There has been a lot of talk about how to open an offshore forex account if you are a US citizen so I though I would start a post and let everyone share their ideas. If you have a way for US citizens to open an offshore forex account share it in the comments section.
I have been told that Citi bank offers an account where you can hedge and get aroung the FIFO rule. I have contacted them but did not get a specific answer on that. I am told because they are a bank they do not fall under the new rules. I assume that is why someone is asking about them to get around these rules. I have been told it is just as easy to setup 2 accounts to accomplish the same thing I set up 2 paractice accounts and it worked but haven’t tested with real money.
Move out of the country.
Scott, good idea…
I have a freind that just got a mail box out of the US and then applied for a credit card account using the PO box. The broker accepted the Credit Card Statement as proof of address. When he got the Credit Card he didnt tell them it was a PO box he just called it a suite. So instead of PO Box 586 he said 4678 road blvde Suite 586 etc, Seamed like an affective way to get around it.
I’m going to confess to being lazy here, because I know this information is available on the web if I were to take the time to google it, but can someone clarify for me exactly what the law is. This is my understanding as it applied to US Residents (or is it US Citizens?)
1) If you’re broker has a US Branch, you are required to open the account at the US branch.
2) US brokers (including US Branches of foreign brokers) are restricted to offering 50:1 leverage and FIFO accounting (no hedging).
If you’re selected broker does NOT have a US branch (e.g., FinFX as was mentioned above, for one), is it legal for a US Resident to open an account with them? If so, are there foreign brokers who simply don’t want to deal with US Residents? And do the laws (technically) apply to US citizens living abroad?
Thanks for indulging me.
Richard, I think the FIFO rule is just one part of why people want more options. Leverage is another big issue that all of us in the US are limited on. But thanks for your feedback.
@ James. That seems like a great idea. Has anyone else had success using that method.
There was a forum I had visited where a member had mentioned locating one of those virtual offices overseas where they answer the phone in your name, receive mail in your name and forward to you. I forgot the country and the details. I know he mentioned he had to form an LLC over there. I think he had opened a HSBC account in England so he could transfer his funds between his U.S. account an England.
Barry — if we are news trading with STPro which execution is preferred — instant or market ( not really sure what the differecne really is). I just received a note from Forex.com / Gain Capital that they are moving as of 8/5 from instant execution to market execution and lowering the spreads on key pairs.
On the last GDP quarterly trade I was slipped 48 PIPs — still pulled off 10 pips profit but lost the lion’s share of the trade on that one. I have tested Alpari US and FIN FX but with not so good results. Thanks for your thougths on this one.
Bob, This is a good point and one worth discussing. The issue here is not how many pips the broker slips you but what percentage of the spike is still left after the slippage as profit. I got filled at 1.6370 on the GBP trade the other day. About 35 or 40 pips of slippage, but still made $300 on that station. I’ll take that all day. If your broker leaves you a bunch of pips at the end of the spike, you can make good money. You may want other accounts, but that one is money in the bank almost every time. Nothing wrong with that. Trade carefully until you are confident there will be pips left at the end of each spike.
The worst is when they fill you at the very worst pip at the top of the spike. Bail immediately from these.
@ Nick
How have your fill orders been on STP or OT? Slippage/requote issues? Been on FinFX…low spreads but news trading slippage is really bad. Thanks!
Guys,
It is wise to do your homework first: search for “NFA ,Broker Name> Complaints” if considering a US based Broker.
Search for “Broker Name> Complaints” also.
Be wary in light of what you find out!
Find out what and where you options are: http://www.100forexbrokers.com/
Before setting up an account, phone the Broker and ask some or all of these questions.
How do you derive your commission? Is it purely through the fixed commission per pro-rated lot, through small adjustments to the spread in the Liquidity Pool, or by commissions on trades?
How deep is your Liquidity Pool, and does it contain many of the largest multi-national Banks? If so, how many?
Do you have a Dealing Desk? Your Orders can be delayed purposefully by either the need for manual intervention, or via the MetaTrader Virtual Dealer Plugin.
Who is your Liquidity provider? If they have a Liquidity provider, they are not true ECN!
What mechanism is in place for Order execution? For example, the MetaTrader to Currenex API Bridge.
What kind of infrastructure do you have in place, and how often is this replaced to keep abreast of technological advances?
There are times when I need execution in milliseconds rather than seconds at times of high Market volatility.
Appreciating that the Market provides the availability to satisfying my Order requests, can you give me execution in a worst case scenario of less than a tenth of a second?
Do any special account conditions or restrictions apply, such as deposit size, trade volume, region, or Lot size?
Do all Clients get the same spread, or are there special discounts of any kind?
Are there any preferential treatments of Clients in terms of Order execution?
Does anyone other than the Brokerage itself get paid as a result of my trading?
Will any intermediary be on the other side of my trade other than the Liquidity Pool/Physical Market itself?
Will my trades get executed and closed at the requested quoted prices to within a few PIPs os so?
