Forex Trading in Bahrain

Contributor, Benzinga

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

Bahrainis have been able to trade in the forex market since 2011 when Bahrain initially allowed online forex trading. As currency trading has grown in popularity in Bahrain, more forex brokers are now accepting clients from the country. Many also offer Islamic accounts and interest-free trading for Muslims who wish to comply with Sharia law.

If you’ve decided to trade forex from Bahrain, your first step would be to find a dependable online forex broker. Before you start trading with real money, ensure that you’ve either developed a viable trading strategy or are using a social trading platform so that you can copy a successful trader’s transactions into your forex trading account. 

Get Started with Forex in Bahrain

It’s relatively easy to start trading forex in Bahrain. Just follow the steps listed below to open a trading account so you can trade forex online:

  1. Get a modern device like a smartphone, computer or tablet that can connect to the internet. 
  2. Find out which online forex brokers accept clients from Bahrain. 
  3. Apply and open a margin account with your preferred broker. 
  4. Make an initial deposit in that account via a payment method accepted by the broker. 
  5. Download the broker’s proprietary trading platform or a trading platform that the broker supports. 
  6. Place an order to make your first trade. 

Once you’ve completed these initial steps, you’ll have a funded trading account with an online forex broker so that you can begin trading in the forex market from Bahrain. 

Bahrain Forex Trading Strategies

After completing the steps above, your next step would be to develop a profitable trading strategy that you can incorporate into an overall trading plan. The type of strategy you decide on will reflect your level of experience, your personality and the amount of time you have to devote to trading. 

Forex traders use one or more of several time-proven strategies that have yielded positive results for many people. They tend to fall into the following 5 categories: 

Trend trading: This strategy involves identifying a long-term direction in exchange rates and establishing a position to profit from the move. Following these extended directional movements means the trader often takes positions overnight that they ultimately liquidate at the end of the trend.  

Day trading: Day traders limit all of their transactions to a single trading session, so they liquidate all positions at the end of the day. Since the forex market stays open 24 hours a day from Sunday evening to Friday evening EST, day traders need to select a particular trading session to operate in. Closing out positions before the session ends allows them to avoid the added risk of holding positions overnight. 

Swing trading: Swing traders take advantage of exchange rate moves using momentum technical indicators to signal when to initiate positions. Since the strategy lacks time constraints, swing traders sometimes take overnight positions.

Scalping: The goal of using this short-term trading strategy is to profit from short-term market fluctuations. A scalper enters and exits the market repeatedly to capture profits a few pips at a time. 

News trading: A news trader observes the economic calendar and geopolitical news for important events that stimulate volatility in the market they can take advantage of.

Forex Trading Example in Bahrain

Bahrain’s national currency is the Bahraini dinar (BHD) with the symbol BD and the Arabic symbol .د. The dinar is further divided into 1,000 fils and issued by the Central Bank of Bahrain (CBB).  The Bahrain dinar has been pegged to the International Monetary Fund’s (IMF) special drawing rights at a rate of 0.376 dinar to 1 U.S. dollar since 1980.  

Since the Bahraini dinar has a firm peg against the U.S. dollar, the currency’s turnover in the forex market was only $2 billion in April 2019, according to the Bank for International Settlements (BIS). To put that amount into perspective, the U.S. dollar had a turnover of over $1.37 trillion in the same period.  

Since the Bahraini dinar is pegged to the dollar, a rather tight trading range of 0.376–0.379 was observed over the last year, as the chart in the previous section shows. A recent quote for the USD/BHD exchange rate was 0.377 Bahraini dinar to 1 U.S. dollar, which is closer to the bottom of that range. 

To take advantage of this ranging market, you could purchase 100,000 U.S. dollars versus the Bahraini dinar at the current 0.377 exchange rate thinking the USD/BHD exchange rate will rise. If it then increased to 0.379, you could calculate your trading profits shown below:

100,000 USD x (0.379 – 0.377 BHD/USD) = 200 BHD

To subsequently convert that sum of Bahraini dinar profit to U.S. dollars, you could perform the following calculation: 

200 BHD ÷ 0.379 BHD/USD = 527.70 USD

Alternatively, if the USD/BHD exchange rate instead declined to 0.376, then you could compute your trading loss as follows:

100,000 USD x (0.376-0.377 BHD/USD) = -100 BHD

You could then convert that loss into U.S. dollars at the USD/BHD exchange rate of 0.376 as follows:

-100 BHD ÷ 0.376 BHD/USD = -265.96 USD

Making Money with Forex in Bahrain

To make money trading forex over time from Bahrain — or from anywhere else for that matter — you will want to develop a viable trading plan. In general, your plan should include a profitable trading strategy, position sizing guidelines and a money management component to increase your chances of success.

