. These include EUR/GBP, EUR/AUD, GBP/JPY, and others. When trading on Forex brokers in the USA you might also want to try out exotic currency pairs. These usually include one major currency along with currency from a developing country. For example, JPY/NOK would be an exotic pair. These are also more difficult to come across. Not all platforms will offer many exotic pairs. However, during trading, you might suddenly get an idea that involves one of the exotic pairs. Political or economic processes might affect your trading strategy and when you need to trade in one of the exotic pairs, you’ll want your platform to give you access to it. That’s why it is important to choose a broker that gives you access to a wide range of pairs.
In addition to Forex, you might also be interested in trading other types of assets including cryptocurrencies, stocks, indices, and commodities. You’ll want to do this all from one platform, so it is a good idea to pick one that gives you access to other assets as well. Having everything in one place is not only easier but is better for the analytics as well.
In addition to the currency pairs, trading tools comprise a crucial part of your trading experience and will also determine your profitability. For example, using leverage your profits can be multiplied by a huge margin. While most Forex brokers in the USA will offer leverage, its size will vary. Leverage is risky so you probably don’t want to overleverage yourself, however, it’s always good to have the set of options at hand in case you need it. That’s why it is important to choose a broker that will give you the widest range of functionality.
Because of the size of the Forex market, there are people of all backgrounds trying to become involved with it. This means that there are traders who might not be as savvy with the technology and world of investing. Unfortunately, it also means that there are Forex brokers in the USA that try to take advantage of such people. As a result, the path of Forex trading should be walked carefully. You can’t just choose any broker that looks appealing. You also have to establish its trustworthiness. There are several ways to do this. If you have chosen a regulated broker, it means that the biggest chunk of the process is already done. The regulators would’ve vetted the company carefully, inspecting its trustworthiness with resources that you as an individual trader simply can’t command. The fact that a company has gone through the screening and has obtained a permit to operate in the country means that it satisfies certain standards set by the authorities. This is a huge deal when trustworthiness is concerned. If you are creating an account on a licensed Forex broker, there’s not much more to do to verify the reliability of the platform.
On the other hand, if you are not sure about the regulatory status of the broker, you will want to do some research on your own. The first thing to do is a simple Google search. This should let you know if the company has had some huge issues with trustworthiness in the past. If, a Google search doesn’t reveal anything concerning, continue with user reviews and discussion forums. You probably aren’t the first customer of the broker and you won’t be the last. Use the knowledge accumulated by other Forex traders in the USA regarding the platform. If there’s something to be concerned about, this should reveal it.
When trading on Forex platforms, you will, of course, want to make a profit. While your strategy might be right and there’s still a chance you won’t break-even. With daytrading, even the smallest fees can make a difference between being profitable and loss-making. So, you want to inspect the fees of a platform before starting to trade on it. If you are a new trader, you won’t have anything to compare them to. In this case, you might want to use fees as a tiebreaker. When you narrow down your list of brokers to a handful, use fees to compare them. Be careful with this strategy, however, as you might be inclined to like platforms that have high fees in general. So, after you’re done selecting the best Forex brokers in the USA, read what other traders have to say about its fees.
Trustworthiness doesn’t guarantee reliability. Even if you’ve managed to pick out a platform with the best intentions, there’s still a possibility you might end up losing your money. Internet is a dangerous place and financial companies are often targeted by hackers who want to steal users’ data or funds. Because of the size of the Forex market, these companies often become targets as well. So, when you’re choosing a Forex broker to trade on, you should pay attention to how secure it is. You as a user will have trouble inspecting and judging the security measures of a broker. However, there are alternative strategies you might choose. There are independent organizations which audit the security measures of Forex brokers in the USA and publish the results. You might want to take advantage of these services. Alternatively, you can also look at past performance. If a broker has weak security, it might have already had some breaches in the past. If there are lots of such breaches, you might want to reconsider opening an account on it.
With the number of Forex brokers out there, the market is highly competitive. These companies are vying for the trader’s attention and come up with innovative ways to attract new users. Bonuses are one of the main ways Forex brokers can appeal to users as there’s only so much you can do in terms of security and trading tools. Although you might think that bonuses are inconsequential now, when you’ve spent months trading on the platform, they might bring more enjoyment to the trading process.
