The goal of a successful trader is to make the best trades. Money is secondary.~ Alexander Elder
We’re pretty sure you are familiar with “Forex Trading”. Aren’t you?
Let’s have a brief discussion on Forex Trading!
It’s been more than 40 years since forex trading became a leading financial market that was made for the exchange of foreign currencies. A Triennial Survey in 2019 of the Bank for International Settlements (BIS) quoted per day turnover in forex trading of about $6.6 trillion, which is comparatively up from the 2016 survey turnover of $5.1 trillion.
Are you thinking of starting forex trading? Wait! Hold your horses. Without precise knowledge of techniques or trends of the market, you can’t be a successful forex trader and shouldn’t risk it.
So, as always! AH Blog is here to help you out. Below are some key points that every trader needs to go through first before getting started with forex trading.
Table of Content
- An Overview of Forex Markets.
- What is Forex Trading?
- Things To Know Before Starting Online Forex Trading in Pakistan?
- Forex Trading Tax Liabilities in Pakistan.
- How To Start Forex Trading in Pakistan?
- List of Top 7 Forex Trading Platforms in Pakistan.
- How to Verify a Forex Broker’s SECP Authorization?
- Essential Steps of Forex Trading in Pakistan.
Below you’ll find a researched guide to forex trading in Pakistan.
Give this article a read and share your thoughts about forex trading and your feedback in the comment section.
1. An Overview of Forex Markets
Forex Market, basically the place where currencies are traded, is globally famous for being a continuous and nonstop trading market. An interesting part of it is that there is no such building made specifically for trading purposes. For the past few years, the market was managed by some institutional firms and banks who worked on the behalf of buyers and sellers. But in recent years, forex trading in Pakistan has generally increased and become more retail-oriented. A lot of investors have taken part in it by exchanging currencies via forex brokers in Pakistan. Later, in the article, we are also going to talk about the top 7 forex trading platforms that are playing a massive role in promoting the e-commerce industry in Pakistan.
2. What is Forex Trading?
While “Forex” stands for Foreign Exchange, “Trading” in the term means buying and selling. Put together, it means “exchanging or trading currencies from several countries”. There are several reasons for the conversion of currencies; for one, if you are a resident of the USA and want to buy rice from France, you will have to pay the French for it in euros (EUR). So, like that there are a lot more reasons. We hope that now, you have understood the concept of Forex Trading!
3. Things to Know Before Starting Online Forex Trading in Pakistan
There are few terms of forex trading that you need to know before starting. It will be helpful for you in the future because you will hear these terms again and again while trading. Have a look:
- Lot size: A lot size is the total number of currency units that you are going to trade. For example, you’ve decided to trade 2000 Pakistani rupees in the market, your lot size will be comparable to 2000. A lot of successful forex traders in Pakistan consider 100,000 units of any currency as a ‘standard’ lot size.
- Pip: It stands for “percentage in point” or “price interest point.” It’s the smallest unit/point of a currency. Normally, pip is calculated by dividing 1/10,000 or 0.0001 as the 4th percent of a point/unit.
- Order: It is meant to be a particular set of instructions that you give to your forex brokers in Pakistan. For example, which currency you want to buy or sell, at what price you want to execute the sell or purchase of a currency or the numbers of the shares you are thinking to buy or sell.
These are the three basic terms (lot size, pip, and order) you have to go through daily while practicing forex trading. These terms are called the Forex Terminology. To become a successful forex trader in Pakistan, you have to understand this.
4. Forex Trading Tax Liabilities in Pakistan
At the beginning of forex trading, there were no such rules and regulations for paying tax. In fact, it was supposed to be one of the best tax-free business ideas in Pakistan. But after some time, new rules were devised by the Federal Bureau of Revenue (FBR) which included the rule that stated every trader has to pay tax on forex trading in Pakistan. The FBR divided tax into two different categories. Take a look at these categories:
- For Non-Filers: Non-filers are subjected to pay 35% tax based on the capital profits tax rate.
- For Filers: These are the traders that file and pay their yearly taxes. For filers, there is a maximum of 15% tax based on the yearly profit.
5. How To Start Forex Trading in Pakistan?
There are almost no types of restrictions in forex trading in Pakistan, however, buying and selling cryptocurrencies are not legal. To get started with forex trading you need to follow the below-mentioned steps that beginners are required to understand.
- Find a broker: There are a lot of legal forex trading brokers in Pakistan but most of them prefer to open an account with a foreign/international broker. The reason behind this is the strict regulations in foreign countries like Australia, UK, and the United States. We recommend you choose wisely. Below, we have also mentioned a list of legal forex trading brokers in Pakistan.
- Choose a platform: Here comes the second step. It totally depends on you to pick a platform that is offered to you by your broker or choose your individual platform like MetaTrader 4/5.
- Account Funding: Last, but not least, is account funding. By the title, you might get a sign of what it’s about. Once your broker has verified everything, you just need to link your bank account to the trading account for the conversion of rupees to USD, GBP, etc., and begin trading!
6. List of Top 7 Forex Trading Platforms
There is a big list of top forex trading platforms in Pakistan. We are going to list down some of them.
- Saxo Bank- Best for research. Trusted global brand.
- IC Markets – Best MetaTrader Broker 2021.
- XM Group – Well-rounded offering.
- FP Markets – Excellent pricing. Great for MetaTrader.
- AvaTrade- Multiple trading platform options.
- Interactive Brokers – Great for professionals and institutions.
- IG – Best overall broker 2021. Most trusted.
You can select any of them after a complete search, and start trading with an authorized platform.
If you have any doubt about your broker’s authorization, no need to worry, we will guide you on how to confirm the SECP authentication of a forex broker.
7. How to Verify a Forex Broker’s SECP Authorization?
There is no such rocket science involved in searching for a verified forex broker. The SECP does not provide a complete list of all verified brokers that are working in Pakistan. However, you can simply get in touch with SECP to verify the specific authorization.
8. Essential Steps of Forex Trading in Pakistan
If you are good at the below-mentioned points, we bet you can be a successful forex trader.
- Practice on a demo account.
- Wisely choose broker and trading platform.
- Understand the processes.
- Choose and buy reliable stocks.
- Keep an eye on the market trends consistently and regularly.
- Determine entry and exit points.
- Always calculate your expectancy.
- Never underestimate the small losses.
- Do weekend analysis.
- Keep a printed record.
Forex trade is a business that, even on a small budget, people can afford. It’s all about gaining profit from the foreign currencies exchange even by investing a small amount. In fact, it is said by a lot of business tycoons in Pakistan that forex trading is the future. While many people believe it depends on luck, we don’t necessarily agree with them. Mainly because a person who is sitting in the market knows very well when a currency increases and decreases in value, so he can buy and sell them accordingly. People with a forex trading background will never depend on their luck. So stop waiting for your luck to shine and start investing in forex trading and be your own boss.
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