Forex Trading & Terminologies: Its options and Platforms in Pakistan
Today we will talk about what is Forex Trading and its terminologies and what are the forex trading options and platforms in Pakistan?
So let’s start with what is forex trading and its terminologies?
Forex trading means the Foreign Exchange of the currencies between buyers and sellers, who handover currency between each other at a settled price. FX is the world’s leading method of exchange, trading every day, by which individuals, companies and central banks exchange one currency into another at fixed rates.
Forex trading is the marketplace where people trade for foreign currencies, share, commodities, bonds and stocks, in other words, they invest their money in order to get profit.
It is the place where companies get their funding from different investors. In simple words, investors and public invest their money in companies by buying their shares, in return, these companies will share their profit with them.
There are a number of purpose of foreign exchange, for instance, if you want to travel abroad you need to convert the currency and for that purpose, you are likely made a forex transaction.
On the other hand, the main purpose of forex trading is to buy the currency of any country at affordable rates and sell it when the rates are high. In this way, the people involved in forex trading getting handsome profit and that’s the reason a number of people fascinated to forex trading.
Although forex trading is a profitable business but it’s has increased risk factor as well.
No matter the advantages or losses continued by individual traders, forex brokers make money on commissions and fees, some of them hidden.
Understanding how forex brokers make money can support you in selecting the authentic and trustworthy FX broker.
Forex Trading in Pakistan and What You Must Have To Know Before Starting Forex Trading?
Forex trading is legal in Pakistan if you go for the rules and regulations of the SECP (State Bank of Pakistan) and deal with the legal currencies including US$, JPY, CNY, SAR, AED, etc.
For FX trading in Pakistan, you also need to give the proof of income/profit/loss at the time of income tax return filing.
The FX trading in Pakistan is known as the Pakistan Stock Exchange (PSX), founded in 2019 with the merger of Lahore, Karachi and Islamabad stock exchanges.
PSX is providing an efficient, trustworthy and reliable platform for its listed Pakistani securities, with the exchange listing equities, derivatives, exchange traded funds (ETFs) and fixed income goods related to Pakistan.
In order to start forex trading in Pakistan, one must have the knowledge about Finance, Financial Management and Accounting. You must be aware of the basics of financial management and its key concepts.
It is very much essential first to understand how financial markets and Forex trading works.
Where to start FX Trading in Pakistan?
If you have the apt skill and think you can to establish your services, business in this sector, in simple words you can jump into this market place with your potentials.
Pakistan is a potential marketplace for online forex trading and becomes very much famous among young traders. The trend of online forex trading is increasing day by day and that’s the reason that many forex brokers have now registered and started providing Forex trading facilities to Pakistanis.
Another reason for the popularity of the online forex trading in Pakistan is the success rate of Pakistani investors. Pakistani investors are making more profit from FX trading as compared to the other countries and also due to the increased rate of foreign currencies.
Online FX brokers usually provide a number of trading accounts for traders, including Forex trading, CDF trading, Demo accounts and Islamic accounts, etc.
You need to select as per your choice to start with….
In forex trading, you are allowed to exchange one currency from another. You can buy the currency when the rates are low and can sell it when the rates are on peak. However, the exchange rates fluctuate, you can either get handsome profit or face loss as well.
On the other hand, the CFD trading (contracts for difference) lets you make transactions in derivative financial instruments and can gamble on the future of their fundamental possessions including currency pair, commodity, stock, stock index or other financial instruments.
The Demo accounts let the customers go for virtual money trading. Such type of accounts can be used to practice trading, investigation policy or check out a broker’s facilities and platform.
The Islamic accounts allow the users to trade according to the sharia law.
The new entrants to the Pakistani FX market may face difficulties in understanding the terminology, options, platforms, so these are some of the hasty explanation to support you to understand forex trading.
Keep in mind that before selecting the online broker, forex trader or CDFs make its sure first they are listed and work under the SECP rules, have a strong reputation and reliable customers’ experience.
The currency rate (EUR/USD) keeps changing along with global financial news and political developments, so keep a check on the up and down of the currency rates on a daily basis.
The Forex traders must observe the events that shake currency valuation and Economic data issues from different central banks affecting the currency value.
One thing is clear, many of Pakistan Forex traders have multiplied their investments every month. Thus, Forex trading is certainly somewhat that cannot be discounted by serious traders.
Forex Trading options and Platforms in Pakistan
A forex trader or exchange broker takes orders to buy or sell currencies and executes them.
In return for executing buy or sell orders, the forex broker will charge a commission per trade or a spread. That is how forex brokers make their money.
All the forex traders and brokers in Pakistan work under the rules of regulatory body SECP (Securities and Exchange Commission of Pakistan) which allows the authorized brokers to provide a maximum 1:10 leverage for Forex trading. On the other hand, the Pakistani traders living in foreign countries are not subject to SECP rules and regulation.
List of best Forex brokers in Pakistan:
Here you can find a list of best forex brokers in Pakistan that are rendering their services to the Pakistani investors for earning the profit by investing in FX market.
IG – World Leader in Online Trading, Most Trusted
Swissquote – Best Banking Services
Saxo Bank – Best Web Platform
City Index – Financial Spread Betting, CFD & Forex Trading
Markets.com – Trade Stocks, Indices, Forex, Commodities & Crypto-currencies
LCG – Best Trading Platform
XM.Com – Forex and CDF Trader
FBS – Online Forex Broker
IQ Option – Investing & Trading in Stocks
e-Toro – World’s Leading Social Trading Platform
How to Verify Forex Broker’s SECP Authorization?
SECP does not offer a list of authorized forex traders in Pakistan; though, you can contact the SECP directly to verify authorization.
Bottom Line and Precautions:
Generally, though traders and businesses may find Pakistan a challenging country to operate, though a large number of Muslim traders may find Pakistan a comparatively good place to open Sharia law compliant accounts and trade Islamic financial products.
Forex Trading is always linked with the risk so when selecting the broker to invest into in FX market keep in mind that the forex broker is offering the wide range of facilities and services to investors, furthermore it has a strong reputation among clients and adequate financial security for a margin deposit.
In order to decrease the risks in FX trading, you must get yourself fully trained by learning the basics and terminologies of the forex market. If you first get the knowledge and understand the forex trading rules well it can give you the handsome profit of your investments.
It is possible to trade on margin by depositing a small amount as a margin requirement. This introduces a lot of risk in the foreign exchange market for both the trader and the broker.
Trading in the forex market will have to proceed cautiously because it’s not the one in which prices are transparent and each broker has his own quoting techniques.
It is up to you before transacting in this market to investigate their broker rating to confirm that they are getting a good deal.
In general, the brokers who are well-capitalized and work with a number of large foreign exchange merchants to get reasonable prices usually offer modest pricing.