There are several types of bonuses offered by Forex brokers in the USA. Welcome bonuses are probably the most popular ones. This will be given to you after you create an account on the platform. In most cases, they will require you to make a certain deposit, but in rare cases, there are also no-deposit bonuses which although smaller in amount, are often preferred by traders. No deposit bonuses give you a chance to use the platform and even make a profit without risking any of your own money. When you’re first becoming familiar with the platform and its functionality, it is good to have a chance to learn from your mistakes without losing any of your own money. Also, unlike demo accounts, whatever profit you make from trading is yours to keep.
Another thing that is also important when looking at the best Forex brokers in the USA are the payment methods. When you open an account on a Forex trading platform, even if you receive a no-deposit bonus, at some point you’ll want to deposit your own money to trade with. When you get to it, you’ll be presented with several payment options. These payment options vary from broker to broker. In general, they might include debit/credit cards, wire transfers, electronic wallets like Skrill, Neteller, PayPal, and various other services. You want to make sure that your preferred method is present on the website. You will also want to pick a broker that offers a wider range of payment options. Although you might only need one at the moment, you never know what might change in the future. In case you’ll need to change a payment method, you don’t want to have to switch to another platform too. You want to make sure that your broker will have other options for you to use as well. Integration with many different platforms also speaks to the scale of the broker’s operations and its reliability.
In addition to deposits, you also have to consider withdrawals when looking at the list of Forex brokers in the USA. Often, the options you have for withdrawing money don’t completely coincide with deposit methods. Of course, you’ll want to make sure that you’ll be able to withdraw the money conveniently, but with withdrawals, you also have to pay a lot of attention to fees, processing times and limits. If the fees on withdrawals are too high, you’ll have to share a large chunk of the profits you made with the platform, which is not something you want to do. The processing time refers to how long it will take for you to receive the payment. This will depend on the method you choose, but some brokers also add their own processing time. You don’t want that to be too long. Limits are also very important. Limits determine how much you can withdraw in a given period or at a time. If the limits are too low, you will have to withdraw your profits in installments, which is, obviously, undesirable. You will also have to pay the fixed withdrawal fee several times.
Many brokers put a lot of effort into educating their traders. They provide lots of videos, tutorials and text material for users to take advantage of and become better at online Forex trading in the USA. If you are a beginner, this is especially important to you. Before opening an account on a broker’s website, see what educational tools it offers to its customers. Of course, you might decide to seek help on YouTube, or from a friend, but there are some peculiarities of a trading platform that they won’t be able to tell you about. It is best to learn from the source itself. Make sure that the platform you choose provides adequate resources for you to become better at trading.
Forex brokers have a huge range of functionality. There are lots of tools and options that traders can use. As a result, the websites tend to get overcrowded with information making it hard for new users to navigate. If you are an experienced trader, this might not be a priority to you. However, if you’re only beginning to trade, you’ll want to pick Forex trading brokers in the USA, that will have a well-designed user experience and a simple interface. Modern websites usually do a good job with this, but older, more established platforms might not follow the latest design trends. One way you can assess the user experience of a broker before starting to trade on it is to view the screenshots or guided tutorials that show the interface. This way, you’ll get a quick look at what the website looks like and if it feels hard to navigate, you might choose another platform. You can also read user reviews mentioning user experience and ease of use. Picking a better-designed website means spending less time on figuring it out, and, in some cases, losing less money in the process.
When you start to use the platform actively, you might come up with some questions that you need help with. These questions could be regarding the registration procedures, payment methods, trading tools or anything else. In such situations, a Google search might not be enough and you might need help from a representative of the Forex broker. Top Forex brokers in the USA will offer customer service that will allow you to get in contact with the support staff. There are several ways a company might allow you to use customer service. The most convenient method is using a live chat. This will usually be a button on the screen of the website that you can click, connecting you to a representative that you can exchange messages with directly. In some cases, the live chat will have certain operating hours and sometimes it will be active around the clock. The latter option is obviously better. There’s also a possibility that a broker won’t have a live chat and will instead offer a free phone line or an email service. A phone line is a convenient option as sometimes you’ll find it easier to explain your issue by talking about it. Emails take long to respond and are the least desirable option for customer service.
