Should you day trade Forex in Philippines?

Discover how to profitably day trade Forex in Philippines

With the living expenses rising recently in the Philippines it may be a tempting idea to start Forex trading and make an extra income besides your salary. But depending on your free time it may be challenging to achieve profitability when trading from the Philippines. In this guide, we are going to discuss the pros and mention a few cons traders will have to address for profitable   day trading from the Philippines. We will also provide essential tips on how to start making money in this turbulent market. 

Advantages of day trading Forex in Philippines

As living expenses rise in the Philippines, it is very important to have a secondary source of income besides the main job. Trading Forex markets can make more money than an average job, but it will require sufficient time and effort to learn how to trade, and then implement this knowledge into practice. Forex markets are active 24/5, making it possible to trade any time you want. This gives the traders from the Philippines flexibility to find a comfortable moment during the day and trade markets. Another advantage why for Forex day trading Philippines can be a suitable place because despite rising living costs, it is still cheap compared to developed countries; And traders will have more opportunities to save money for Forex accounts. It is possible to trade Forex with a very low budget and still make substantial income to support your goals. 

Day trading Forex Philippines pros and cons

Several cons are associated with trading Forex from the Philippines including the time zone that is GMT + 8 which is very different from the most active and volatile London session which is located in GMT + 1 zone. But since the New York and London Sessions heavily overlap and New York starts later after the London session, Filipino traders will not find it hard to find the best trading hours when looking for trading opportunities. 

High leverage and low margin requirements

Many well-established Forex brokers offer very flexible leverages, meaning that Filipinos can trade FX with low capital. For example, with leverage of 1:200, the buying power of your trading account is amplified by 200 times. With just a budget of 50 USD, it is possible to command 50*200= 10 000 USD trading power. This is unique only to FX markets as every other financial market requires much higher starting capital as the leverage is around 1:5 at max. Especially for stock trading and cryptos. The margin requirements in many cases are low and allow traders to fully employ the power of such high leverages. So, the high leverage is very desirable when day trading currency market in Philippines as it allows traders to start with the smallest amount of capital before switching to larger accounts. 

But the leverage is a double-edged sword and it has the power to amplify both potential profits and losses. It is essential to have strong risk management in place when trading with high leverage. 

Forex markets are the most liquid markets with trillions of dollars traded every day. For traders, this is good news as there is always someone to buy or sell the Forex pair from you at the market price. While the liquidity can cause slow movements and slow price changes it is still possible to find inefficiencies in the Forex market as some trading sessions especially the London and New York have higher volatility and offer multiple trading opportunities every day. 

Possibility to fully automate trading strategies

Forex markets have one of the oldest trading platforms that are constantly updated and offer the ability to automate the trading process entirely. Popular platforms like MetaTrader 4, MetaTrader 5, cTrader, and TradingView all support custom programming languages and it is possible to write and deploy trading algorithms on live markets with little effort. Since these platforms are not new they have large communities and thousands of free trading robots that can be tweaked for maximum profitability. There are many programmers working in the FX industry and translating one’s profitable trading strategy into a trading robot is cheap these days, so, the chances of making a profitable trading robot with little capital are very realistic. 

Day trading Forex for beginners in Philippines

When starting a Forex trading career, quality education, and practical consistency are key to success. It is really important to equip yourself with deep knowledge of Forex markets and what affects its prices the most. 

Forex markets essentials

Forex markets are open 24/5 and international banks, big hedge funds, retail and professional traders, and corporations are the main participants. On the FX markets, currencies are traded and exchanged for one another. The currencies are paired against each other and are known as currency pairs. For example, EURUSD is a currency pair, where EUR is called the base currency and USD is quoted currency. EURUSD reflects the amount of USD traders have to pay to buy 1 Euro. Every other currency pair works in similar ways. Traders’ main job is to make sense of markets and follow the price to make a profit. Buy when cheap and sell when expensive is the main key in Forex markets too. Predicting future price fluctuations and trends is extremely difficult in Forex markets. So, the main method is to understand what the market is doing at the moment and react to it to make a profit. In this regard, fundamental and technical analysis come in handy, and combining them makes it possible to develop profitable trading strategies. We will explain each of these terms below. 

Technical analysis and fundamental analysis

Fundamental indicators are the main macroeconomic factors that have the highest impact on Forex currency pair prices. Important indicators such as inflation rates, central bank interest rates, employment rates, and consumer confidence can define how the Forex market will behave in the future. For this reason, fundamentals are great for defining the possible medium to long-term price trends. Central bank monetary policy can also impact markets as it can greatly affect the inflation rates. For example, the Fed’s interest rate hikes recently lowered inflation and strengthened the US dollar. Knowing this, many traders took advantage and opened positions in the market direction. In the Philippines day trading FX can become profitable after understanding how to conduct a fundamental analysis and use its results for decision making. 

