Why there are less U.S clients in forex

The Forex market is the largest market in the world. Every day, millions of traders are trading in the market. Though this market is open to every trader around the world and people from different countries are training, it is very surprising that there are a very small number of US citizens in this market. Remember that the US does not ban its citizens from entering the Forex market. There are many reasons which contribute to the small number of U.S traders in this market. Compared to the number of Swiss traders, the active U.S traders are very low. Many often consider that the hard regulations are the only cause of a low number of traders. But nowadays the number of active traders in the United States is increasing at an exponential rate. Every single day people are opening trading accounts only to trade the live assets.

Is Forex trading permitted in the USA?

Forex trading is permitted in the USA. The residents of USA can easily trade the market like the other traders in this large market with a broker. Though Forex trading is permitted in the US, not many brokers offer their services. However, if you consider the elite class broker, then you will notice that they also offer service to U.S clients to trade the market. When you trade with the professional brokers, then you need to spend some high fees on trades and commission. However, compared to other brokers their offered service it is negligible.

Why do brokers not like to offer services?

There are many reasons which hold the brokers from coming into this market. Though US Dollar is one of the major currencies in the world of Forex, and the residents of U.S can hardly trade in this market. However, in the recent days, CFD trading is very popular among U.S clients. But compared to other country’s active traders the number is still low. Many professionals believe that within the next 10 years the U.S will also trade like other country’s traders, and the number will be very high. The main reason behind this rise is the economic crisis. People are looking for an alternative source of income and once you master the true art of trading, this is one the best profession in the whole world.

The first problem that brokers face when they try to start their services in the US is the license problem. As we know, the European market provides the best movement in the world. It is also because European countries have the easiest way of accepting brokers and providing their services. If you can get your license from one of the regulators in Europe, you can offer your services throughout all the European countries. But the USA does not have such an advantage to the brokers. They have to take their license from the National Futures Association which has its own rules.

Another reason not many major brokers can offer their services to the people of the States is that the NFA needs a very large amount to start trading Forex in the USA. You need to deposit 20 million dollars before you can start your services. In European countries, just 100 thousand to 500 thousand dollars can get your services running.

Profitability

The profitability of brokers is also less in the US market. While the brokers can provide 500:1 leverage in the European market, they can only provide 50:1 leverage in the U.S market. They can only make one tenth of the profit in the US when they are offering their services. It is one of the reasons major brokers who are offering their services worldwide do not offer in the US. However, trading with low leverage is always beneficial for the forex trader.