The Uncertain Future of US Brokers

The United States of America has long been known as the "land of the free and the home of the brave", but when it comes to the Forex market, this term takes on a completely unique meaning. Increasingly restrictive NFA policies designed to protect US investors have been chasing and, in some cases, punishing US currency brokers. The rates imposed to maintain a brokerage firm are prohibitive for most, and trading conditions are limited compared to those in other regions of the world where regulation is less stringent.

In August 2012, FX Club (also known as Forex Club), formerly one of the best brokers in the United States, abandoned its RFED license, the regulation required to accept retail customers. Since then, the company has been accepting only institutional customers, and will likely continue to do so, at least for the foreseeable future. As part of this change, FX Club became another currency broker, replacing its CEO (after OANDA and GFT, among others), with Michael Klena, of E * Trade, who came to lead the change of the company.

Although the FX Club abandoned its RFED license, the NFA continued to investigate the broker, charging the company for $ 300,000 administrative violations, which the broker solved the day the claims were made.
Just two months after the FX Club closed its doors to US retailers, Advanced Markets made the same strategic decision, opting to give up its RFED license and operate only with institutional traders. This decision is much less surprising, since Admiral Markets (aka AMIFX) has always held that only a handful of retailers are admitted who presumably can transfer their accounts quickly with the broker's help if necessary.

What comes next in the forex retail market in the United States is uncertain, but if the NFA fines and increased regulations on brokers are a clue, it would not be surprising if other US brokers throw in the towel . Although I do not think that industry giants like FXCM or Forex.com will disappear in the short term, smaller entities may find themselves fighting an uphill battle. Some may not be interested in fighting much longer.

How to choose a broker to invest in the forex market?

The Broker or Broker is the financial institution in which we are going to deposit our funds to open an account and invest in Forex.


You have to take into account a number of factors to make the right decision since there are many brokers in the market and each offers a range of variables that must be taken into account.


Below we will describe the main variables that should be taken into account when choosing a broker to invest in the currency market.


1. The capital of the Broker: It is important to know the capital of the Broker because at the time we make a profit we have to be sure that the Broker has enough funds to pay us. In general Brokers do not disclose this type of information, but you can find out the payroll of employees who work for the broker, how big the organization is, how many clients operate with it, and several more factors may come to our notice.

2. Market and products offered: We have to know in which markets we plan to operate, and in what products we want to invest. There are brokers that offer foreign exchange, commodities, futures, among other financial instruments.


3. Commissions: There are brokers that do not charge commissions and that their profit comes only from the spread or exchange differential (difference between the purchase and sale price of an asset).
If we choose a Broker that if it charges commissions, we have to take into account what those commissions are; can be commissions for the purchase and sale, commissions for withdrawals of funds, commissions for maintenance of accounts.


4. Spread: The spread as we said before, is the difference between the purchase and sale price. Investors always prefer a small spread to pay less to the Broker. Spreads can be fixed or variable. If the spreads are fixed, this means that in times of greater volatility they will always remain fixed. If the spreads are variable, then in times of less volatility the spread is lower but in times of greater volatility, the spread will be greater.


5. Services: Brokers usually provide a number of services that can be of great help to traders. Technical analysis, fundamentals, recommendations, news and graphics are usually the key. Beginning investors have to take this service very seriously as the customer managers in Spanish can assist in all these issues.


6. Customer Service: We have to verify if the Broker we choose there are people who speak Spanish and can help us with any inconvenience or doubt. There are Brokers that also enable communication through chats, telephone assistance, email, and all this during the 24 hours. Besides of course those who assist us must have knowledge in financial markets.


7. Execution: One of the most important variables to take into account when choosing a Broker is the speed of executions. The best thing is that the execution is automatic, then when we want to enter or leave the market at a certain price, generally the Broker respects.


8. Stop Loss and Limits: It is necessary to find out if the broker respects the Stop Loss and limits that we place in our platforms. It is important as these are the limits of profit and loss that we allow ourselves.


9. News: Not all brokers allow their traders to trade in news feeds as the market is very volatile. For operators that operate with news, this is one of the most important points to ask.


10. Regulation: There are official entities both nationally and internationally that regulate the operation of brokers. Broker regulation is not a 100% guarantee, but it can help. The most important regulatory agencies are the NFA (United States), CFTC (United States), FSA (United Kingdom) and the CNMV (Spain).


11. Fund Withdrawals: Each Broker has different times to respond to our requests. The security of our funds is a must, therefore receiving the requested funds on time is essential. It is also good to corroborate that the bank with which the Broker works is known and respectable.


