The biggest financial regulatory bodies in North America include IIROC in Canada, and the CFTC in the United States. These organizations are responsible for controlling financial markets and ensuring that both traders and brokers are in a safe trading environment. Generally, the market is not easy to enter, as it comes with high fees – For instance, IIROC requires brokers to have a minimum capital of $250,000 before entering the market. So if you are trading with a North American broker, you can at least hope that it follows regulations and is safe for your trading journey.
It will be no surprise to say that the most popular currency in the region is the United States dollar which is supported by the country’s strong economy. Almost all reputable Forex brokers that we know offer accounts/currency pairs in USD as the demand for it is quite high from traders.
The majority of places around the world have taxes on trading activities and this region is not an exception. Mostly, traders will be subject to Capital Gains Tax which varies from country to country. For instance, if you are trading in Canada, you might have to pay up to 50% of your Forex profits, while in the United States trading tax rate can be as high as 35%.
Currently, not a lot of places in North America have a cap on leverage – for instance, in Canada, there is nothing enforced by the regulators, while In the United States, the available leverage is limited to 50:1 so investors are not able to take unprecedented risks.
There are a variety of payment methods available for traders from North America. You can either make deposits/withdrawals with debit/credit cards, e-wallets, and cryptocurrencies as well. However, the most popular option for Americans remains PayPal due to the fact that it is a faster & more secure way to pay while trading online.
Finding a reliable Forex broker in North America might be associated with good research and knowledge of the market and not everyone is equipped with them. In order to save your time and money, we are providing you with our all-time favorite brokerage companies that are considered reliable and trustworthy, meaning that once you start trading, you can be sure that your money is in safe hands.
5$
CySEC, FCA, ASIC
30$, 50%+20%
30:1
2009
MT4, MT5, WebTrader
$100
CySEC, CBI, FSA, FFAJ, BVI FSC, FSCA, FSRA
1:400
2006
MT4, MT5, WebTrader, AvaTradeGO
USD 5,000
FINMA, FCA, ASIC, FSA, MAS, AFM
N/A
1:30
1992
SaxoTraderGo, SaxoTraderPro
$5
SVGFSA, FCA, DFSA, FSCA, FSA
From 30% to 100%
1:1000
2010
MT4, MT5
15
CySEC
30%
1:500
2015
MT4, WebTrader
$250
FSCA
1:200
2012
MT4, WebTrader
100$
FCA
N/A
30:1
2008
Custom
$10
Risk Warning: YOUR CAPITAL MIGHT BE AT RISK
N/A
1:1000
2013
Proprietary
10 USD
FCA, CySEC, FSA
N/A
1:Unlimited
2008
MT4, MT5, WebTerminal
$10
N/A
N/A
1:500
2019
MT4, custom
$10
1:500
MT4
250$
FCA, NFA
N/A
200:1
1999
MT4
$25
ASIC, CySEC, FSA, BVI
50%
1:400
2001
WebTrader, MT4, TradingView
100
FCA, CySEC, DIFC, CIMA
N/A
500:1
1977
MT4, MT5
$100 AUD
ASIC
N/A
500:1
2005
WebTrader, MT4, MT5, IRESS
AUD$200
ASIC, SCB, CMA, CySEC, FCA, BaFin and DFSA
N/A
1:400
2010
MT4, MT5, cTrader, TradingView
$50
N/A
N/A
1:500
2015
MT4
1 USD
ASIC, FCA
10 USD
1:500
2005
MT4, MT5, WebTrader
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Considering the fact that the region does not have a centralized regulatory system, there are a lot of agencies overseeing the market – Each of them has its own responsibilities and in each country, traders might come across different names of organizations regulating the market. For instance, there are 11 main regulatory bodies within Canada with IIROC (Investment Industry Regulatory Organization of Canada) being one of the most important ones.
The Forex market in North America is highly regulated and the rules can be quite strict. Entering the market is not easy as it is associated with high costs – unless brokers have the required amount of capital, they will not be able to get approval for market entry. While it may be bad for brokerage companies themselves, the clients can benefit from this situation, as there is a very low chance that an unreliable company will be able to get to you.
IIROC is an organization that does not only regulates Forex brokers but instead investment dealers along with debt/equity markets. One of the reasons why IIROC’s existence is beneficial is that it guarantees a large sum of compensation to investors in case a brokerage company goes bankrupt. CIPF (Canadian Investors Protect Fund) might compensate traders up to $1 million, which is a great advantage for large traders that are making significant investments in the Forex markets. Even the UK’s most reputable regulatory body – FCA compensates clients for around $50000, meaning that it makes it hugely attractive for traders in Canada to trust brokers to keep their promises to their customers.
