Hi, I am currently a college student in the US and looking for a broker that can offer me a good leverage. Unfortunately, brokers that accept US client allow only 50:1 maximum leverage. My question is, can I say I am from Malaysia which is where I was born and still trade at my school in the US?
Or is there any broker recommendation?
Thanks!
First of all if you are new to forex you do not want more leverage than 50:1 and most likely you will not even be using that much unless you plan to scalp at below 5min timeframes or have several trades on at once.
Personally I would recommend IB or FXCM depending on how much money you have to invest.
Let’s review the legal requirements, and how you might go about getting around them. Then, let’s talk about what makes sense for a beginning forex trader.
[B]First, the legal situation.[/B]
The Commodity Futures Trading Commission (CFTC) stipulates that U.S. brokers may not offer more than 50:1 leverage to their clients, regardless of the citizenship or the country of residence of those clients. In other words, if doesn’t matter whether you are a U.S. citizen, a Malaysian citizen, a U.S. resident, or a Malaysian resident — if you become a client of a U.S. forex broker, you will be subject to the CFTC’s regulations, including the 50:1 leverage limit.
Furthermore, the CFTC stipulates that U.S. residents (regardless of citizenship) may not become clients of the offshore branches of U.S. brokers. So, as a U.S. resident, you can open a trading account with FXCM in New York and get 50:1 leverage; but, you can’t open an account with FXCM in London and get 100:1.
Finally, the CFTC (and the SEC, and other U.S. financial regulators) have entered into agreements, called [I]Memoranda of Understanding[/I], with the regulatory authorities in many other countries, to require that those countries impose the same restrictions on U.S. residents that the CFTC imposes on them here. In other words, if you attempt to open a trading account with a U.K. forex broker (which is not a branch or subsidiary of a U.S. broker), you will be told that the U.K. broker does not accept U.S. residents. This is because the U.K. has agreed (through [I]Memoranda of Understanding[/I] with the U.S.) to enforce U.S. regulations in regards to U.S. residents.
It’s probably apparent to you at this point that the CFTC is trying to establish total control over U.S. forex brokers, and over U.S. residents who trade forex anywhere in the world. But, their control is not yet total. There are ways around their attempts to become the World Forex Police.
There are several reputable brokers outside the U.S. who will do business with U.S. residents. Generally, these brokers are located in jurisdictions which either (1) have not signed [I]Memoranda of Understanding[/I] with the CFTC, or (2) do not classify forex as a regulated financial instrument. For more than 4 years, a number of us have been looking for, and vetting, these offshore brokers, and our work can be found in this thread — 301 Moved Permanently
As a Malaysian citizen in the U.S. (presumably on a student visa), you could open a trading account with any of the offshore brokers we have identified as welcoming U.S. clients. But, the question is, should you do that?
[B]What makes sense for you, at this stage of your trading career?[/B]
If you are a beginner, your first task will be to teach yourself to trade profitably and consistently. That will require a tremendous amount of study and practice. It will not require a tremendous amount of leverage.
I agree with rindoan’s broker recommendations, in the previous post. If you have what it takes to be a successful forex trader, you can succeed with either of the brokers he recommended.
After you have gained some real-life market experience with your U.S. broker, you will be in a much better position to evaluate offshore brokers, if you still want to pursue higher leverage.
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Thank you very much rindoan and clint for your explanation.
Comparing FXCM and oanda, any of you had any experience with these 2?
FXCM yes, Oanda no.
My experience with FXCM has been totally positive. — I strongly recommend them.
In looking for a reliable broker i think location should not be an issue .One should focus on the reliability and reputation of a broker. And also there are brokers who are good and accept client or traders from different countries.
You are right that’s why I trade with profiforex though not from the country where I live but due to their good service and reliability they have always been my choice of broker.