I understand that more exotic forex currencies are riskier and have less volume; nevertheless, I am interested in experimenting with them.

However, to my surprise, I have been unable to find a broker available to US clients for this. Oanda has some, but I am referring to ECN rather than Market Makers. The only other one I have found is SaxoBank, but I don't believe that they take US clients.

This leads me to wonder, is it possible for small retail traders in the USA to trade exotic currencies, or does the market merely not exist? If it doesn't, why is this? Is there not a good deal of potential opportunity (although with more risk)?

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  • Can you give some examples of "exotic" currencies? Many currencies have no market because they are pegged to the value of a larger currency. – dg99 Dec 31 '15 at 19:48

The vast majority of retail Forex brokers are market makers, rather than ECNs. With that said, the one that fits your description mostly closely is Interactive Brokers, is US-based, and well-respected. They have a good amount of exoitcs available.

Many ECNs don't carry these because of the mere fact that they make money on transactions, versus market makers who make money on transactions and even more on your losses. So, if the business model is to make money only on transactions, and they are as rarely traded as exotics are, there's no money to be made.

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  • This answer mixes up some terms. Saying that most brokers are not ECNs is like saying most soccer goalies are not soccer stadiums. The OP is looking for a market, and you have suggested a broker. It may be the case that IB can help the OP find and access appropriate markets, but by itself "use IB" is not an answer to the question. Perhaps elaborate on the markets to which IB provides access? – dg99 Dec 31 '15 at 20:00

You are in a difficult situation because of US regulation, that is much more demanding to fulfill than in EU or rest of the world.

Second, Interactive Brokers stopped serving FX for US clients.

Third, EU brokers - like Saxo Bank - don't accept US clients:

Almost any private client can open an account with Saxo Bank, although there are few exceptions. You can’t open an account if you are US, Iranian or North Korean resident - Brokerchooser: Saxo Bank Review

Working for Brokerchooser, I would say you are limited to Oanda or Gain Capital. The latter is an ECN broker, and operates through other white label partners, you could try Forex.com also.

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