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Why every US trader needs to trade offshore

  • #21
  • Jul 16, 2015 2:33pm Jul 16, 2015 2:33pm
Just wanted to provide an update. I am now trading exclusively with one offshore broker. I have used 7 total over the past 21 months. This particular broker has tighter spreads and lower commissions than all of them. Execution is flawless, no price spikes, frozen platform, no tricks of any kind. Withdrawals are 24 hours from request to my bank, even using e-wallet. So, once again, to all US traders, unless you enjoy higher spreads, higher commission, the broker trading against you, random price spikes and DEPOSITING 10X MORE TO EXECUTE THE SAME SIZE TRADE, you should really move your trading offshore.
  • #22
  • Jul 17, 2015 6:49am Jul 17, 2015 6:49am
Because forex trading is margin trading using leverage trading and is not allowed in US along with some other countries
  • #23
  • Jul 17, 2015 6:57am Jul 17, 2015 6:57am
I'm curious which one you ended up staying with. I have four accounts and really didn't care for two of them. Still going strong with two others and plan on staying with them. Everything you talked about is right on, the execution, spreads, margin, etc., all better than my U.S. broker accounts. Send me a PM if you don't want to post which one you stayed with. Best of luck to you.
  • #24
  • Edited 7:35am Jul 17, 2015 7:22am | Edited 7:35am
This is a good thread, but it only highlights the problems, which raises the correct questions, but doesn't provide any answers.

So to turn this good thread into a great thread, lets pose the questions and find the answers shall we?

The most obvious questions:

What are the other brokers are available for a US-based trader?
What other brokers offshore have been explored and tested by US-based traders?
How does a US-based trader go about using a broker that doesn't accept US citizens?

Look forward to any and all responses.

As for myself, there are only 4 options for a (real)* US trader. Not in any particular order:

Oanda
FXCM
CitiFX (bought out by FXCM)
Interactive Brokers

*denotes a trader that uses capital equal to or greater than $25,000. Do not turn this into an argument on whether or not a real trader is someone who uses $250 or $250,000. Fact is- if you're trading lower $ you most likely haven't arrived yet.

As for myself, I'm interested in offshore banking, but the hassles to and from, just don't cut it. Hassle being I must have an address in a foreign country which isnt a PO Box. Therefor; I'd have to rent a space I've never seen- and will most likely never will see, all to save a couple pips per trade. Not to mention when the tax man comes around, or finds out about the $150,000 I just made trading overseas whilst being a US citizen.

Most of these issues, are easily solved by being a smart US trader. Hedging and FIFO can be circumvented by intelligent traders. Larger account traders 10k + (3k in some cases) can have an ECN broker and avoid the spread issues. The only issue left then, is Taxes- which even as an offshore trader- you are subject to being that you live in the US and hold US citizenship. Sure you can hide it, but if and when you are found out- you'll be looking at a huge tax bill. There is a thread about that very issue here already in which a member is facing a 400k tax bill.

Unlike most other nations, the U.S. taxes citizens, green-card holders and residents on income earned anywhere in the world. (There is partial relief from double taxation.) It also imposes complex reporting requirements that come with severe potential penalties for those who fail to comply.
  • #25
  • Jul 17, 2015 8:14am Jul 17, 2015 8:14am
What are some available offshore brokers that a U.S. Trader can use?
  • #26
  • Jul 17, 2015 12:39pm Jul 17, 2015 12:39pm
Quoting Pharm0r
This is a good thread, but it only highlights the problems, which raises the correct questions, but doesn't provide any answers. So to turn this good thread into a great thread, lets pose the questions and find the answers shall we? The most obvious questions: What are the other brokers are available for a US-based trader? What other brokers offshore have been explored and tested by US-based traders? How does a US-based trader go about using a broker that doesn't accept US citizens? Look forward to any and all responses. As for myself, there are...
You pose some great questions. As far as what brokers are available, there are 13 left who will accept US clients, only 3 are worth trading with, as I stated above only one truly stands out above all. I do not want a commercial label, so I am more than happy to share via PM. As far as the options for US traders, they are a complete joke. With all the regulations imposed on traders, the brokers are allowed to do whatever they want..... random price spikes which do not exist elsewhere, freezing platforms, etc. How many times has FXCM been fined? Why are they allowed to continue? To top it off, the biggest issue is there is no protection of funds whatsoever. So my point is this, why deposit 10-15 times more with a broker to execute the same size trades when your funds are not protected?