Are there any restrictions to Market entry around times of Market volatility?
Can I raise Orders that will be immediately executed at any time?
Do I have the ability to have entry Orders automatically cancelled if the spread is above a predetermined threshold value that I set?
Does the Brokerage use the MetaTrader4 Virtual Dealer Plugin?
Will my Entry and Exit prices be strictly honored?
Do I have open, uncensored access to information, such as logs, bid/offer prices, and spreads which I can download for analysis?
Do you offer VPS for your Clients?
Other things to check before setting up an account:
Check to see if the Broker doesn’t even have their own infrastructure using these tools: http://network-tools.com/
Things to be aware of, a Demo account will NOT behave as a Live account will!
The Price movements in your MT4 charts are the BID PRICE ONLY! To see the Offer Price, you need to bring up the Tic chart for the currency pair concerned.
There are tools available on the Internet, some free, some not, to give you visibility of Order execution delays, slippage, unusual increases in Spread and other things.
Remember above all, that OracleTrader and StraddleTraderPro logs will give you log data down to the millisecond, your MT4 logs are only accurate to one second intervals.
All of the data you see is coming from your Broker, NOT the Market itself.
I have no specific recommendations for Broker, but I have found that UK Brokers do not want US Clients, but Australian Brokers do.
Check to see who regulates your Broker, but be aware that they might just be affiliated with their nation’s regulatory body. Again, do your homework first, and/or post questions in this forum.
Great trading… David Long.
David, excellent post. Thanks.
On this blog is ” 1 pip” taken to be the equivalent of “Point” in MQ4 or is it always the pip that used to be before brokers started offering 5-digit prices?
I think all should bear in mind the OECD arrangements for exchange of information between Governments. Usually when presenting ID you would have to provide a copy of your Passport or Drivers License. If you proved you were a resident of the UK you would have to complete a Tax return in the UK, as the FX company would provide the Inland Revenue with details of your account.
My advise is if you are making substantial profits, then Cough up your countries Taxes. After all you want to sleep at night, Don’t you?
David, thanks for the great post and excuse my ignorance but how do you access the OT and STP logs?
Just read Nick’s post above. I have just closed a live account with FinFX. This is a Broker who does NOT have their own infrastructure, and uses Integral (in New York) as a liquidity provider (so, obviously, latency can be a factor).
I will leave this to your own judgement…
I used the Straddle on my first trade (and indeed all of my initial trades) on 31st May. Risked 2% (if you can really call it a risk with Barry’s tools) and had a 7.6% reward. Had a 1.8 PIP slippage on the trade ~ not too bad.
Great, I thought. There’s no reason why this shouldn’t continue. Then began a string of trades which were slam dunks that somehow I was a loser on. Slippage increased to roughly 9 PIPs up to a whopping 40 PIPs.
Suspicious of this, but still ahead because of money and risk management, I through a couple of 0.1 Lot trades in to test a few hypothesis. One was a hedged trade, as this is allowed outside of the US, one Order ran for a 30+ PIP gain, the Other Order failed to cancel and ran for a 40+ PIP loss, despite using the Straddles stop-to-zero feature, and despite using TradeManager to manage trailing stops and exits. Net result lost 10 bucks or so ~ didn’t have to reach for the handkerchief.
Stopped trading whilst I went into research mode. Ran the Strategy Tester tool in MT4 to show Bid Price changes for a number of trades, recording the data. Also, found a link on their Liquidity Provider’s web site to download real Market data (aggregated from the perspective of the Liquidity Provider). Downloaded the relevant data for each time period, and logged all price changes in M/S Excel.
Bearing in mind that MT4 cannot log all of the price changes occurring in the Market, in more than one instance, there were 60+ opportunities to fill (and presumably close) my Orders at better prices than those passed onto me. I suggested that they were using the MetaTrader Virtual Dealer Plugin, but this (maybe legitimately) was refuted.
So entered a long dialog of discussion in which I presented my findings a bit at a time, the end result being that I would not be compensated for my losses, never mind the fact that I would have made at least 10 grand if my trades had been filled somewhere close to my requested prices, and that I had stopped trading so missing multiple trades that moved 70+ PIPs. Check Barry’s performance figures for the last three months, or go to ForexPeaceArmy (who record the current and previous six month largest movements per trade ~ from their own data suppliers perspective).
FinFX are associated with the Finnish Financial Supervisory Authority, but when you look at the Fin-FSA web site, you find out that Forex is NOT policed by that authority. So, be very careful if a Broker claims to be regulated by their Country’s supervisory body ~ do your research before you phone the Broker. The Internet is a great place to find things out (even if it’s in hindsight)!!! However, maybe my experiences can help one of you guys not go with the wrong Broker.
As News Traders, we have to have quick fills as close as possible to our requested prices. If using the Straddle, you have to accept that you are probably at least going to have to blow off the first 5-10 PIPs of a spike, so look for trades that have a consistent performance of 30-40 PIPs (or more) as prospective trades. Anything less than that, in my view, is a risk not worth trading. There are plenty of trades every month (and quarterly) which have this kind of profit potential, so why bother with the other potentially losing trades.
