Forex trading is completely legal for the people of Pakistan, contrary to popular belief. More and more Pakistani traders are turning to the foreign exchange market because of its almost limitless potential as Pakistan’s economy continues to expand and change. If you are considering it, use our guide to open an account and start trading forex from Pakistan.
Forex Investment in Pakistan is almost unlimited in Pakistan, although buying and selling cryptocurrencies is currently illegal. Many local brokers are not registered with the Securities and Exchange Commission of Pakistan (SECP), despite national regulations by the State Bank of Pakistan and the SECP aimed at curbing fraud and money laundering.
Therefore, opening an account with a forex broker based outside Pakistan is highly recommended. Although not all international brokers choose to do so, it is legal for them to provide accounts to Pakistani traders. When you open an account with an international forex broker, you go through the following basic setup steps:
Find a stable internet connection:
Before you can trade forex, the most important prerequisite is a consistent and reliable internet connection. Make sure you have a stable internet connection before proceeding.
Choose a broker:
Most forex traders in Pakistan choose to open an account with a foreign broker due to the strict regulation of brokers in Australia, the United Kingdom and the United States. Ask the broker you want to open an account with.
Select a phase:
Although your forex agent might offer a custom exchange stage, you may need to use a more complete stage such as MetaTrader 4 or 5.
Fund Your Trading account:
Once you open it and your broker approves your personal information, you will need to deposit funds into your trading account. Pakistani traders can fund their accounts with most international brokers by linking a bank account and converting Rupees to USD, GBP or another more liquid trading currency.
You can officially make your first currency trade as soon as your account is credited.
Pakistani Forex Trading Strategies:
Most Pakistani traders choose to trade during the Asian session when the Tokyo Forex Exchange experiences the most activity. To reduce liquidity issues, it is recommended that if you are new to forex trading, you start by trading a major currency pair such as USD/EUR or USD/JPY. You can use wire transfer to deposit USD into your accounts with most international brokers that offer accounts to traders in Pakistan.
Below are some technical indicators that you may want to use when trading. Although not foolproof, these indicators can help you figure out where to start developing your technical trading strategy.
Momentum indicators are technical indicators that measure a sudden change in price. An inversion of past patterns can signal that money power is going the other way, which may mean you should trade. When trading currencies, many traders use momentum indicators because they lag trends. This means that even if you enter later, you are less likely to misread the signal.
An inversion candle is a sign that can demonstrate that the pattern is changing and that the example the money is following will move. Reversal candles, which can be either bearish or bullish, can indicate whether a currency will stop losing value. Transient brokers and sellers often depend on reversal candles rather than strength indicators because they benefit from more modest volatile movements.
Example of forex trading in Pakistan Let’s look at one way a Pakistani trader could make money from forex trading. When trading forex, most Pakistani traders prefer to convert their original rupees to a more liquid currency such as the US dollar or Euro. Imagine that you hold the opinion that the value of the euro will rise relative to the dollar. You deposit 200,000 rupees into your account and transfer the entire amount to USD. After the transaction is completed, you will have $1,250.
When you trade in USD, your broker gives you 10:1 leverage, which means you can now trade with the power of $12,500. At the moment the exchange rate between USD and EUR is 1 USD to 1.12 EUR. You convert your entire package to EUR and you are left with approximately EUR 11,160.
The EUR is starting to rapidly gain value against the USD. You decide to sell when 1 USD is 1.20 EUR. You return all your EUR to USD and earn $13,392. Once you return the amount borrowed on margin, you will have a profit of $892.
Bringing Cash to Forex in Pakistan:
- There are no legitimate restrictions preventing a Pakistani trader from opening an account with a global or domestic forex broker. Additionally, there are no regulations limiting the profit you can make from international currency transactions. Most international brokers allow Pakistani traders to fund their accounts in USD, despite the fact that the Pakistani rupee is not generally considered a trading currency or a foreign exchange reserve currency. As a result, native rupee holders may be able to take advantage of significantly more global business opportunities.
- Even though the Forex Pakistan market is largely unregulated, you still need to follow a few rules to keep track of your profits. First you need to track your total earnings and you can open an international account only if you are filing taxes in Pakistan. According to government revenue department standards, fee registrars can depend on up to 15% forex benefit assessment, so be sure you’re saving enough money to cover your expenses. You may be able to open an account with a domestic broker if you are not a taxable person, but you will be subject to standard capital gains tax rates.
Best Online Forex Brokers in Pakistan
Despite Pakistan’s expanding domestic foreign exchange market, a number of brokers continue to operate without SECP oversight. We recommend opening an account with a global broker based in a country with stricter conduct and fee control rules.
In case you don’t know where to start, consider a few of our top decisions offering listings to Pakistani sellers below.
You Should Know Before you start trading Forex, it’s a good idea to familiarize yourself with some of the most common terms. The following are some terms that you will hear over and over in the exchange.
The smallest unit of currency known as a pip is usually calculated with a fourth percentage point. In the context of the US dollar, for example, $0.0001 equals one pip.
Lot Size: The total number of units of the currency you are trading is your lot size. Assuming, for example, that you enter a request to sell 1000 Pakistani Rupees.