12. Trading Platform: There are different forex platforms in the market, it is important to first try out the free demo, see which tools the platform has, and if it is complete. In addition, platforms can be download, no download, for mobile phone, and more.


13. Investment: We must find out what the minimum deposit required by the Broker is if we are interested in investing small amounts.


14. Broker Type: There are different types of brokers like Market Makers, NDD, Dealing Desk or ECN. The differences between them are as follows:
- Market Makers: they are market makers.
- NDD: "No Dealing Desk". No intermediary operating room. The operations are executed automatically.
- Dealing Desk: They have an operating room that intervenes in the operations that the Investors do.
- ECN: "Electronic Communications Network". They operate directly connected to the market where market makers, banks and traders are operating offering the best bid / offer prices.

In short, it is important to choose a broker who is serious and professional and suits our needs.

Is a Good Idea to Change Forex Broker?

One important reason you may have to switch Forex broker is certainly fear for the security of your deposits. If you ever ask your broker to withdraw some funds from your account, and it becomes excessively slow or unresponsive, then this is an excellent reason to switch brokers immediately. Of course, if you hear some reliable information about your broker's financial situation or ethics, it will also be good to consider a change. It is advisable to check from time to time the professionalism of your broker, even if you have obtained some good results, requesting the withdrawal of some of your recent earnings. If there is an unwarranted delay, it is advisable to close the account immediately and, if necessary, threaten to contact the corresponding regulator.

Moving from critical reasons to more common reasons, one of the factors that urged more than one customer to change brokers is the average level of spreads that are charged. For example, there are still brokers charging a spread of 3 pips in the EUR / USD pair. While this was the norm a few years ago, today it is considered extremely expensive. Switching to a broker that offers the EUR / USD at 1.5 pips or less makes sense, since the spread becomes the "cost of doing business", and over time can generate a loss in operator income, especially if you trade frequently using short time frames.

Another good reason to switch brokers can be an unstable platform. If you find that the trading platform is disconnected very frequently or that it takes a long time to execute an operation, then this is a convincing proof of incompetence or dishonesty. Dishonesty is more likely if these disconnections or freezes happen every time you are trying to enter a trade where you would have made profits quickly. Of course, it is important not to be paranoid and not to blame your broker for all your losses. However, as the Forex market does not have a centralized place, brokers have a commercial incentive to "shadow" their spread just above levels where many of their customers have stop-losses set in open trades. determining whether your broker is acting shady is to see if these price movements do not match the price feedback of other brokers.

Watch two or three. If your broker tends to produce sudden and unexplained spikes in price, which are not followed by other brokers, it is time to think about moving away from it.
A good way to get a better understanding of whether a particular agent is the best for you is to think about what the brokers are actually doing, and see things from their point of view. In order to do this, it is helpful to start with some facts about Forex trading:

1. Most currency brokers are not really trading any currency in the market. They are simply providing a price indicator, in the movements of which their customers can bet in exchange for two effective quotas: the spread or commission, and a small charge during the night that incurs each night any position that is left open. These brokers are in antagonistic relationships with their customers: they make money when their customers lose and lose money when their customers win.

2. The remaining currency brokers tend to monitor the trades of customers who have profitable trading data, and cover the aggregate positions of these traders with a bank. These brokers have a less contradictory relationship with their customers, but they may still face problems in the proper way of covering themselves in rapidly evolving markets.

3. The real Forex market is dominated by four large banks which together account for about 85% of the market volume. These banks provide liquidity to the smaller banks, which in turn do the same with smaller banks, who then provide liquidity to the brokers, and so on in the chain in size and importance. This tends to mean that the smaller the broker, the worse the price and the spread that is willing to give, since they themselves will not be able to get premium prices. The dilemma here is that these smaller brokers tend to offer lower minimum deposits. The more money you have to deposit, the better the service that will be available to you. Of course, this does not mean that you have to go higher up the chain than the one that is appropriate for your account size. In general terms, it is a good idea to adapt the Forex broker to the size of your account.

4. Much of the Forex market has a bad reputation and is poorly regulated. When these facts are combined with the natural tendency of the human being to be tarnished by greed, it creates a profitable vacuum for unscrupulous brokerage houses that have no reputation to protect. This is not to say that small Forex brokers are fraudulent, but do not assume that your deposit is secure just because you opened an account with a broker. However, if that broker has a public reputation and is subject to regulations, you will surely be able to sleep peacefully.