Using your $25,000 "real trader" qualification.... let's say you are trading standard lots with that account. Why not keep the 25K in your own personal bank account and only transfer to the broker what is required to execute the trade. I only need $2,500 with my broker to accomplish the same thing $25K does with a US broker. The other $22,500 remains in my FDIC insured bank account, fully protected. I am still risking the same % of my forex funds per trade, just not leaving it exposed with the broker.

All of those over-funded FXCM accounts came within about an hour of losing their entire balances on SNB day. Offshore, it wasn't even an issue, but if it was, I would have only lost 10%.

AS far as hedging and FIFO, you are correct, anyone with half a brain can work around them. But why should we have to? Why can't I close my second trade first? Why does the rest of the world, except North Korea and Iraq, enjoy trading freedoms which we don't? To boot, most countries also provide protection of traders funds. In my opinion, there is simply no benefit to trading with a US broker.
  • #27
  • Jul 17, 2015 1:23pm Jul 17, 2015 1:23pm
Quoting jayjay050
What are some available offshore brokers that a U.S. Trader can use?
What off shore brokers can a US trader use legally? key word here is Legally?
What would you do if you knew you could not fail?
  • #28
  • Jul 17, 2015 1:31pm Jul 17, 2015 1:31pm
I agree with you 100%, so please don't take my counter points the wrong way. The entire trading market in the US is rigged against anyone that isn't a politician or an institution. To a point, that it's shady at best, and down right criminal in most cases.

I do understand your points on trading with much less needed capital, but my point is regardless- most traders use the entire amount of capital at their exposure. Whether US or Off shore, I'd be using 25k regardless....just it would go further off shore. the reason I denoted that as the amount, is that two of the brokers listed required a 10k balance or more. Regardless, 500/200:1 leverage is often the wrong answer for new traders.

I'd love for you to shoot me any pm's regarding available offshore brokers, and I'd be more than happy to deposit and give em a go

There's still the issue of taxes, and how to be accepted (whether it requires a new address etc). Any solutions to those are appreciated as well of course. Well, probably except taxes- as that would be illegal
  • #29
  • Jul 17, 2015 1:48pm Jul 17, 2015 1:48pm
Quoting The Sparrow
{quote} What off shore brokers can a US trader use legally? key word here is Legally?
There is no law preventing you from trading with an offshore broker. The US has simply reached it's powerful arm to places it doesn't belong and has strong armed most brokers in the world to not accept US clients.
  • #30
  • Jul 17, 2015 2:51pm Jul 17, 2015 2:51pm
Quoting The Sparrow
What off shore brokers can a US trader use legally? key word here is Legally?
//----

hey sparrow.... i just called nfa and they are going to have a specialist call and email me back about the legality.... from my best recollection nfa only 'highly suggests using a registered broker'.... and i believe that is a direct quote of theirs....

i can not recall ever seeing anything that says you or i could not use a non nfa broker..... there are some clear requirements for anyone, other than an ib, that accepts US clients..... but those requirements only hold the offshore brokers feet to the fire, not yours or mine.....

like i said, nfa is to call me back and i will post it here..... but i believe it is legal, just not nfa advisable....

personally, i'd never use an offshore broker.... the risk does not out weigh the reward in my mind.... i've watched twice now, one of these guys secretly pushing the 1000:1 offshore brokers blow live accounts.... and he does exactly like they say.... he puts in a small amount, blows it and keeps refunding the account over and over..... actually thought about commenting in his journal but did not because felt he might take it the wrong way.......

anyone that knows me, knows i respect everyones right to form their on beliefs.... even if it differs intensely from mine.... or nfa's.....

oh, btw, nfa might be monitoring this thread now........ ...... so yall keep it clean......

