Forex Trading in Hong Kong

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Contributor, Benzinga
September 8, 2021

Want to jump straight to the answer? The best forex broker for most people is definitely FOREX.com or CedarFX.

The battle for Hong Kong’s political status is also a battle for its economic status. The city’s financial authorities are downplaying the tensions between itself, Washington and Beijing, although investors are concerned about potential capital outflows. It becomes increasingly difficult to justify the HKD/USD peg if Hong Kong starts hemorrhaging its economic hub of white-collar ex-pats. U.S. Secretary of State Mike Pompeo has publicly called Hong Kong’s special trading status with the U.S. into question.

The retail forex market stands to suffer greatly should Hong Kong lose its economic status in relation to the U.S., but that has not stopped forex trading yet. The city maintains its position as the 4th largest global forex market and the world’s largest Renminbi forex market. The war of words and protests continue but there is still plenty of opportunity in the Hong Kong forex market.

Best Online Forex Brokers in Hong Kong 

Everyone wants to do business in Hong Kong, so you will have no shortage of forex brokers to choose from. Choose wisely.

  • Forex.com
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    Forex Investing
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  • Pepperstone
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    Best For
    Customer Service
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  • AvaTrade
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    Best For
    Non US Forex Trading
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  • eToro Forex
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    Best For
    Copy Traders
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    eToro USA LLC; Investments are subject to market risk, including the possible loss of principal.

Get Started with Forex in Hong Kong

Hong Kong does maintain standards and minimum financial requirements for its brokers through the Securities and Futures Commission (SFC). Consider this and other important factors when moving through the following list.

  1. Move online. A solid internet connection means a solid connection to the forex market. A bad connection means that you may miss out on investment opportunities that show themselves rarely.
  2. Pick out a regulated broker. If you choose a stateside forex broker, make sure it is regulated through the SFC. Offshore brokers should be regulated through a well known international financial authority. Proper regulation gives you a shield against broker fraud.
  3. Open a forex account. Consider the amount of leverage you can take on, the customer service and the terms of service your broker provides on your account before committing.
  4. Fund yourself. You should be able to fund your investment account using fintech, a debit card, a check or the bank account you connected in the tip above.
  5. Get a trading platform. Your broker may have its own trading platform. You may also choose an industry-standard platform. Whatever you choose, make sure you don’t add latency to your chain.
  6. Trade. It is always recommended to test your investment chain with a demo account. After that, you can begin to trade forex with more confidence.

Hong Kong Forex Trading Strategies

Now that you have vetted your setup for safety, you can move into investment blueprints that provide a framework for a trading plan. 

Breakout trading: If you are good at identifying when trends end, you may be a good breakout trader. Breakouts occur when trends are over and a price moves far away from a range that it had previously inhabited.

Return to the mean: If a price can’t break away from a range, it usually returns to its average. This is also known as a “retest.” Investors looking for a return to the mean trade to profit from the difference between the current price and the average price over a set period of time.

Retracement: A retracement is a pullback that temporarily reverses a directional trend. It usually doesn’t last very long but provides an opportunity for quick and substantial profit.

Carry trading: If you hold a currency overnight or longer, you are rewarded with the interest rate of that currency. Carry traders profit from the differences in currency exchange rates, selling a currency with a higher rate to buy a currency with a lower one.

Forex Trading Example in Hong Kong

HKD/USD is trading at 0.1310/0.1330. This price seems low. You think the price will rise, so you buy in. The margin rate of this currency pair is 2.78%. This entitles you to purchase HK$100,000 with $366.96 in your brokerage account.

The new HKD/USD price after 4 hours is 0.1370/0.1390. If you exit the trade at this point, your profit is (HK$100,000 x 0.1370) – (HK$100,000 x 0.1330), or $400, on the 40-point move.

Making Money with Forex in Hong Kong 

Maximize your profits with these day-to-day strategies after choosing your investment blueprint. 

  • Shorting a market: Many investors assume you make money only when prices rise, but shorting a currency market allows you to profit from a price fall.
  • Contracts for difference (CFDs): Trading CFDs relieves you of the ownership responsibility, but you still profit from the price movements of a currency pair. You can also trade high amounts of leverage using CFDs — usually higher than with traditional forex.
  • Binary options: Binary options provide a yes or no outcome. You can only gain or lose a fixed amount because the value of the option does not directly track currency pricing.

Political Unrest and Economic Opportunity

The Hong Kong dollar is the 8th most traded currency in forex. It also stands as an important tie between the enormous Chinese and American economies. Should its status seriously come into question, all of these markets will likely be affected. This volatility is exactly what prepared investors look for.

With the right flow of information and the appropriate strategies, you have an opportunity to profit from price irregularities between the Hong Kong dollar and other world currencies. Bookmark this website and return often for the latest strategies and news in this essential economic and political development.

Get a Forex Pro on Your Side

FOREX.com, registered with the Commodity Futures Trading Commission (CFTC), lets you trade a wide range of forex markets plus spot metals with low pricing and fast, quality execution on every trade. 

You can also tap into:

  • EUR/USD as low as 0.2 with fixed $5 commissions per 100,000
  • Powerful, purpose-built currency trading platforms
  • Monthly cash rebates of up to $9 per million dollars traded with FOREX.com’s Active Trader Program

Learn more about FOREX.com’s low pricing and how you can get started trading with FOREX.com.