Forex trading, also known as foreign exchange (FX), is a popular investment option in the Philippines. It involves buying and selling different currency pairs with the aim to make profit from the price fluctuations.
Forex trading in the Philippines is regulated by the Bangko Sentral ng Pilipinas (BSP), which is the central bank of the Philippines. Currency trading is governed by BSP Circular No. 922, which sets out the guidelines for FX trading in the country. The main requirements for Forex brokers in the Philippines include: segregation of the clients’ funds from the broker’s accounts, maintaining minimum capital requirements, and creating regular reports.
It’s recommended to open a trading account with regulated brokers and avoid unregulated ones. Residents of the Philippines can find locally regulated brokers by the BSP, or globally regulated ones.
It is widely accepted that a significant portion of Forex traders lose money trading currencies. Some studies suggest that the failure rate can be as high as 90%. However, many manage to succeed and turn trading into profitable endeavors.
There are many ways to profit in the Forex market. You can learn how to trade using your own money and become a retail trader. You can become an institutional trader and trade other people’s money, or you can become a signal provider to other traders. In this article we’ll give you tips to make money trading Forex in the Philippines.
Trading Forex for additional income
Currency trading can be a way to make an additional income, however, it is important to understand that it also involves risks. There are several steps you can take to limit the risks and increase your chances of success:
- Begin trading on a demo account: demo trading is a good way to learn how to use a trading platform, develop and test your trading strategies and get to know different brokers better. This will allow you to get a feel for how the market works. Demo accounts are very similar to live trading accounts with the main difference being that the funds displayed on the demo accounts are not real and there are zero financial risks to trade on demo.
- Educate yourself: the more you know about currency trading, the better the chances of making income from trading. Take the time to learn how to conduct technical, fundamental analysis and learn how to manage risks.
- Design a trading system: having a trading system is essential for success in trading. A trading system is a set of rules and guidelines that dictate how a trader will open and close trade orders. It should be designed to provide a framework for making trading decisions based on objective criteria, rather than feelings. Trading system can be optimized using numerous different trading tools that are available for everyone. This can help remove emotions from the trading process and make trading easier.
- Manage your risks: risk management is key to success in Forex trading. Risk management includes setting stop-loss orders, limiting your leverage, and investing what you can afford to lose. Many people make this mistake and invest borrowed money in trading. When you have to make money from trading to cover loans or pay the bills, you are in a bad place. This can easily lead to overtrading and taking huge risks.
- Develop discipline: it’s crucial to be patient and disciplined when trading financial assets. The main reason why beginners fail is that they do not know how to trade properly yet. The main reason why professional traders fail is that they know how to trade but lack the discipline to follow their rules. In order to make money trading Forex Philippines, traders need to control their emotions.
Trading as a source of having an additional income is a good way to make money for various reasons. When you already have an income from other sources, you don’t have to trade all the time, which means you can be selective and trade only the best trading setups, which will reduce your risks and increase profitability.
Trading Forex as a full time job
Trading Forex as a full time job is highly profitable for many individuals, however, it requires a significant amount of dedication, education, and experience. There are various full time trading career opportunities to consider:
- Become a proprietary (prop) trader: proprietary Forex trading firms trade for their own profit rather than for clients or customers. Prop traders typically are trained by the prop firms and traders split profits with the company.
- Become an institutional trader: institutional traders trade for financial institutions such as banks, hedge funds, asset management companies, and mutual funds. Institutional traders have access to a range of resources such as advanced trading platforms, and research and analysis tools to help them make informed decisions.
- Provide trading signals to other traders: a forex signal provider is a trader who provides buy and sell signals to other traders who subscribe to their services. These signals are based on market analysis and can be sent through a variety of channels, including email, or social media. In addition, you can become a signal provider for copy traders that use trading algorithms to automatically copy successful traders.However, to be able to provide other traders with signals, it’s important to trade Forex profitably in Philippines.
- Become an analyst: becoming an FX analyst can be a rewarding career path for traders with a strong interest in the financial markets and a desire to use analytical skills to make informed decisions. Currency analysts are responsible for analyzing market trends, economic indicators, political and economic events, and charts.