Technical analysis on the other hand refers to analyzing price behavior on the charts and using tools such as Fibonacci retracements, trend lines, and technical indicators to determine the price direction and find the best entry and exit points in the market. Technical indicators are mathematical formulas used to analyze the price dynamics and define what it’s doing. There are countless indicators and learning the most popular of them can give traders an edge to make money in FX markets. Moving averages, MACD, Bollinger bands, and Average Directional Index are a few such indicators.  Moving averages are the average price of the asset for certain periods and it shows if the price is above or below the average price. Moving averages are great for defining trends and traders use them widely. Moving Average Convergence Divergence or better known as MACD is an oscillator that shows when the price is overbought or oversold and can indicate price turning points on the charts. Bollinger bands is a great indicator that can be used to trade trends. The Average Directional Movement Index or ADX is a trend-identifying indicator that shows if the market is trending or not, no matter the direction. Traders have to remember that no single indicator can make money and it is critical to use 2 or 3 indicators to analyze markets and develop strategies. 

Demo account

After understanding the basics of Forex, the next step is to start gaining practical knowledge and this is only achievable with the demo account. A demo account lets traders experience trading in live markets without risking their money. A demo account lets you trade markets like it was real, the only difference is you don’t have to actually lose money. This unique ability makes the demo account an absolutely essential part of Forex trading education and almost all brokers offer it for free. Theoretical knowledge is very beneficial in Forex, but without actually being able to open and close trading positions and set stop loss and take profit, it is impossible to make money. Like in any other country in the Philippines day trading Forex profitably can be achieved only after demo trading has been completely mastered. 

Familiarize yourself with one of the popular trading platforms

The platforms like Metatrader 4 and MetaTrader 5 are the most popular trading platforms. The MetaTrader 4 or MT4 is the platform offered by more than 90% of Forex brokers. Mastering the MT4 will allow you to select any Forex broker you want and not to worry about learning a new platform every time a new broker is selected. Make sure to learn how to use drawing tools, indicators, and set stop loss, and take profit orders for each trading order.

Developing a trading strategy

After practicing on the demo account and familiarizing yourself with the trading platform features, it is possible to switch to the trading strategy development phase. A trading strategy is a set of rules for executing trading positions. Trading strategy lowers the emotional impact and makes trading a less chaotic and more scientific endeavor. In trading, a strategy must be as logical as possible and has to encompass every single term for opening and closing positions. The main things every profitable trading strategy includes are trading indicators used and their settings, rules for buy and sell positions, rules for exiting the trading position, stop loss and take profit, and risk-reward ratio. After writing the strategy down it is essential to backtest it on the historical data to check its performance. Then, forward-test it on a demo account to see if it works in a live market environment. Developing a trading strategy and strictly following its rules is the cornerstone of profitable trading in any financial market and Forex is no exception. For achieving profitable FX day trading Philippines is a great country as the living expenses are not as high and traders have time to master trading with a considerably low budget.

How to select a reliable Forex broker?

After all the educational and trading strategy steps are completed, it is essential to find a trustworthy broker. While the demo account can be opened with any Forex broker for educational purposes, for a live account the selection process is very strict and cautious. The broker must be regulated by at least one regulatory body and should offer acceptable trading terms like low spreads and trading fees. Low fees and spreads are critical for achieving optimal performance. Spreads are the difference between the buy and sell prices also called the bid and ask prices, and can play a key role in profitability. Traders have to pay spread twice for each trading position. If your strategy relies on opening many trading positions then lower spreads are key, but if you prefer trades to be opened for hours or even days then your focus should be on lower fees and commissions. 

Forex day trading tips for Filipinos

Since we already know the pros and a few cons related to Forex day trading it is easier to conclude the best tips for achieving success. 

The key tip in trading FX in the Philippines is to focus on education and practice trading in the demo account. 

Learn fundamental analysis and technical analysis and try to combine them for achieving the highest accuracy. Fundamentals can tell what price is going to do in the medium term, while the technical indicators will help to define the exact entry points in the market. Thus, using them both combined will bear the best results. 

One of the most important tips for successful Forex day trading Philippines is to be patient and disciplined. Without being consistent it is impossible to make money in Forex. 

FAQs on whether should you day trade Forex in Philippines?

How to start day trading Forex in Philippines?

Start with understanding the basics and switch to a demo account to practice technical analysis and familiarize yourself with one of the popular trading platforms. After this phase make sure to develop a trading strategy that addresses risk management, entry and exit rules, and make sure to execute it flawlessly. Tweak and check the performance of your trading strategy after every 25-30 trades as this is enough sample size to conclude if a strategy is working or not. Develop the trading strategy according to your personality and risk appetite and make sure never to follow emotions during trading. 

Is day trading profitable in Philippines?

Day trading Forex can be profitable in the Philippines when approached with a disciplined and consistent style. Many traders lose money as they lack consistency and do not have clear trading strategies and risk management methods. Make sure to be in a small group of profitable traders by addressing these things. 

How much money can you make day trading in Philippines?

The amount of profits made in Forex when trading the market from the Philippines depends on the trading capital and trading strategy. The average golden monthly profitability should be at least 4-5% to make a living from Forex. In this regard with the trading volume of 0.1 lots which is around 10 000 USD, it is possible to make around 400-500 USD per month which is enough for paying all the living expenses in the Philippines. What’s more exciting is the leverage system flexibility in Forex markets. The leverage can be 1:200 or even more with many brokers. Theoretically with just a 100 USD budget you can make trading for a living a real possibility. 

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