T
he Commodity Futures Transactions Commission (CFTC) is the federal organization in charge of monitoring commodities markets, including foreign currency trading. The role of CFTC is very important in the Forex industry as together with states, it works against fraudulent companies that aim to scam customers and steal money from them. For instance, in 2005 together with Corporations of the state of California, CFTC sued National Investment Consultants, Inc. as it was engaged in a Forex scam that involved more than $2 million of customers’ funds. After a year, the Court ordered fines of $3.4 million in total. This was a good warning for other brokers and the existence of CFTC actually contributes a lot to the Forex industry in the US.
Trade with a trustworthy broker – XM
When it comes to Forex tax rates, one might say that it is not the best place, as you might have to share a significant amount of your profits with the government. Additionally, filing taxes can be a little confusing, especially when you are a newcomer to the industry. Let’s take a closer look at how clients from North America are being charged.
Anyone willing to trade in Canada is subject to Capital Gains Tax which can go up to 50% of your marginal rate. In order to calculate how much you have to pay, you should use the following formula:
Capital Gain x 50% x 43% (marginal tax rate) = Capital Gains Tax. It is important to note that the marginal rate may vary and differ under various circumstances.
Traders are free from tax for the first $200 in gains and losses, so if you don’t intend to trade for a long period of time and make profits, you might not have to worry about taxes.
In the United States, traders have to follow the 60/40 Capital Gains tax code. What this means is that 60% of capital gains are taxed at a 15% rate, while the remaining 40% is taxed at your income tax bracket which can go up to 35%. Customers that use trading tools for a long period of time and make profits from them, should report Forex trading profits. Even if traders have losses during a year, they still should file it to the proper authority.
More than half of the trades in the Forex market involve the United States dollar, meaning that it is a heavily traded currency, and demand for it is quite high. The main reason behind this fact is that the US holds global confidence as the country is always able to pay its obligations – because of this U.S dollar remains the strongest currency not only in the Forex market but in other industries around the world.
The Canadian dollar is another strong currency of the region that is supported by the Bank of Canada. The majority of reliable brokers that we know have accounts/currency pairs in both – USD and CAD. Having a strong economy is one of the main reasons why most investors choose these currency pairs. Other than that, countries in North America go extra mile for the safety of customers which is extremely beneficial for clients that plan to invest a significant amount of money in the Forex trading market.
At the moment of writing this review, the available leverage is limited only in the US, where clients are restricted from using leverage more than 50:1. Other than that, the region is pretty liberal and customers have the possibility to choose whichever ratio they prefer.
However, this does not mean that you should not be careful. Beginners and less experienced traders are advised to stay within the limits. The industry’s standard is somewhere between 200:1 and 300:1, meaning that going above that might involve some risks of losing a significant amount of money. That’s why the majority of reputable financial regulatory bodies choose to impose restrictions so customers don’t have the ability to play with their luck. While it is true that leverage can bring huge profits to your trading account, it can also play an important role in losing all your funds.
The Forex market in North America is quite big, that’s why the customers have the ability to choose from a variety of payment methods. The majority of FX brokers offer Visa, Mastercard, Skrill, and Neteller. However, the most used and favorite option remains PayPal, as it offers a comfortable way of paying and the fastest speed transactions. Compared to other systems, the maximum waiting time can go up to 1 working day, while for debit/credit cards, and wire transfer methods it can vary between 5-10 working days.
Other than transaction speeds, all payment methods that you will come across have their own specifications and requirements. Some of them may come with commission fees as well, and the information about them will most likely be included on the specific brokers’ webpage. That’s why it is a good idea for you to check terms and conditions before choosing your favorite payment method, so your trading journey is comfortable and enjoyable.
One of the essentials when choosing a good North America Forex broker is being able to identify the company with a decent license and regulations. Without it, you will always have to worry whether your financial assets are in safe hands or not. Trading itself involves some risks but trading with a broker that you are not able to trust makes it even riskier. Trustworthiness is the key as if something inconvenient happens (e.g. your money is stolen, the company goes bankrupt), you have the guarantee that there will be a financial regulatory body that will take all the necessary actions to protect you as a customer. Generally, most North American Forex brokers have license information included on their main website – if you can’t find it, it might already be a red flag.
It is important to mention that not all brokers offer their services in the US as a heavily regulated environment requires them to deposit a significant amount of money. Other than that, limited leverage makes it harder for companies to increase their profitability.
Another thing that defines the quality of a specific broker is its customer service. If you are a beginner and not very familiar with the trading process, you might have some questions or issues when dealing with a specific platform. When this happens, you should be able to contact a member of the support team who resolves your issues and provides you with high-quality service. Other than that, you are trusting the website with sensitive personal information and you need a guarantee that the company itself is responsible enough to properly take care of it.
It might also be a good idea to go for North American brokers that have high-quality trading platforms such as MetaTrader 4 or MetaTrader 5. Both of these tools are widely known among traders due to the simple fact that they provide a user-friendly experience and technical analysis options that can help you make better trading decisions.
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