..... just kidding.....h
to trade and code, keep both simple... no call to impress....h
  • #31
  • Jul 17, 2015 3:15pm Jul 17, 2015 3:15pm
Quoting hayseed
{quote} //---- hey sparrow.... i just called nfa and they are going to have a specialist call and email me back about the legality.... from my best recollection nfa only 'highly suggests using a registered broker'.... and i believe that is a direct quote of theirs.... i can not recall ever seeing anything that says you or i could not use a non nfa broker..... there are some clear requirements for anyone, other than an ib, that accepts US clients..... but those requirements only hold the offshore brokers feet to the fire, not yours or mine..... like...
You are correct, there is no law preventing you from trading with whichever broker will accept you. You are very well respected and I have read many of your posts, but I just cannot understand the comment regarding the risk. The US brokers (not by their choice, it's all NFA) are not allowed to protect client funds. So my point will always be....why deposit 10-15 times more with a broker than necessary if funds aren't protected.

When you say deposit a small amount and blow it, I do the same thing, but it is only a small portion of my trading capital. I keep 80-90% of my trading capital in my FDIC -insured bank account, not with some US broker requiring me to put up $2,000 to trade a standard lot when I can do it for $200.

Not to mention, our largest broker is allowed to continue despite many times being caught and fined manipulating and stealing from clients. The others are market makers trading against you. The greater risk is here, not offshore, in my humble opinion.
  • #32
  • Jul 17, 2015 4:49pm Jul 17, 2015 4:49pm
Quoting Profit Daily
You are correct, there is no law preventing you from trading with whichever broker will accept you. You are very well respected and I have read many of your posts, but I just cannot understand the comment regarding the risk. The US brokers (not by their choice, it's all NFA) are not allowed to protect client funds.
//-----

hey profit daily.... nfa called me back 3 times.... per the specialist, 'they can not give legal advice ..... there is no law specifically saying we have to use a nfa member broker but they strongly advise against using a non-member broker'..... that is from nfa themselves and they left me a voice mail saying the same thing....

as for the risk part, that's just my assessment... nfa offers me a blanket of protection.... of course i would be negligent not to point out how thin that blanket has been lately when considering the brokers gone under the past few years.... and yes, nfa's rules cause me some discomfort..... and yes, my results were better before the fifo and no opposing trades restrictions.... and yes, i must maintain a larger balance than you on a per trade basis.... but i still seem to do pretty good....

there just seems to be an extra element of risk with offshore brokers.... even with all the pro's you have mentioned many times, that extra risk just does not seem worthwhile.... perhaps i'm wrong.....

traders way is one of those 1000:1 non-nfa offshore brokers.... those pro's did not help that guy the other day.... i silently watched every trade in his live explorer.....

bottom line, i wish everyone the best with whomever they choose....h
to trade and code, keep both simple... no call to impress....h
  • #33
  • Jul 17, 2015 5:02pm Jul 17, 2015 5:02pm
[quote=hayseed;8387948]{quote} //-----
Funny, I thought you just preferred to keep you money within rifle range
  • #34
  • Jul 17, 2015 5:19pm Jul 17, 2015 5:19pm
The counter argument, would be that someone that over leverages a 1000:1 account, would do the same with a 50:1 account.

Leverage is a very profitable tool, or a very evil tool.

Like guns- guns don't kill people, people do.

Leverage doesn't kill accounts, people kill accounts.

