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Choosing forex brokers for US traders can be daunting. With more than a trillion dollars exchanged daily, brokers take up a big part of the forex market. They work by facilitating trades, making profits for their clients, and making sure that all parties involved in the forex trade can reach an agreement about the terms of the trade. While brokers do not make the final decision on your trades, they are important because they take up a big role in your trades. Here is where we will look at a few key factors that will help you find the most effective brokers for US traders.
1. ECN Traded:
The first thing that we will look at when choosing brokers that accept US traders is whether or not they are ECN-traded. A forex trader connects his trading system to an online forex brokerage account, through which he will be able to execute trades using his electronic broker. The ECN (Electronic Communications Network) system lets the trader save money on commissions and has made trading easier for US clients around the world.
However, since brokers are tied to ECN servers, some brokers might not accept certain clients from certain countries, while others might not accept certain currencies. For instance, some offshore forex brokers might not accept US clients, due to regulations put into place by the USD.
2. Fully Insured or Protected:
The next thing to consider is whether the forex brokers for US traders are fully insured or fully shore protected. There are many instances when there have been losses incurred during online forex trades. The loss might have been caused by a broker's failure to maintain sufficient insurance, or by the US authorities or their laws.
Forex brokers for US traders must always follow United States federal and state laws. The US authorities have set minimum standards of care. These requirements are what these brokers need to adhere to. If they are found to violate the law, then they will be shut down. In some cases, the penalties can be quite heavy.
3. Offshore Forex Brokers:
Offshore forex brokers for US traders can also offer us, traders, good advice concerning the risks and benefits of online trading. US investors have a unique perspective compared to other countries. For them, the risk/reward ratio of forex trading is very important.
Many top forex brokers for US clients will always make themselves available to US investors. They want us to feel comfortable that our investments are safe and secure. This can only be guaranteed if these brokers have a solid reputation in the industry and they regularly carry out research on US stocks and companies.
4. Mini Trading Account:
Forex brokers for US traders who do not have large deposits can opt to open a mini trading account. This will allow them to experience the benefits of a forex brokerage firm without a huge deposit. Mini accounts usually have a monthly fee as compared to the standard account. There are several mini accounts available in the market. Try to find out which brokers offer the most attractive commission structures for mini accounts.
5. Forex Leverage:
To ensure that they can get the best leverage, forex brokers for US traders need to constantly expand their base of clients. Many brokers will let new traders use their services if they have a certain amount of money in their account. Forex leverage is a very important aspect for traders who want to succeed.
6. Availability of Scalp Trading:
One advantage that many brokers have over others is the availability of scalp trading. This facility allows traders to execute a trade even without accessing their account. When using a scalping broker or an ECN account to execute trades, you can have bigger wins than losses because you will always have a small profit. However, you may not be able to enjoy the same level of leverage.
7. Offer Platforms:
Most forex brokers for US traders who do not have a large deposit also offer some type of platform. These platforms allow the brokers to access their customers' transactions. You should check the platform thoroughly before starting to use it. If you are a new trader who does not require very much leverage, you can simply use a free demo platform until you feel more comfortable. It is always a good idea to test a platform before paying any deposit.
8. Licensing Policy:
You should also consider the licensing policy of the forex brokers for US traders. Most brokerage firms accept only a few reputable banks and financial institutions. If you find one broker who accepts almost all of the banks in the country, you can be sure that he will offer you the best rates. Before you sign up with any broker, check to see if he is licensed to manage accounts in your state. You will be required to have a valid banking license to operate your trading accounts.
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