There are other good specific reasons that may play a role in determining the choice a broker are as the availability of a specific pair that you want for trade, platform, quality of customer service and other "concrete" things. Now that we have covered all of the critical aspects to consider when choosing a broker, it is time to shift your focus on how you can conquer the forex markets - with hard work and patience, of course!

Forex Market: What is Forex?

Forex is the acronym for "Foreign Exchange" (FX) and refers neither more nor less than to the global currency trading in all markets. It is the largest financial market in the world and, because it is not centralized (that is, there is no central stock market such as, for example, stocks), it allows trading currencies through a global network of banks, brokers , financial institutions, companies and investors during the 24 hours of the day.

The Forex market, Forex or simply FX was born in the decade of the 70s in order to improve monetary flows derived from international trade, namely: facilitate the sale of national and international currencies at real prices. Currently, the volume of transactions exceeds USD 1.5 trillion, becoming the most liquid market with the largest number of operators.

Due to the ease of speculating with any currency and the high profitability that is offered, many governments have established control policies on foreign exchange transactions to avoid devaluation or excessive revaluation of one currency compared to others. Logically these phenomena affect directly to the internal and external economy of any country.

Although there are more than 182 currencies, the most traded currencies are the dollar, the euro, the pound sterling, the yen and the Swiss franc.

The Best Social Brokers

It is not a novelty that, for some years now, social networks have not stopped gaining ground. In this sense, more than one has wanted to join the success car and with more or less virtue has "copied" the style of social networks to transport it to any sector that boasts.

The brokers have not been waiting and, at least, the most affluent already have a live chat that offers a 24-hour customer service (no need to pick up the phone, go). However, others have gone further and have merged traditional online trading with the modus operandi of social networks, so what is this? No worries, below we present all the info on the social brokers and which, in our opinion, offer the best service and tools according to their price.

What is a social broker?

Let's get into the matter: we mean a social broker or social broker (Spanish term) as the operator that not only offers "traditional" online trading services, basically trading shares, commodities, cfds, forex, etc. . but also uses an interface derived directly from the modus operandi used in social networks, namely: live chat, possibility to post videos, photos, comments, send likes, follow x people, etc. The reality is that the invention has been quite well and we will see why.

Advantages of a social broker

• No custody or maintenance fees
• Well, with the roll that it is rather a social community, most have been polished the typical commissions of custody and maintenance.
• Network Community
• The possibilities offered by a social broker are practically the same as those of facebook; we can send videos, talk to other brokers, send likes and comments, create lists or groups of friends, share in social networks, etc.
• Copy to other traders
• This option is one of the most striking claims for most (not all) social brokers, which allow and facilitate the follow-up of other users' positions and copy them on the fly.
• All kinds of conventional tools
• Market analysis, live charts, economic calendar, indicators, updated news, etc.
• Trading Markets
• Spanish stock exchange and regulated international stock exchanges.
• Investment products
• Stocks, CFDs, Forex, commodities, binary options and obligations (rare).
• Trading Platforms
• These can be either the social support of the broker, or more conventional platforms such as Metatrader4. Almost all of them usually have a mobile App.
• Demo Accounts
• Many brokers offer demo accounts without any commitment to take a look at the matter.

Where do they get the benefit?

In principle this class of brokers only benefits from spreads. They also do not play with exchange tables, which is why they do not benefit from your losses. Now, we recommend to always read the fine print before hiring any service; in this case many brokers require a minimum deposit (usually between $ 100 and $ 300), which we would not want to lose for having saved us ten minutes.

What do I have to consider when investing in a social broker?

Well, come to this point it is worth remembering that you should always invest with head and expose ourselves to the risk of losing the investment. Therefore, we recommend to have some aspects in mind in case of being beginners:

• Consult or follow the experts
• Thanks to the social brokers this act has become a little easier. We can follow and analyze the positions of other traders more experts in the matter to learn from their movements.
• Diversify the portfolio of investments (not to lose all the parné of one).
• Be well informed of all the possibilities offered by a broker and not start investing for the most complicated products (such as cdfs, futures and family).
• Compare the best brokers on the market before choosing one.
• Try demos
• Before we start investing we can get a pretty good idea of ​​how the tool works.
• According to experts, long-term investments are more productive than short-term investments.
• Learn how the broker world works, its financial jargon, analysis, tools, etc. and always stay informed of the latest economic news
• Remember that even if the broker is free, you will always have to pay the redemption fee if you buy stocks: all on the stock exchange here.