Forex trading is a form of investment that one can make. Like any investment, forex trading has its risks, and precautions must be taken when engaging in such a venture. Forex trading is basically trading or exchanging currency pairs; you buy one type of currency and sell another at the same time on the foreign exchange (forex) market for potentially higher profits when the trade is closed. Let’s say you buy EUR/USD at 1.4000 and sell it at 1.4050; you will make 50 pips profit which amounts to $15 if your pip value is 0.0001; this transaction only takes 5 minutes from open to close. One thing to remember is that these transactions are done through an online platform.
Trading currencies for-profit has come under scrutiny by government authorities because it involves buying or selling currencies that are controlled by other countries. Currency rates are often used as a trigger for inflation, interest rates and employment rate changes. The manipulation of these crucial economic indicators can lead to unrest or political instability in that country that may not be good for the citizens of that particular nation.
Is it easy?
A lot of people are often tempted to engage in forex trading because of the huge profits they can get from it. But forex trading is not an easy way to make money. In fact, it requires a lot of discipline and patience in the beginning when you are just learning how to trade currencies. Even veteran traders can lose all their profits if they don't know what they're doing, so engaging in this type of investment must be done with extreme caution and research.
There are some people who buy currencies in bulk in order to increase their value, but this is still considered illegal. The only way you can earn money with forex trading is through selling or buying currencies when there's demand for it. This type of investment is the same as any other financial instrument since they all require practice and patience before one can be profitable without losing money.
Is it illegal?
Some countries like China have actually banned their citizens from engaging in forex trading, while others like Japan allow all their citizens to trade currencies provided they are doing so under the supervision of a regulated broker. So when it comes to forex trading, rules vary from country to country, and you must be aware of that before engaging in this type of activity, especially if you are an ex-pat or tourist travelling to places where forex trading is completely banned.
If you are from any of the below countries, then forex trading is illegal for you, and if you cannot find your country's name, then a google search will do.
● France
● Israel
● North Korea
● Belgium
● Malaysia
● Bosnia Herzegovina
In the following countries, forex trading is completely banned or illegal but restricted.
● Ukraine
● Russia
● Nigeria
● South Africa
● Egypt
The takeaway
It needs to be noted that this type of investment can be risky, especially if you are doing your trading in sites that are not regulated by the government's Security Exchange Commission (SEC). Make sure to use brokers that are well-known and accredited so you will have recourse should anything happen while you are trading currencies.
All countries have different regulations for forex trading, so check first before engaging in this type of investment. This is to ensure that your hard-earned money won't be taken away from you by con artists who are only looking to earn a quick buck and disappear when they succeed in robbing you of your life savings. There are a lot of legal and regulated sites that allow you to engage in forex trading, so make sure to use them when conducting your transactions.