US Forex in simple words

Today we have an interesting topic under consideration — Forex. For many of us this is a topic in which we do not understand much. Objectively speaking, people’s opinions on this subject are divided. What is the real situation? We will try to answer this question in the current article. 

After the crisis in 2008 the American government seriously concerned with the issue of quality regulation of the financial market, putting forward very strict requirements. All these requirements were to fully secure the market and protect it from possible collapse and strong swings. In 2008, the global financial crisis really shook all the world’s strong economies and, naturally, the U.S. economy was no exception to this trend.

Affordability, Adjustability and Quality

Naturally, you should understand that all these restrictions have also directly affected Forex trading in the U.S., making operations in this market almost illegal. But, nevertheless, you should not get upset and understand everything backwards, thinking that Forex trading is not available within the US. In fact, this is not the case, and thousands of traders in the U.S. are trading on this platform. There are not many brokers in the U.S., but those few companies that work there provide really high quality services to job seekers. In general, there are certain peculiarities that you should pay attention to.

Regulation in the U.S. is very strict

In the U.S., the subject of Forex trading is mostly taboo. The main reason for this is to protect the country’s interests and aggressive foreign policy, which in turn leads to the creation of related financial restrictions that cannot but affect Forex trading in the USA. At times, many ideas may seem really delusional, which once again suggests that the implementation of certain laws related to the financial sector — are the actions of those directly concerned and lobbying for their goals.

For example, let’s look at the U.S. Futures Trading Commission. The task of this regulatory body is to supervise the activities of companies that provide services within the framework of futures trading. You should agree that these are very good goals, and the Commission itself is a very reputable body. But the question is to what extent the body manages to translate its goals into reality.

Recently there was a very loud and resonant story. The broker FXCM was permanently expelled from the national platform. This is a rather harsh punishment, so what did the broker do to get it. According to the U.S. Commission, the broker in question purposely misled its customers between 2009 and 2014 by saying there was no conflict of interest. More specifically, what they meant was that the broker was only an intermediary in the client’s transactions and was not lobbying for his interests. And he only receives his commission for his services.

But the commission has conducted an investigation and summed up that not all the deals of the clients were submitted by the broker to the public reporting. That is, the broker himself actively interfered in the work, overlapping the transactions of clients within his platform. And this is just a direct indication that the broker lobbied for his goals, because in this case, the clients’ losses would be an automatic profit for the broker himself. But, of course, that was at the discretion of the commission itself.

In practice, the broker simply did not submit all the reports to the public offer, and the commission itself has already recorded the broker in the section of fraudsters. So, no broker is protected from such absurd actions, even if he has a long history, a solid brand and a high turnover. And the represented broker was really big. As of December 2016, exactly one third of transactions within the Forex segment in the world, and not only in the USA, passed through it. By this action, the U.S. government shows its perverse and distrustful attitude towards the decentralized market, urging people to conduct transactions on more familiar and centralized exchanges.

In 2010, a law called the Dodd Frank Act was introduced. This law was one of the anti-crisis measures, which were designed to generally reduce risks within the financial sector. With the adoption of the new restrictions, many habitual transactions at the U.S. Forex market had simply become illegal. Along with it the big banks were forbidden to have hedge-funds as well as invest the clients’ money in the similar offices. Moreover, the market of precious metals was also dragged into the process. Thus, all transactions on this platform must be closed on a mandatory intraday basis.

As a result, the vast majority of brokerage firms, which were not registered in the United States, were forced to leave the region. Of course, this also affected the U.S. Forex segment, as the number of companies providing services in this area has sharply decreased. 

On the one hand, Forex trading in the United States is available, but it is available with certain serious restrictions. On the other hand, this kind of isolation and rigidity has forced dubious offices to leave the territory of the United States, and this is a positive factor for consumers. As you can already understand forex trading in the U.S. is covered with a halo of mystery. Forex trading in the United States has its own conceptual advantages and disadvantages. But here it is worth just realizing that in order to reduce the number of low-quality companies, it is sometimes necessary to impose severe restrictions.

Now, when you better understand the basics of the U.S. foreign exchange market, it makes sense to talk about the philosophy of trading. This information will help you take your first steps in the Forex market.

Trading philosophy

As we know, there are certain principles of trading on the market, which every trader develops on his own experience. There is a kind of philosophy of trading that a more or less experienced trader begins to understand on the market. When you come into the world of trading you get into an environment, which is not like any other. The rules that we are used to using in everyday life are not helpful to us in trading, in fact, they will just hinder us. Our fierce motivation when trying to make money in the market can become our enemy. There are people who start out in trading because they have already managed to make a certain career in other fields.

Maybe they got bored and want to find a new challenge in life and realize themselves in something else. This is normal, and many people have experienced this kind of life challenge. But more often such people become a part of the majority, and they trade in a completely non-systematic way. Initially, all trading decisions are made on the basis of emotions, it is a kind of emotional trading. The basic principles of trading themselves say that emotions have no place in trading. Most often, many people initially act on the wrong principle. When someone first enters the field of trading, he must ask himself one personal question: «Why do I trade?» If you can answer this question clearly and affirmatively, you will have already saved yourself time and money. 

In today’s world, we strive to satisfy our needs as much as possible. What do we do when we are offered something really tempting and interesting? Of course, we tend to accept it! But when in the real world we encounter some unpleasant phenomena, what do we do? We try to postpone it as much as possible, hoping that time will smooth over the rough edges. This is logical enough, but what will happen if we do the same in trading? More often than not, it will lead to the fact that you will fix your profits very quickly and fix your losses too late. The principles of trading say that we need to cut our losses and let our profits grow, but you will be doing exactly the opposite.

What is the essence of the trading philosophy?

There is a certain philosophy of trading. The first level of this pyramid is yourself. Obviously, if there’s no you as a trader, it’s impossible to form further steps. In fact, you yourself define all further structure of the pyramid, so you must build something that will suit you personally. Therefore, the general pyramid of every concrete trader can be a little bit different. It is very important to work concretely on what suits you personally.

Your opinion is a priority, and it doesn’t matter at all what anyone says about the market. Because your trading principles can be different from the principles of another person, you have to learn how to make trading decisions, manage them and be responsible for them in the long run. Your trades must work for you first, nothing else will work for you. The next level of our pyramid is aspiration. In fact, trading itself is very complex, and it’s one of the most difficult areas. In trading, as in any business, only those who show the strongest ambition succeed.

It is a very difficult way to be a trader, and it requires from you a great number of resources. Every beginner sees trading as some easy way to improve his financial situation, but this is wrong and will lead you to big losses in the end.