Are forex expert advisors illegal in the US?

Beginner Questions
1

I heard about a new forex mlm company that has forex expert advisor as its only product. Just need to know if I should stay away.

2

As I see, Forex is costly in the US. So many restrictions.

3

It seems like forex advisor may be regulated according to the Investment Advisors Act 1940.
You can also look through new regulation relating to robo advising.

4

This is the first time I am hearing about this. I knew hedging was banned, but EAs?

5

Hi @J_C_Anderson, while the terminology may sound similar, the act you mentioned does not apply to Expert Advisors, which are automated programs traders run on their own MetaTrader platforms. In fact, many traders code their own strategies in a programming language called MQL designed to execute on MetaTrader.

Hi @shasha986, the MLM structure might be cause for concern: Multi-level marketing - Wikipedia

See our earlier posts on factors to consider when choosing a forex broker. Similar principles apply when choosing any forex service provider or service provider in general: How to choose good broker

"See then that ye walk circumspectly, not as fools, but as wise, Redeeming the time, because the days are evil." - Ephesians 5:15-16

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6

Hi @Luke_Ronchi, it can be more costly to go with an unrestricted (unregulated) broker: I think I'm being scammed by my broker.

The regulations for trading forex in the US and in other major financial centers are designed to make sure business is conducted fairly. Key advantages of trading with a well-regulated broker are:

  • minimum financial and trading standards they must meet,
  • ongoing monitoring by the regulators to ensure compliance,
  • a framework for handling complaints from customers, and the
  • power to enforce actions against regulated brokers for violations.

For example, the CFTC and NFA set the requirements a broker must meet in order to offer forex trading to US residents. Though not an exhaustive list, this membership application will give you an idea of some of those requirements: Compliance Requirements for Retail Foreign Exchange Dealer (RFED) Applicants | NFA

  • In the US, forex is regulated by the CFTC and NFA, and brokers are required to maintain net capital of $20 million.
  • In the UK, forex trading is regulated by the FCA and funds are protected for up to £50,000 per client by the FSCS.
  • In Canada, forex trading is regulated by IIROC and funds are protected for up to $1 million per client by the CIPF.
7

Yes, I know all of these points; but thanks for your efforts.

1 Like
8

No, I do not think so as it is legal to provide advisory service. Yes, some people misuse it by cheating the innocent community. It does not mean that the service is illegal. Scams are present where money is present. It si the bitter truth of the forex market and many other markets as well.