I simply could not imagine a 1000:1 leverage account, even with a to-the pip execution. 100:1 is suitable to me, 50:1 can be annoying at times if I have the perfect trade lined up....but the argument both for and agasint leverage...is that someone that doesn't understand and utilize leverage correctly will blow their account regardless. That being said, I believe proper utilization of leverage is a very advanced trading tactic...that all must learn...but it's more of the run stage as opposed to the crawl or walk stage.
  • #35
  • Jul 17, 2015 6:16pm Jul 17, 2015 6:16pm
Quoting Pharm0r
The counter argument, would be that someone that over leverages a 1000:1 account, would do the same with a 50:1 account. Leverage is a very profitable tool, or a very evil tool. Like guns- guns don't kill people, people do. Leverage doesn't kill accounts, people kill accounts. I simply could not imagine a 1000:1 leverage account, even with a to-the pip execution. 100:1 is suitable to me, 50:1 can be annoying at times if I have the perfect trade lined up....but the argument both for and agasint leverage...is that someone that doesn't understand and...
Couldn't agree more. The big advantage to a high leverage broker is when adding to winners. You can really compound a winner with all of the free margin your existing profits provide. Once again, can't be done with US broker.
  • #36
  • Jul 17, 2015 8:08pm Jul 17, 2015 8:08pm
So we all have to suffer because new traders and other traders do not know how to use leverage correctly?
I trade cme forex futures [along with emini sp futures] and am allowed 'day trading margins' which suits my style of trading. And I trade forex offshore AND I report and pay taxes on both [futures and forex]. And yes I pull money out at end of each week on both offshore and onshore accounts. Right before the last us futures broker commited fraud [this was by a well known firm that was well respected and even had their own trading platform].

So it is just smart to keep your money in a us FDIC insured bank account.

Once a broker [us or offshore] has your money and it is gone it will take a long time to get your money back [if ever]
All trends begin with the smallest time frame
  • #37
  • Edited 10:55pm Jul 17, 2015 10:43pm | Edited 10:55pm
http://nomadcapitalist.com/2014/11/0...rage-accounts/

http://www.greencompany.com/
"If The Fool persists in his Folly he will become wise." - William Blake
  • #38
  • Edited Jul 18, 2015 8:09am Jul 17, 2015 11:11pm | Edited Jul 18, 2015 8:09am
Quoting hayseed
nfa called me back 3 times.... per the specialist, 'they can not give legal advice ..... there is no law specifically saying we have to use a nfa member broker but they strongly advise against using a non-member broker'..... that is from nfa themselves
never has been about what the US govt limits YOU from doing, but what Dodd-Frank, FATCA etc have meant for how foreign financial institutions do business with US taxpayers.

If you want to get around all of that you can (try to) do so by forming a legal entity offshore that does not pay US taxes. Then your next can of worms will be: how easy will it be for my Panamanian Sociedad Anonima to open an account and trade with those choice brokerage houses in the UK? And of course, unless you renounce your citizenship altogether, you will still be on the hook for US taxes on any income you derive from the offshore entity. Guess who will be looking up your skirt when they find out you are forming an offshore corporation? And they will find out. Ways around all that, too, but pretty quick you see what a hassle it all is - like trying to put a rocket on your skateboard because you were afraid to ride the maglev train........
"If The Fool persists in his Folly he will become wise." - William Blake
  • #39
  • Jul 18, 2015 6:40am Jul 18, 2015 6:40am
Puerto Rico - Act 20 & 22....

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http://www.internationalman.com/arti...tax-incentives
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  • #40
  • Jul 19, 2015 5:52pm Jul 19, 2015 5:52pm
Quoting sobcza11
Puerto Rico - Act 20 & 22....
http://puertoricotaxincentives.com/a...investors-act/

The catch is you will have to live there a minimum of 1/2 the year and also give up any other taxable US base you may have. If the Puerto Ricans are desperate to leave, what makes you think it would be a nice place to live?

http://news.yahoo.com/puerto-ricans-...DVfMQRzZWMDc2M-
"If The Fool persists in his Folly he will become wise." - William Blake
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