The scale of operation and user reviews
Sometimes, it’s easier to judge a broker by its results. If it has managed to attract millions of users, there’s probably a reason for it. When choosing the best Forex brokers in the USA, you might want to go for the ones with the biggest customer base and best reviews. Large scale operations mean more resources to offer better products and services to the traders. It also means integration with more companies and more scrutiny from the regulators. Small brokers might get away with things that large brokers will never be allowed to do. The security measures of bigger companies will also be stronger. On the other hand, there’s a lot of innovation that is born from small companies, so they shouldn’t be disregarded altogether. We’ve mentioned user reviews a couple of times already and it’s because they are extremely important. Take advantage of what the internet has to offer in the form of shared knowledge. Read what others have to say about the platform and you might learn things that could make you reconsider your decision.
What qualities make a successful Forex trader?
Even if you manage to find the best Forex brokers in the USA, you’re not guaranteed success. Forex trading is a risky business where some win and others lose. However, there are some characteristics that unify many successful Forex traders. It might be a good idea to go over them and take them into consideration when you start trading yourself.
Patience is a key quality for day traders of all kind. It will manifest itself in many ways. Firstly, patience is important in order to be able to follow through the set-out strategy. No matter how good a strategy is, it won’t always be profitable. As a result, there will be a big temptation to abandon when it stops to make a profit. While it’s not wise to follow a loss-making strategy, it’s equally unwise to switch up your trading system at every loss. Losing is a natural part of the trading process and those traders that are patient enough to go through it without a panic often win. Patience is also important in other ways. It takes time to become good at trading and if you give up at an early stage, all of the effort you put in will be lost.
Diligence and determination
Forex trading in the USA involves millions of traders. Obviously, not all of them can make a profit all the time. In order to succeed, you will need motivation that will force you to spend time on making yourself better at trading. Without determination, you will simply be just one of the traders try to get by on luck. The technical analysis required for Forex trading is not a simple matter. It takes a lot of work and effort to be able to predict future movements of the exchange rates. Without diligence, you will find it more and more difficult to spend time on educational pages and tutorials that allow you to make yourself a better trader.
Discipline and work ethic
Although you’ll need to put a lot of work and time into acquiring the necessary skills to be a good Forex trader, discipline and work ethic are also important for you to be able to restrain yourself sometimes. When you set out a trading system, you will need to follow it meticulously. The actual trading happens only a few times a day and each time it takes minutes. There will be a huge temptation for you to be more active, but you will need to put that aside and focus on your strategy. This is how the best Forex traders in the USA do it and that’s why they manage to succeed.
Ability to see the bigger picture
With trading, it is easy to get carried away with small details and forget about the bigger picture. You will need to take a step back and evaluate how your strategy is working out without being too detailed. This doesn’t mean that you should ignore details altogether, but sometimes, to be a better trader, you will need to look at the big picture.
Rookie mistakes often made in Forex trading
It is good to learn from others mistakes and with millions of Forex traders entering the market every year, there are a lot of mistakes to learn from. Below we offer some of the most common mistakes new traders make with Forex trading. Go over them carefully and keep them in mind not to make the same mistakes when you manage to choose the best Forex brokers in the USA and start trading.
Not using stop loss
A stop-loss order is a trading tool offered by platforms to allow traders to limit their loss. Basically, when you place a stop-loss order, the asset under question will be bought or sold after it reaches a certain price. So, if you invest in one asset, but you are afraid it’s price might drop precipitously eradicating your holdings, you will place a stop-loss order and the asset will be sold after it drops to a certain level, limiting your loss at the difference of the current price and the trigger price. Of course stop-loss orders have drawbacks as well, otherwise, everyone would use them. Namely, it is not cheap to place such orders. That is why many new traders steer clear of them. Nevertheless, it is a great tool for limiting your losses and not taking advantage of it is definitely a big mistake of new Forex traders in the USA.
Leverage is a great tool when employed wisely. It allows you to open positions larger than your contribution. Basically, you are trading with borrowed money. While this means that you could potentially see gains much larger than what you would’ve been able to achieve with just your money, it also means that you could end up without any money really quick as well. Still, sometimes the temptation of quick and stupendous riches is too much for new traders to resist. They tend to overleverage, lose all of their money and then feed in more money as they try to recover losses with even more leverage. This downward spiral could end really bad for traders.