Brokers that accept clients from Bahrain allow traders to leverage positions by as much as 500:1, so you can control large forex positions with a relatively small amount of money. Be aware that leverage can be a double-edged sword since losses are magnified as much as profits. 

Even though developing a trading plan entails some work, the rewards of having a good plan you can stick to can make that effort very worthwhile. Alternatively, you could copy another successful trader’s transactions via a social trading network. Keep in mind that whatever strategy you develop may yield diminishing results over time because of constantly changing market conditions. 

Best Online Forex Brokers in Bahrain

Bahraini residents have a wide selection of brokers regulated in other jurisdictions that will accept them as clients. The CBB recommends that you choose a Tier 1 regulated broker that has oversight from a major regulating organization such as the UK Financial Conduct Authority (FCA), the Australian Securities and Investment Commission (ASIC) or an EU-based broker operating under the EU’s Markets in Financial Directive II (MiFID II) regulations.  

Many top brokers provide a broad range of educational resources that you can access online. The list of well-regulated forex brokers below can help you choose the best online broker available to Bahraini traders based on your individual needs. 

Get started securely through AvaTrade’s website
Account Minimum
100 EURO
Pairs Offered
50+
1 Minute Review

A fully regulated broker with a presence in Europe, South Africa, the Middle East, British Virgin Islands, Australia and Japan, Avatrade deals with mainly forex and CFDs on stocks, commodities, indexes, forex, cryptocurrencies, etc. This brokerage is headquartered in Dublin, Ireland and began offering its services in 2006. It offers multiple trading platforms and earns mainly through spreads.

Best For
  • Beginners
  • Advanced traders
  • Traders looking for a well-diversified portfolio
Pros
  • Controlled by regulatory agencies of multiple countries
  • Choice offered in terms of trading platforms
  • Support available in 14 languages and trading platforms in 20 languages
  • Practice/demo account available for trying out
  • Breadth of trading assets
Cons
  • Does not accept customers from the U.S. as it isn’t regulated in the U.S.
  • Transferring funds to the account may take up to five days; withdrawals could take up to 10 days
get started securely through eToro’s website
Disclosure: eToro USA LLC; Investments are subject to market risk, including the possible loss of principal.
Account Minimum
$50 USD
Pairs Offered
47
1 Minute Review

Though Australian and British traders might know eToro for its easy stock and mobile trading, the broker is now expanding into the United States with cryptocurrency trading. U.S. traders can begin buying and selling both major cryptocurrencies (like Bitcoin and Ethereum) as well as smaller names (like Tron Coin and Stellar Lumens).

eToro offers traders the opportunity to invest their assets into premade portfolios or cryptocurrencies, similar to services offered by robo-advisors through traditional brokers. Though eToro isn’t a one-stop-shop for everything an investor needs, its easy-to-use platform and low spreads is a great way to enter the cryptocurrency market.

Best For
  • International Forex/CFD Traders
  • New cryptocurrency traders looking for an easy-to-use platform
  • Traders who want to buy and sell cryptocurrencies on-the-go
Pros
  • Simple platform that is easy to master
  • CopyTrader feature that allows new traders to copy the same strategies used by professionals
  • Virtual dummy account that gives you $100,000 to practice trades
Cons
  • U.S. traders currently limited to cryptocurrencies
  • Only 15 major coins available to trade
get started securely through FOREX.com’s website
Account Minimum
$100
Pairs Offered
80+
1 Minute Review

FOREX.com is a one-stop shop for forex traders. With a massive range of tradable currencies, low account minimums and an impressive trading platform, FOREX.com is an excellent choice for brokers searching for a home base for their currency trading. New traders and seasoned veterans alike will love FOREX.com’s extensive education and research center that provides free, informative forex trading courses at multiple skill levels. While FOREX.com is impressive, remember that it isn’t a standard broker.

Best For
  • MetaTrader 4 users
  • Beginner forex traders
  • Active forex traders
Pros
  • Impressive, easy-to-navigate platform
  • Wide range of education and research tools
  • Access to over 80 currencies to buy and sell
  • Leverage available up to 50:1
Cons
  • Cannot buy and sell other securities (like stocks and bonds)
get started securely through IG Markets’s website
Account Minimum
$250
Pairs Offered
87
1 Minute Review

IG is a comprehensive forex broker that offers full access to the currency market and support for over 80 currency pairs. The broker only offers forex trading to its U.S.-based customers, the brokerage does it spectacularly well. Novice traders will love IG’s intuitive mobile and desktop platforms, while advanced traders will revel in the platform’s selection of indicators and charting tools. Though IG could work on its customer service and fees, the broker is an asset to new forex traders and those who prefer a more streamlined interface.  

