Forex Trading in Algeria

The People’s Democratic Republic of Algeria is one of the largest countries in the world in terms of landmass. The country has vast petroleum reserves, making the country a hub of foreign exchange in North Africa. Although the country has always been rich in resources, that wealth did not necessarily reflect itself in the lives of Algeria’s everyday citizens. This has changed over time and according to the World Bank, Algeria has reduced poverty by 20% in the last 20 years. 

Forex trading is growing across Africa, but Algeria’s sharia law limits who can do business in the country and how efficiently money is transferred. The retail forex market is a way for Algerian citizens to connect with the global economy through all of the restrictions. However, there is a risk when using offshore brokers — the Algerian government does not protect your financial well-being should you choose to transact this way.

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Disclosure: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% 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 Algeria

Use the following tips to get yourself started trading forex in Algeria. Pay special attention to the broker you choose and the international regulators monitoring its conduct.

1. Access the internet. You can trade forex using any device that connects to the internet. Choose from multi-screen desktops, laptops or smartphones. If you’re interested in becoming a sophisticated trader, it is typically better to trade on a desktop, because you can take in a great deal of information at once. Your connection should provide minimal latency for fast trade execution.
2. Choose a forex broker. For maximum flexibility in your trading, choose an offshore forex broker. Verify that the broker is regulated through an international financial authority. Make sure your broker has written policies for money transfers and how your accounts are treated.
3. Open a forex account. Once you choose your preferred platform(s), follow the process provided by your brokerage to open your account. Opening an account will require you to set up with money transfer options to and from your bank. You will also be required to verify your identity.
4. Fund your forex account. After you have practiced with your virtual account (account with fake money), transfer money from your outside bank into your brokerage account. Most brokers allow deposits from debit cards, checks, bank accounts or selected fintech apps.
5. Download your trading platform. The broker of your choice will connect you to a trading platform or provide its own proprietary platform. Don’t commit to a platform with lag or constant errors. 
6. Trade. Take your time and study forex trading strategies to improve your odds of success.

Algeria Forex Trading Strategies

The UK Algerian Business Council

Here are some trading strategies to get you started. 

Trading breakouts: When a price breaks above a noticeable resistance level, it is a breakout. Investors who trade this pattern look to profit from a continued move in the breakout direction. 

Return to mean strategy: The return to mean strategy works well for a currency pair trading around a certain price. When the price moves away from the mean, the trader assumes it will return and trades on that notion.

Retracement: Short-term corrections on price rallies are called retracements. The retracement moves in the opposite direction of the original trend. These can be opportunities for quick-day trades.

Reversal: Reversal traders want to be ahead of the market and they make use of momentum indicators to guide their trade decisions. 

Carry trading: Carry trading occurs when you capture the difference in rates between 2 currency pairs. If you buy a high-interest currency with a low-interest one, you can potentially profit from the difference.

Forex Trading Example in Algeria

Let’s say DZD/USD is trading at 0.0078/0.0080 and you think the price will rise. The margin rate of this currency pair is 5.02% and you want to purchase DA1,000,000. You will need $396.58 in your account at this margin rate.

The DZD/USD price does actually move up. In 4 hours, it’s trading at 0.0082/0.0084. This is a move of 2 points, and your profit is (DA1,000,000 x 0.0082) – (DA1,000,000 x 0.0080), or $200.

Making Money with Forex in Algeria 

A chart with range bands

Getting familiar with winning trade strategies will take time. Become a student and find the strategies that work best for you. Here are a few winning trades to get you started. 

• Shorting currency pairs: Instead of purchasing a currency pair at a low price and selling it at a higher price later, shorting is the reverse strategy. Shorting involves selling a currency pair and then buying it back at a lower price later.
• Contracts for difference (CFDs): When you trade CFDs, you never actually own any currency. CFD brokers offer high-leverage positions, which can be risky for new investors.
• Binary options: Binary options only have two possible outcomes, unlike traditional options. The amount of money you gain or lose is also a fixed amount. 

Best Online Forex Brokers in Algeria 

The broker you choose will affect your trading success. This list of forex brokers will get you started, but do your research on all of their feature sets and regulation agreements. 

Forex Terminology

If you want to research forex on your own or converse with other investors about strategy, you should know these basic terms.

Pip: A “percentage in point” is the standard unit of forex measurement, pegged to $0.0001.

Lot size: The lot is the amount of currency you want. The standard lot size in forex trading is 100,000 units.

Orders: These are the strategies used to enter or exit a trade in forex.

Calls: Calls contract a buyer and seller to exchange a currency pair at a certain price on or before a certain date.

Finding a Way to Invest

Algeria does not make it easy to invest in the forex market, but it is possible for the determined investor. Take advantage of the international regulators and guidelines that give a measure of protection for your accounts.

Taking the time to learn the market and your chosen trading interface is essential. You should also be aware of the latest strategies and news concerning the forex market. Bookmark this page for updates and be sure to check back with our blog for the latest tips.