Trying to anticipate the news
Many new traders try to use the surrounding economic or political processes to predict the movements in the exchange rate of a certain currency pair and make a profit. Unfortunately, although that might seem logical, it is not always the best decision. When you are online Forex trading in the USA, and you expect certain news to be released which you think will affect a certain currency pair in one direction, it won’t always happen. In most cases, the exchange rate moves in both directions and it does so with a very short interval. This could mean huge losses within seconds. In addition, during that period of volatility, the bid-ask spread will be bigger than usual, which means there might not be enough liquidity for you to get out of your position.
Choosing the wrong broker
Choosing a wrong broker is often a big mistake made by new traders. It’s completely understandable as they lack the experience to judge a platform well. Which is why it is important to read articles like this one carefully and be informed about the process. In the worst case scenario, you might end up choosing a broker that is a scam and wants to steal your money. However, there’s also a possibility that will choose a broker with too high fees or not enough trading tools for you to use. In such case, you won’t even know what you are missing out on if you are not informed about the standards and don’t know what features a broker must have to be a good choice.
Opening several correlating positions
With Forex trading in the USA or in general, with all kinds of investment decisions, diversification is something that is advised by many. Diversification refers to investing your money in different types of assets so that if one of them turns out to be a losing position, it will be offset by another. Following the advice, many new traders open several positions at the same time but fail to consider their correlation. If you are investing in highly correlated assets, it doesn’t matter that they are different, diversification is still not achieved. One way you can avoid this mistake is by looking at the trade setup of different pairs. If they look similar, then they might, in fact, be correlated.
Changing the system too often
Another very common mistake of new Forex traders in the USA and everywhere else in the world is changing the trading system too often. Once you have formed a strategy, if you believe it, you should give it a chance. No strategy is absolute and it will definitely lead to some losses at some point. Don’t be too hasty to abandon the strategy once this happens. This doesn’t mean that you should keep using a loss-making strategy. It simply means that if a system has been working for you, one or two bad days are not a reason enough to set it aside completely.
Not having a clear strategy
When people hear about Forex trading and the opportunities it provides, they are often too quick to dive into trading without forming a clear strategy beforehand. Much like with everything else, it is good to have a plan before you start risking your money. Although you might luck out a few times and make a profit, it doesn’t mean that what you are doing will keep working, unless you have a strategy you can follow in the future. Clearly set out strategies give more structure to the Forex trading experience and are often necessary for you to be successful in the long term.
How to become a better Forex trader
Success in Forex trading is determined by a lot of factors, but most of them can be improved over time. Even the best Forex traders in the USA had to start somewhere and no one started out making millions right away. Even after you open an account and start trading, there are some things you can do to work on your skills and improve your result.
Because of the size of the Forex market and the number of individuals involved in it, there is a huge content made online for the purpose of educating traders. While not all of this content will be useful, there’s a lot of interesting information out there that could help you become a better trader. YouTube is full of tutorials made by experienced traders. Your broker might have some educational resources as well. You should put it to use and actually spend time and energy on learning things. Trading can be done knowing next to nothing as well as with a strong background. In the former case, profits won’t likely be consistent and high, however, traders might have a false sense of knowing it all. There are many trading tools out there that they won’t be using, but which could really make the difference in the results. Without diving into educational resources, you might never find out about such tools and opportunities.
Keep track of your strategies and results
When you choose your favorite from the list of Forex trading brokers in the USA and open an account on it, you will hopefully come up with a trading strategy. After you do this, every day you will see the results of your strategy. It is important to write down these results and keep track of your strategy in case the broker doesn’t offer such analytics tools. This will be important for you to judge the performance of your own strategy and switch it up if need be. It will also make you more immune to the urges of abandoning a strategy during the days it doesn’t make a profit as you’ll be able to see its overall performance better.
Read, read and read!
The pace at which modern technology is developing is astounding. Forex trading is not an exception to such developments. There are new strategies, theories, and trading tools coming out every once in a while that you will need to be up to date with. The only way to do this is to read, read and read! Subscribe to newsletters of Forex websites, do frequent Google searches and join communities that share new information about Forex trading in the USA. This will ensure that you are not falling behind other traders and are able to use the latest technology and methods to trade Forex.
Learn from your own mistakes
Learning from mistakes is an integral part of any process and it is one of the best ways we get better at things. Forex trading is a great example of this. When you make a mistake, don’t push it aside without any thought. If your results aren’t as good as you want, think about what could be the reason. It is sometimes easier to move on and try new things, but there’s a lot of knowledge you can get from simply sitting down and looking at what went wrong. It will allow you to avoid similar mistakes in the future and will also give you a better understanding of the process in general.
