Forex Trading in Afghanistan

Start trading forex in Afghanistan with FOREX.com as your online broker.

People from Afghanistan are embracing foreign exchange (forex) as an alternative means of potentially generating income. The higher leverage ratios available on forex trades can appeal to speculators. In addition to trading livestock and dry fruits, you can now learn how to trade forex via an online forex broker from Afghanistan. 

Here’s how you can start trading forex in Afghanistan.   

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Disclosure: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 68% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

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Get Started with Forex in Afghanistan

The Afghan rupee was the 1^st official currency of Afghanistan. It was succeeded by the Afghan afghani in 1925. Notes of the new currency were printed in Russia and shipped back to the country. 

However, due to inflation, a new version of the Afghan afghani was issued in 2002 and given a new ISO code AFN to help reboot the economy. The new notes of Afghan afghani (AFN) were printed in Germany and have denominations of 1, 2, 5, 10, 20, 50, 100, 500 and 1,000. These notes have images of Islamic architecture and the Afghan mountains depicted on them. 

Banknotes of Afghan Afghani

Da Afghanistan Bank (DAB) is the sole authority that issues licenses to banks, forex dealers and financial service providers in Afghanistan. The DAB was established in 2001 to look after commercial activities and state banking affairs. Its primary objective was to maintain the value of the Afghan afghani. DAB has also devised and implemented several monetary policies as well as foreign currency policies to date.

Agriculture is the backbone of Afghanistan’s economy. It produces vast quantities of opium, cannabis, saffron, apricots, nuts and pomegranates. It is a member of the World Trade Organization, the South Asian Association for Regional Cooperation and the Economic Cooperation Organization to promote free trade among its neighboring countries. 

Afghanistan is also heavily dependent on financial support from international organizations such as the World Bank to run its operations.  

Guide to Forex Trading in Afghanistan

Here’s how to get started.

Step 1: Get a Digital Device With Fast Internet Connectivity

You can use your desktop, laptop, tablet or smartphone to trade forex. The value of the currency pairs listed frequently fluctuate. Having a personal device to constantly track these changes is essential to successful forex trading. 

Step 2: Find an Online Forex Broker 

You can find several forex brokers and trading platforms available online. Go through their websites and choose a broker that lets you trade currency pairs with the AFN or other currencies you are interested in speculating on.

Be sure to check the footer of their website for information on their regulatory bodies. If you can’t find any information regarding their regulation by agencies like the Securities Exchange Commission (SEC), the Financial Conduct Authority (FCA) or other major regulatory bodies, the broker can’t be trusted. 

Step 3: Sign Up for an Account

You can open a new account with the forex broker on their website. Some forex brokers require a minimum amount of deposit to open an account. These brokers also offer different kinds of accounts based on your financial goals. Choose the one that’s right for you. 

Step 4: Transfer Funds to Your Account

Once you’ve signed up for an account, you need to transfer funds to start trading forex. Depending on the broker you’ve chosen, you can choose your accounting currency and fund your account using several options. Generally, these funding options include bank wire transfers, e-wallet transfers and debit cards. 

Step 5: Download a Forex Trading Platform

You’ll probably want to download a forex trading platform your broker supports onto your computer or smartphone. Take the time to customize the look and feel of the platform to help you maximize your ability to spot good forex trading opportunities. 

Step 6: Begin Your Forex Trading Journey

Before you start trading forex, you might want to trade in a demo account using virtual money. This can help you get used to the interface of the forex broker’s platform without risking any of your own money. After you feel confident using the platform, you can start trading forex using real money in a live account.

Afghanistan Forex Trading Strategies

Forex traders from all over the world rely on variations of a few strategy types to help them maximize their profits and minimize losses. You can consider looking into how to use these forex trading strategies to earn better results from your trading activities. 

Scalping

Scalping involves making numerous trades throughout the day with the goal of capturing small gains and taking fewer small losses. The compounded earnings from this fast-paced strategy are significant, although transaction costs can quickly eat into any profits gained. 

Rapid exchange rate movements during intraday trading sessions can cause slippage in your stop-loss trade executions. These additional losses can further erode your earnings from profitable trades. This method of trading requires a lot of time and focus to track exchange rate movements.  

