Forex Trading USA - How Do I Start Trading Forex In The US?

Last Updated August 25th 2020
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How To Start Trading Forex In The US

Want to learn how to start trading forex in the US, but not sure how to begin? In this article, we cover the basics of what you need to know to get started trading in the forex market in the US. 

If you have decided to, or are still considering whether or not to start trading forex, you're probably asking yourself questions such as 'How do I start trading forex in the USA?' or 'Is forex trading legal in the US?'

This article will address such questions and more by providing you with a starting point for how to start trading forex in the US.

Given the fact that forex is the largest financial market in the world, it’s no surprise that more and more people are interested in forex trading. In fact, forex trading is open to traders from all over the globe, 24 hours, five days a week.

That’s right! No matter where you live, you can easily begin trading forex. So, are you ready to conquer the forex market in the US? This is the right place to help you get started!

To have a successful start, you should gain a deep knowledge of the forex industry. All you need is profound forex education, a consistent trading style, and high self-control. As a matter of fact, controlling your emotions when trading forex is vital. Impulsiveness and greed can only harm your trading plans and strategies!

Though forex is not a get-rich-quickly scheme, with the right mindset and approach to trading, forex traders can actually make a profit and become millionaires over time.

A newbie in forex trading? No need to worry! We at Trading Education provide a free forex trading course to help you learn more about forex trading in the US and become a pro in the industry! Also, do not hesitate to sign up to the best broker in the US!

Forex Trading Around the World

As stated above, forex is the largest financial market in the whole world. One of the best things about forex trading is the fact there is no central marketplace

Forex trading is open 24 hours, five days a week, so you can create your own forex trading routine

On top of that, all transactions happen electronically over-the-counter, so it doesn’t really matter if you are based in San Francisco, CA or Huston, TX. Just consult the best US broker to get started!

Currencies are traded in all major financial centres, such as London, Sydney, New York, Zurich, Tokyo, and Hong Kong. Interestingly enough, because of the different time zones across the globe, when a trading day in the US finishes, another trading day starts afresh in Australia

The Mighty Dollar and Forex Trading

trading forex in the US

Forex trading, considered the largest and most volatile market, attracts people from all over the world.

Interestingly enough, the almighty dollar is a big player. As the Bank for International Settlements declared, “The U.S. dollar retained its dominant currency status, being on one side of 88% of all trades.”

That said - although the US dollar has been the most dominant currency for the past few years - trading forex in the US can be quite tricky. Wondering why? Simply keep reading on!

Forex Trading in the US

Even though the US is a huge market for services, stock exchange, and different goods, forex trading there is not very popular. In contrast, forex trading in the UK and Australia is on the rise.

But is forex trading legal in the US? Yes, you can trade forex in the US. Simply sign up to the most prestigious broker in there.

However, getting started might be a bit more complicated. One of the main reasons is the limited choice of forex brokers

Both US and non-US brokers who want to work with forex traders from the US must be licensed by the National Futures Association. European or other licenses simply do not work there! In contrast, a broker from the UK regulated by the UK Financial Conduct Authority can trade with any EU member state.

Here we should mention there is an online verification system, Background Affiliation Status Information Center, offered by the National Futures Association. 

The other institution responsible for regulating forex trading in the US is the Commodity Futures Trading Commission.

Forex Traders and Brokers in the US

start trading forex in the us

As stated earlier, forex trading in the US is legal but a bit more complicated. But why is it so difficult for forex brokers to get a license in the US

  • Capital Requirements

Capital requirements are a huge obstacle, which makes forex trading in the US unpopular. Believe it or not, the National Futures Association requires 20 million dollars from any forex broker who wants to operate in the US. It is worth remembering that this is the money that’s kept locked to cover potential losses.

In comparison, a forex broker will need between $100,000 and $500,000 to get a European license! Add all the legal fees and extra costs, and you’ll understand why forex trading is not a big thing in the US.

  • Leverage & Profits

Leverage, defined as the ratio of the trader’s funds to the broker’s credit, is what allows you to get bigger refunds for a smaller deposit or up-front investment. In the US, forex traders can access leverage of 50:1 on major pairs and 20:1 on minor pairs. In 2010, the Commodity Futures Trading Commission even tried to lower this ratio to 10:1!

In contrast, profits in Europe are quite high; for example, some forex traders can access leverage of 500:1. There are non-US forex traders that can even access leverage of 1000:1!

  • Regulations & Tax

It’s not only the low leverage that makes forex trading unpopular in the US. As explained earlier, the forex market is strictly regulated in the US, which may prevent brokers and traders from trading forex.

Wondering why? It was the 2007-2008 financial crisis that changed the nature of forex trading in the US. This devastating crisis resulted in numerous strict regulations, including the Dodd-Frank Act of 2010, which was perceived as a punitive measure by forex traders.  

How Do I Start Trading Forex in the US?

Despite all the difficulties, forex trading in the US is legal and you can start trading forex there. Simply do not hesitate to sign up to the best US broker

Here are some basic factors to consider:

  • Invest in forex trading education. Online courses, video materials, and seminars can help you understand the basics of forex trading.  
  • Explore the complexities of forex trading in the US, in particular. Do not forget that we can provide the best online forex education in the US!
  • Make sure you are familiar with all the restrictions and tax regulations related to forex trading in the US. As stated earlier, forex trading is taxable in the US, and we all know that tax evasion is a crime.
  • Find a reputable US broker. Do not forget that brokers have to be licensed by the National Futures Association in order to work with US traders. Due to the limited number of brokers operating in the US, finding a broker can be problematic. But don’t worry; we are here to help. Check out the best forex broker in the US and start trading forex.
  • Familiarise yourself with all the protections available in case of a market crisis or a fraud. As the trading market is changing 24/7, trading requires a lot of research, practice, and consistency.
  • Remember that consistency is the key to success. Develop a consistent trading style and routine and learn to control your emotions. Do not underestimate the power of forex trading psychology!

Key Points

  • Whether you are a forex newbie from New York or a financial pro residing in Singapore, forex trading is available 24 hours, five days a week.
  • The almighty dollar is one of the major players in forex trading across the globe.
  • Despite the popularity of the US dollar, trading forex in the US can be tricky. Regulations, taxation, and leverage are among the problems that make forex trading in the US quite unpopular.
  • That said, you can trade forex in the US legally. To get started, one must invest in forex trading education, establish a profitable trading strategy, and find a reputable and licensed forex broker.
  • Consistency, emotional control, and patience are also crucial to help you succeed in forex trading.

Now you know how to start trading Forex in the US, the next step is to choose the best Forex trading broker in the US.

Trade With the Largest US Forex Broker 

Whether you’re just getting started or ready to take your trading to the next level, Forex.com can help. As the global market leader, Forex.com offers tight spreads on over 90 pairs and access to 300+ markets. Learn more about what it’s like to trade with the US largest Forex broker and open a real account.

Remember: Forex trading involves significant risk of loss and is not suitable for all investors

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