Examples of Forex scams in the US
The world of Forex is full of stories about scammers who attract millions of dollars in investments by promising unrealistic returns and a program that can never truly turn a profit. Although you might think that the traders would be immune to such traps by now, such scams still manage to appeal to many investors. In order to be better equipped for the search process for the best Forex trading brokers in the USA, it’s a good idea to go over some examples. They might give you an indication of what kind of offers to avoid.
From 2007 to 2009 Keith Simmons and Deanne Salazar set up a complex Ponzi scheme under the name of Black Diamond. The company promised investors returns of up to 137% and claimed that they had the license to operate. Those who failed to see through the scam investing heavily into the program. Black Diamond attracted 240 investors and $35 million in investments before the founders were arrested in 2010. What’s interesting is that the company really paid out small amounts to the investors at first, which made it seem like a legitimate business.
This is not the only Forex scam of this kind. In many countries around the world, such schemes are set up very often and still manage to attract investments. They do this by giving the investors false promises and taking advantage of their lack of awareness on these issues. The dangers in the Forex market don’t only come from Forex brokers in the USA, much larger institutions are also involved in rigging the market as well. At the beginning of 2019, several major banks including JP Morgan and Citibank were fined for operating a cartel that fixed the market. As an individual trader, you can’t do much to identify or forestall such schemes, but there’s a lot you can do to avoid becoming a victim of a Ponzi scheme and losing your money.
Protecting yourself from scams
Because of the power of the internet and the ability for online services to offer their products to customers anywhere in the world, it is becoming increasingly more difficult for the regulators to control these activities and identify the scams in a timely manner. As a result, it is your responsibility as a trader to protect yourself from such traps and not lose your money by trusting the wrong company. There are a few things you can do to avoid becoming a victim of a Forex scam when you are involved with Forex trading in the USA.
Watch out for the red flags
Forex scams usually have a few red flags that should alert you to the true nature of the offer. One of them is a promise of a specific return. There’s no way a company can guarantee a certain percentage of a return. It’s not even possible for someone to promise you that you will make a profit. Forex trading is inherently risky and no one can know exactly how profitable a certain trade will be. For example, in the example above, the company promised returns of up to 137%. That should’ve been enough to alert the investors. Even the number 137% is too specific, but anything promised at all would be suspicious.
When you start looking at the websites of Forex brokers in the USA, you’ll notice how much information the company is sharing. If you feel like it is hiding some information, like the registration address or the identity of the management, then you might be dealing with a suspicious provider. A broker shouldn’t have any problem sharing information about itself. Sometimes, scammers will create fake profiles and upload false information about the team. You can use LinkedIn and Facebook to double check the truthfulness of such claims.
Check the regulatory status of the broker
As described above, companies have to go through the screening procedures with the regulators in order to obtain a license to operate in the country. This means that the authorities, with their vast resources, check the validity of the company and its claims. If it is in a precarious condition and can’t handle investments from the customers and especially if it is a fraudulent scheme without legitimate business, it won’t be able to obtain a license. Scammers also avoid the scrutiny of the regulators and it’s unlikely that one will apply for the license at all. In this case, there are two things that can happen. The broker might lie about its regulatory status and post a false claim on the website. You can use the tools provided by the regulators to look up the company and check its regulatory status. Obviously, if you catch it in a lie, you better avoid it altogether.
Sometimes, instead of choosing licensed Forex brokers in the USA, traders go for platforms knowing that they don’t have the right to operate legally. This might happen because of appealing offers or services that force the traders to overlook the regulatory status. When you neglect the regulatory status of the broker, you reject the protections that are put in place by the authorities. In this case, you will have to do the research yourself and judge the trustworthiness of the broker on your own, which is much more difficult.
Reviews are a good way to judge a Forex broker, but it can’t be the only tool you use. For example, in the case described above, there were hundreds of investors in the company getting small payments in the beginning, which would have led to positive and reassuring reviews on the forums and websites. If you trusted these reviews, you would’ve lost money. However, if the broker has been operating on the market for a long time and defrauding traders along the way, you’ll likely find information about it from the reviews. That’s why it’s a good idea to go over them in the process of looking for the best Forex trading brokers in the USA.