News Trading

Global economic news and geopolitical events can have a strong impact on forex markets. Many traders stay on top of influential financial information to anticipate the short-term exchange rate movements of affected forex currency pairs. 

You can research inflation rates, trade policies and multinational deals made between countries. News trading typically requires research and a correct market view to make a profit. You also run the risk of missing the window of opportunity if you’re not fast enough with your trade executions. 

Momentum Trading

Momentum trading, or swing trading, involves making trades that can often be held overnight based on changes in market momentum. Swing traders often buy and sell currency pairs during the frequent market swings that occur during the week. These traders typically rely on correctly anticipating market reversals to make a buck. 

This method of trading can be less stressful than day trading or scalping. You can adjust your positions throughout the week to take profits and cut losses.   

Day Trading

Day trading typically involves closely monitoring the intraday exchange rate movements of forex currency pairs. These traders can take positions anytime during the day and will generally exit all positions on the same day. Some traders have adopted this method to reduce the risk of unexpected losses from overnight market volatility when they are unable to monitor the market. 

Forex Trading Example in Afghanistan

While forex traders operate in a variety of currency pairs, traders from Afghanistan might be interested in trading the USD/AFN forex currency pair.

For instance, consider a situation where the USD/AFN forex currency is trading at 77.00. At that exchange rate, it will cost you 77.00 afghanis to buy 1 U.S. dollar. If you think the afghani will decline against the U.S. dollar, you can buy $100,000 for 7,700,000 afghanis on margin if an online forex broker actually lets you trade that currency pair. 

If you are proven correct and after 3 months, the USD/AFN exchange rate has risen to 79.00, then you can sell your $100,000 position and buy back the afghanis to make a profit of 200,000 afghanis. 

USD/AFN exchange rates over the last 5 years.

Making Money with Forex in Afghanistan

Over 7,000 registered forex traders live in Afghanistan. The steady rise of forex traders in Afghanistan has also been controversial. Some unregulated online forex brokers have fraudulently lured unsuspecting traders into opening accounts. These scam brokers encourage new traders to fund their accounts before vanishing with their money, so be aware of that risk. 

In contrast, trading forex via legal and regulated online brokers can result in trading profits if you have a good strategy. For example, let’s say the USD/AFN forex currency pair currently trades at 76.81. It has a 52-week low of 75.55 and a 52-week high of 78.94. These significant exchange rate fluctuations can give you profitable entry and exit positions if you are able to accurately identify them.     

Bloomberg

Best Online Forex Brokers in Afghanistan

Online forex brokers let you trade a variety of currency pairs in the forex market. You can easily manage your forex trading positions via the broker’s supported trading platforms. 

Most of these forex brokers also allow you the luxury of trading commission-free during market hours, although you will generally still need to pay the dealing spread on each trade. You can also trade forex currencies using substantial leverage ratios via these online brokers to amplify your risks and possibly your rewards. 

Take a look at these top forex brokers available online.  

Forex Terminology

You should be familiar with a few basic forex terms before you start trading. Millions of forex traders use these terms regularly while trading currencies.

• Pip: The smallest exchange rate movement for a particular currency pair. Generally, forex currency pairs are quoted up to the 4^th decimal point, but the Afghanistan afghani is only quoted to 2 decimal points versus the U.S. dollar due to its low value. 
• Lot size: A standardized trading amount typically equal to 100,000 base currency units at online forex brokers. You can buy and sell currency pairs in smaller lot sizes as well at some brokers.
• Orders: An order is a command to an online forex broker to execute your trade. When you want to buy a forex currency pair, you enter a buy order. When you want to sell a forex currency pair, you enter a sell order.
• Margin calls: A notification from a broker that you need to deposit additional margin to continue to hold your positions. Most online forex brokers instead close out your existing positions when this situation arises. 

Trading Afghanis can be Profitable

Forex traders in Afghanistan currently have the opportunity to trade in the international currency markets and take risks that can be profitable, although they can also lead to losses if your market view turns out to be incorrect. 

The Afghan afghani also has a rather predictable pattern of declining in stages versus the U.S. dollar that an astute trader could take advantage of if you can find an online broker that supports trading in the afghani — many do not. You can still trade other currencies from Afghanistan that can be profitable and give you exposure to currencies other than your own.    

Frequently Asked Questions