Forex Trading in Bangladesh

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Contributor, Benzinga
Updated: June 13, 2022

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Forex reserves in Bangladesh hit an all-time high of $35.09 billion on June 24, 2020, due to the COVID-19 crisis. This topped the $34 billion record that had just been set on June 4. As of the summer of 2022, those reserves has risen above $40 billion, making this one of the best places to invest if you want to break into the forex market. Central bank officials attributed the increase to the inflow of remittance from ex-pat Bangladeshis. Foreign loans from entities including the International Monetary Fund (IMF), who gave the Bangladesh government $732 million in coronavirus relief, added to the total. The World Bank, Asian Development Bank (ADB) and the Japan International Cooperation Agency (JICA) also assisted.

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Attribution: Wikimedia – The Bangladeshi taka

The government’s use of the forex market has trickled down into the retail space. Forex investors in Bangladesh enjoy regulation from the Bangladesh Bank (BB), which allows only licensed dealers to facilitate transactions. There are many reliable brokers and plenty of local support for people who want to get involved in the industry.

Get Started with Forex in Bangladesh

With a certain level of protection, Bangladeshi traders can join the global forex market without the need to worry too much about fraudulent brokers. There are also many educational programs for new investors to learn the basics. The local industry also offers contracts for difference (CFD) brokers. Here are the steps you should follow to get started in the forex market in Bangladesh.

  1. Start with a solid internet connection.  To connect with a broker and facilitate trading, you need an internet connection that is free of latency and downtime. Timeliness is important in forex trading because some windows of opportunity do not stay open very long.
  2. Pick a reputable broker.  Your broker will execute your transactions and facilitate your connections between accounts. You have many regulated brokers to choose from that are local to Bangladesh as well as foreign brokers regulated through offshore organizations.
  3. Connect your accounts.  Your broker should take you through the verification process and connect your bank account.
  4. Initiate funding.  You should be able to bring in your initial funding through your bank account or a debit or credit card. The options you have will depend on the broker that you choose.
  5. Download your trading user interface (UI).  Your UI makes a huge difference in your trading, so make sure that you are comfortable with it. A good UI reduces your input error rate and allows you to speedily assess situations.
  6. Trade and profit.  With your user interface ready, you are ready to trade in the forex market. Experts advise that you may want to start with a virtual account (a working account that doesn’t use real money).
  7. Review your strategy. Depending on the results you get, you can review your strategy and make changes. Don’t make a change after one bad day, but consider options that are best for your long-term goals.

Bangladesh Forex Trading Strategies

Trade forex in Bangladesh more efficiently with important strategies that every forex trader should know and master.

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Attribution: Global Press Journal

Day Trading

The day trader wants to profit within minutes or seconds of opening a trade, increasing their efficiency and reducing the number of assets they’re holding at any one time. Day traders need to be extremely quick and precise. This type of trading relies on a great internet connection — you will be competing against sophisticated, high-frequency traders with automated software and high-quality internet.

Day traders must move extremely quickly within the market. It is also important to understand the relationship between bid and ask prices (also known as the spread), have a working knowledge of important indicators and the proper level of focus during trading hours. At the same time, you cannot make a fortune every day. Moreover, you may go days at a time before you find the best opportunity to enter, exit and profit from a position quickly.

Trend Trading

Trend trading usually puts an investor in a trade for days or weeks at a time. Trends occur in ranges or in directional movements that may take some time to pan out. This is quite a different perspective from the day trader, but the need for a solid internet connection and a reputable broker remains the same.

When a currency is trading within a range, it creates support and resistance levels. These are price levels that provide traders potential signals of when to buy and sell. When a currency is trending, it is moving in a discernible direction that a trader expects to continue.

Positional Trading

If you are more interested in the economic and political conditions that cause forex prices to rise and fall, then you may be a positional trader. Investors who define themselves as position traders may hold a trade for a few months or even years if it becomes necessary. Positional investors are not concerned with the daily news items that make a huge difference in the life of a day trader.

Short-term price irregularities are actually good for the positional trader. When a long-term investor knows that a currency is out of place with its true position, that becomes a wide-open opportunity for a successful trade.

Forex Trading Example in Bangladesh

৳/USD is trading at 0.011740/0.011760. You want to buy ৳400,000 and profit from a rise in the price. The currency pair has a margin rate of 5.21%, so you will need a total of $244.87 cash in your account to control a ৳400,000 investment. Trading on margin means that your broker backs the part of the trade that you do not have the capital for.

As you predicted, the ৳/USD price moves up and is trading at 0.011780/0.11800 after 4 hours. That corresponds to a 0.2 point increase, and your final profit is (৳400,000 x 0.011780) – (৳400,000 x 0.011760), or $8 on the trade. Remember, these figures could change at a glance, and you must carefully calculate what you can do to make money, remembering that some trades may not be worth your time and effort.

Making Money with Forex in Bangladesh

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Attribution: Shaharia

There are many ways for an investor to profit in forex, whether a day trader or a position trader. Here are some of the most important ways you should know.

  • Short selling: If you short sell a currency, you are borrowing money to sell it at a high price. You will buy it back at a lower price later for a profit.
  • CFDs: Contract for differences (CFDs) track currencies, but you never own them. Brokers use CFDs when they want to offer currency pairs without the need to hold a reserve.
  • Binary options: If following the price of currency pairs exactly seems too difficult for you, you may like the choice of binary options. Binary options do not track currency price but offer a simple yes or no proposition. Answer correctly and you win money.

Best Online Forex Brokers in Bangladesh

Here are a few of the best forex brokers in Bangladesh to start an account with.

  • Forex.com
    More Details
    Account Minimum
    $100
    Pairs Offered
    80+
    securely through Forex.com's website
    More Details
  • AvaTrade
    More Details
    Account Minimum
    100 EURO
    Pairs Offered
    50+
    securely through AvaTrade's website
    More Details
  • eToro Forex
    More Details
    Account Minimum
    $50 USD
    Pairs Offered
    47
    securely through eToro Forex's website
    More Details

    eToro USA LLC; Investments are subject to market risk, including the possible loss of principal.

Forex Terminology

You must learn these basic terms when trading forex:

  • Pip: $0.0001, equivalent to the smallest unit of measurement in the forex market.
  • Lot size: The size of the trade you are marking. A standard lot size in forex is 100,000 currency units. You can also trade micro-lots that are smaller than 100,000 units.
  • Orders: Orders communicate your investment to the trading software you have chosen.
  • Calls: A call option is a contract with intrinsic value that you can trade on as well as the underlying currency.
  • Spreads: The spread is the difference between the bid and ask price, and the difference between the two is generally the fee you pay to execute the trade.

Connecting to Global Finance

As an integral part of the domestic economy, forex will likely play a larger and larger part in Bangladeshi finance in the near future. Learning the market will help to ensure your financial stability even if you decide not to actively trade.

Bookmark our website for the most up to date tips and tricks you can use in the forex market. The world of global finance is always changing and so are the strategies that will be successful in forex.

Frequently Asked Questions

Questions & Answers

Q
Is forex trading easy?
A

Forex trading can be easy, but not all currencies are made the same. You must research each investment before committing.

Q
Can you make money from forex investing?
A

Yes, some of the richest people in the world—like George Soros-made their money trading currencies. However, you cannot expect to get rich overnight, and you should remember that a diverse portfolio is the best route to take.

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