Best For
  • New forex traders who are still learning the ropes
  • Traders who prefer a simple, clean interface
  • Forex traders who trade primarily on a tablet
Pros
  • Easy-to-navigate platform is easy for beginners to master
  • Mobile and tablet platforms offer full functionality of the desktop version
  • Margin rates are easy to understand and affordable
  • Access to over 80 currency pairs
Cons
  • U.S. traders can currently only trade forex
  • Customer service options are lacking
  • No 2-factor authentication on mobile
get started securely through HotForex’s website
Account Minimum
$5
Pairs Offered
47
1 Minute Review

HotForex is a company with a headquarters in London that provides clients with unique investment opportunities through contracts for differences (CFDs) on forex, metals, energies, indices, shares, commodities, bonds and ETFs, etc.

Best For
  • Investing in CFDs
  • Choosing from other investments
  • Customer service
  • Education
Pros
  • Easy navigation
  • Lots of trading platforms to choose from
  • Extra trading tools
Cons
  • Platform not available to U.S. and Canadian residents
Get started securely through Pepperstone’s website
Account Minimum
AUD$200 or equivalent
Pairs Offered
60+
1 Minute Review

Pepperstone is an Australian broker focused on providing international forex, CFD and cryptocurrency trading. Though U.S. traders currently cannot open an account with Pepperstone, the broker remains an affordable and comprehensive option for international traders. 

Pepperstone offers traders access to over 61 forex markets, over 60 CFDs for index funds and stocks and 5 cryptocurrencies. Leverage options with Pepperstone are extensive; you may qualify for up to 500:1 leverage when trading currencies and up to 5:1 leverage when trading cryptocurrencies, for example.

There are a few areas where Pepperstone can afford to improve. We’d love to see Pepperstone add its own trading platform in the future instead of relying entirely on 3rd-party platforms. We’d also love to see direct stock and fund purchase options in the future. Despite these flaws, Pepperstone remains a very strong choice for international traders.

Best For
  • International traders interested in trading CFDs from foreign markets and currencies
  • Traders who are already familiar with the MetaTrader or cTrader platforms
  • Traders who are looking for leverage when trading cryptocurrencies
Pros
  • Access to over 61 forex pairs and over 60 stock CFDs
  • Leverage available for both forex and cryptocurrency trading
  • Wide range of educational tools and courses that both beginners and experts can use
  • 24/7 customer service
Cons
  • Not currently available to U.S. traders
  • No option to purchase stocks, bonds or mutual funds directly; only CFDs are available
get started securely through FXTM’s website
Account Minimum
Micro account (with minimum deposit $/€/£ 50) and ECN Advantage & ECN Advantage Plus (both with minimum deposit of $/€/£ 500)
Pairs Offered
35
1 Minute Review

Cyprus-based ForexTime Limited, commonly referred to as FXTM, is one of the world’s most popular forex and contracts for difference (CFD) brokers. Since 2011, FXTM has provided traders with a wide range of trading instruments and educational resources, as well as fund protection, free demo accounts and account managers. 

FXTM is regulated in a number of jurisdictions and supports the MetaTrader 4 and 5 (MT4&5) trading platforms and their mobile apps. In addition to forex, you can trade spot gold and silver, as well as CFDs on cryptocurrencies, indices, commodities and over 300 of the largest cap U.S. stocks. FXTM also provides educational webinars and seminars for less-experienced traders. 

 

Best For
  • Beginning traders
  • Experienced traders
  • Copy traders and people looking for a managed forex account
Pros
  • Extensive list of trading instruments
  • Online webinars and seminars
  • Copy trading, PAMM and managed accounts
Cons
  • Does not accept U.S.-based traders
  • Does not support Myfxbook or ZuluTrader options for social trading
  • No futures or options trading

Is Trading Forex from Bahrain for You?

To achieve success as a forex trader, you’ll need knowledge of the market, a profitable trading plan with a viable strategy and the discipline to follow your plan. If you can meet all of these requirements, you have a much better chance of becoming a successful forex trader. 

When selecting a broker, make sure that the broker has oversight from a major financial regulator like the agencies cited above. Start out by reviewing our recommended brokers to begin trading in the forex market from Bahrain today. 

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.