In the last two-years, the foreign exchange market has experienced a great deal of activity. The forex market has seen many new brokers come out, and all are returning. Forex trading has been affected by some significant changes. What is the new way to choose a broker for a Forex account?

Regulation

All countries have massive controls on the money they allow to leave their country. Dodd-Frank came into being in the USA, back in October of 2010. The CFTC issued a new act which imposes strict restrictions to foreign brokers that open US citizen accounts. Forex brokers cannot open US accounts if they have not registered themselves with CFTC. Since the capital requirement to open a Forex is at least twenty million dollars, it is difficult. Japan, the second country to do so, prohibited brokers from opening Japanese trading accounts. Along with this, the regulators placed restrictions on leverage. Thus in Japan and USA it is limited to 25:1. The only way to get into the market is if you are a really big player.

India also decided that it would regulate its Forex markets, but took even harsher measures. It imposed restrictions on banks by not allowing outbound transfers to be made if they were being used for Forex trading. That’s a real pain! Turkey closed its markets recently as well.

Forex brokers

Until a couple of years ago, 2 new forex brokers would be registered every day. Whether or no they were regulated, it was enough to get the MT4 and a couple of sales staff. What we are seeing is the complete opposite. For more stability, there are now many mergers between brokers. ODL, one of the largest brokers in the world, merged into FXCM. If a year earlier we were seeing a growth in forex brokers, the trend now is downward.

Automated trading

Only two years prior, this was a booming business. Some brokers began to provide free virtual private servers so traders can host the trading systems they use. There were automated trading programs like Zulutrade Tradency Currensee. Once again we are seeing a trend of decline. It was clear to most people that there would never be a robot who won.

What else do you want to know?

In general, it is also true that forex trading will be more difficult in the future.