I am now with a US Broker despite the reduced leverage, but this doesn’t matter to me because I will only risk 2% on any given trade. This is not foolproof though, the US’s largest Broker Gain Capital was fined $475k and Ikon Global Markets were fined $320k earlier in the year for ripping off their Customers using the MetaTrader Virtual Dealer Plugin, and of course, these Brokers are regulated by the National Futures Accociation (which is arguably the best supervisory policing authority in the World).
My personal view is that you’re safer going with a US Broker (or perhaps an Australian Broker, although I don’t know what jurisdiction they hold over their Forex Brokers). If you need to lodge a complaint, you will at least be in the same country.
It is wise to regard this as a slow get-rich-quick possibility, so that 50-to-1 leverage becomes OK to you (as we’re supposed to use US Brokers when we’re US Citizens), and to very mindful of your risk and money management.
Sorry about another lengthy posting, but I hope that both have been useful.
Good luck with your trades!
I corresponded with with Alpari UK and found out:
1. As a US citizen living in the US, they would not accept me as a client,
2. As a US citizen living in another country,, they would accept me as a client, even if I use my US passport as identification.
A newby question: What is the least expensive way to fund an account, both for small amounts ($250-$400) for testing, and for larger amounts ($5000) for trading. Is there usually a cost for using a Visa credit or debit card?
Stephen, I don’t think there is a cost to use a credit card. Wiring usually costs between $25 and $45 depending on where the wire is going.
I want to keep my money in Swiss Francs. Will brokers generally accept Swiss Francs to fund an account? What is the typical cost of converting the currency to USD, the currency most brokers use as an account currency?
Stephen, someone else will need to answer this. I don’t know. I guess it is the conversion rate at the time.
some of us U.S. traders understand who REALLY gets our tax money. Federal reserve is a privately owned cartel who is taking our monies for there own personal use.They already get money they shouldnt so some of us want to use a broker that does not report. Did use a U.K. broker and the fills were about the same as my U.S…….
How can I access the OracleTrader and StraddleTraderPro logs that David Long mentioned? Nick’s post that David Long referred to does not seem to be visible.
Stephen, the STP logs are in the /Experts tab. If you shut down the MT4 station, the /Experts tab is deleted by MT4 so make sure you remove the EA but do not shut down your MT4 until you have no more questions about a particular trade. The OT has no such log file.
Allen,
I have Windows XP, so the directory path may well be different in Vista and Windows 7, the OT and STP logs are hidden away in the following directory path on my computer: C:Documents and SettingsAdministratorLocal SettingsTemp
Hope this helps!
Mary raises an interesting point. If you search YouTube for “Zeitgeist The Movie Federal Reserve” you will enjoy the documentary that establishes that there isn’t even a statute requiring us to pay taxes! Just as well the mass of the population don’t know that… There’d be another revolution!
check here for the logs C:Program FilesYour MT4 Folderexpertslogs
or
C:Program Files (x86)Your MT4 Folderexpertslogs on a 64-bit machine
Here is another non usa fx broker who readily accepts usa residents…… http://www.worldprofx.com/ – ECN – 400:1 leverage – remember, with 400:1 you never really have to keep too much with these firms to trade the news.
Hey David long, how is Gain Capital working for you on fills? do they report your earnings? having trouble with slippage, now with Forex.com….. thanks, Mary
Does anyone actually get fills at ECN/STP style brokers with StraddleTrader? Theoretically, there would be no liquidity to fill the trades, correct?
Hello, it would help if Worlprofx.com would accept debit/credit cards, wire fees two ways gets expensive. I think there working on it………best fills so far!!!!!!!!!!!!
Dustin, WindsorBrokers.biz accepts USA residents and forex-metal.com accepts USA residents. One of the best is still worldprofx.com, however for News, Scalping, Instant Execution, ECN, MAM, managed accounts and Android, iPhone mobile trading, USA watts number, etc. I named several others in previous posts
hi dustin,
dont have to post this in your blog, u can just email me, coz i just wanted to ask because i have been getting emails from your name with it from tradersdaily.com about the product endorsed by wealthinsider alliance regarding bank flow, just wanted to know if you are in anyway related to this or their just using or duplicating your name, and if you are indeed promoting this one, do you use their services and does it really work or if u dont have anything to do with this company then i wont bother to check out their services and i’m just letting you know regarding this
thanks
Mario, it is a reciprocation Email. They Emailed for Dustin so he Emailed for them. But the logic seems sound to Dustin.
Hi guys. am a Kenyan, and in my country, only p.o. box addresses are in use.how do i open a forex account?
Eric, well this is an odd situation. My understating is that the only reason you need a real address is if you are planning to wire money. If you fund by check, I’m not sure why they would care, though they might. Did you try try open an account?