- Trade full time as a retail trader: trading full time from your home office can be highly profitable, however, it also requires good preparation and having an upfront capital. Retail traders do not get steady paychecks at the end of every month. Traders often experience drawdown periods. Which is why it’s important to have your annual budget planned in advance. In addition, retail traders need to purchase equipment for home offices and make a deposit to their accounts. Before you make money with FX Philippines, you should be open to having some expenses on education and trading hardware.
Things to avoid when trading FX
Trading currencies can be highly rewarding, however, it can also become discouraging when not prepared. Philippines Forex trading profitability depends on many factors. Here are some of the most common things to avoid when trading Forex:
- Be wary of scams. Unfortunately FX scams are a common occurrence in the trading industry. Scammers may create trading software or trading robots and promise to automate your trading and deliver huge returns.
- Stay away from unregulated brokers. Regulations are in place to protect your interests. Brokers that are supervised by reputable financial institutions are under constant supervision. While it’s not illegal to open an account with unregulated brokers, this increases risks.
- Learn risk management before investing. Most beginner traders lose money because they open oversized positions and lose everything when price moves against their predictions. Profitable trading in Forex is about probabilities and not about being a genius and guessing every price movement. Many successful traders are only correct for 50% of the time or less. But the winning trades cover for the losses and grow accounts gradually.
- Avoid trading with money you cannot afford to lose. As already mentioned, trading is risky and you don’t need to be pressured to make money. Money is made when markets offer good trading setups, not when traders need to make money. You should always have a trading budget that in case of a loss will not have long-term negative consequences.
- Make sure that your broker offers low trading fees. Brokers often have hidden fees. Make sure the fees are transparent and you can compare them with other brokers. The market is filled with hundreds of brokers. Shop around to get the best prices. Be noted that many brokers brag about low trading spreads, while they also charge traders with commissions. In addition, some brokers charge for transaction fees, and inactivity fees.
- Avoid low quality educational courses. Some trading classes offer very little value for money. Do your research first and read reviews from other traders. Often it takes more time to unlearn bad skills than it takes to learn.
To sum everything up, currency trading is popular in the Philippines. Financial trading is regulated in the country by the central bank of the Philippines, the Bangko Sentral ng Pilipinas (BSP). Forex trading can be a good way to earn an additional income, or to make it a full time job. However, there are many challenges to overcome to achieve consistency in profitability. Learning how to make money trading in the Philippines can be an interesting journey. Firstly, traders need to start with demo accounts, get quality education, build a trading system, learn risk management, and develop discipline. Currency trading offers many career paths, such as being a prop trader, becoming an institutional trader, retail trading full time, providing signals to other traders, and becoming an analyst. While learning how to trade, traders need to avoid scammers, unregulated brokers, and brokers with high trading fees.
FAQs on Forex trading as a good way of making money in Philippines
What are the best Forex pairs to trade with in the Philippines?
The best currency pairs to make money on the Philippines Forex market are major pairs. Major currency pairs are most actively traded and therefore are the most liquid with smallest spreads. The list of major pairs include:
- The euro and US dollar: EUR/USD.
- The US dollar and Japanese yen: USD/JPY.
- The British pound sterling and US dollar: GBP/USD.
- The US dollar and Swiss franc: USD/CHF.
- The Australian dollar and US dollar: AUD/USD.
- The US dollar and Canadian dollar: USD/CAD.
- The New Zealand dollar and US dollar: NZD/USD.
Is Forex trading profitable in the Philippines?
The profitability of Forex trading in the Philippines is very similar to other countries. Most traders lose money, however, many manage to turn trading into a profession. Traders can trade their own money and become retail traders, or become institutional traders and manage other people’s money. Profitability is very subjective and depends on risk tolerance, trading capital and trading strategy.
Is Forex trading worth it in the Philippines?
When measuring Forex trading profit percentage in the Philippines, it’s important to note that every trader is different. Many make fortunes in financial markets while others lose everything. However, it’s definitely worth a try to trade currencies. The FX market is the most liquid and offers a 24/5 active market. In addition, information on currency trading is widely accessible.