Bulgaria has a rich European culture and a growing economy. Many Europeans have been trading currencies as a means to supplement their income. If you’re new to forex trading, read on to find out how to get started trading currencies.
Get Started with Forex in Bulgaria
Introduced to Bulgaria in 1881, the lev (BGN) was named after the Bulgarian word for lion. The Bulgarian National Bank has the exclusive right to distribute banknotes and coins to the people of Bulgaria.
Following the restoration of the Bulgarian state, The Bulgarian National Bank (BNB) was established in 1879. It is an independent institution that reports to the National Assembly. The BNB plays a key role in maintaining the sustainability of the Bulgarian currency as well as strengthening the country’s banking and credit system.
The Bulgarian lev is divided into 100 stotinki. The national currency of Bulgaria has denominations of 1, 2, 5, 10, 20, 50 and 100. These banknotes have depictions of European architecture, royal emblems and scientific inventions.
Banknotes of Bulgarian Currency
Bulgaria is part of the European Union, NATO, Council of Europe and the Organization for Security and Cooperation in Europe. It has been elected to the UN Security Council 3 times. As a result, the lev has been pegged to different foreign currencies. These currencies include the French franc, the German mark, the Russian ruble and the U.S. dollar. It has also been backed by gold at different stages in its history.
Here’s a step-by-step guide to help you get started with forex trading in Bulgaria.
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.
There are several forex brokers available online. Go through their websites and choose a broker that lets you trade the currency pairs you are interested in.
Be sure to check the footer of their websites for information on the regulatory bodies that oversee their activities. If you can’t find any such information from the U.S. Securities Exchange Commission (SEC), the Financial Industry Regulatory Authority (FINRA) or other reputable 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 deposit to open an account. These brokers also offer different kinds of accounts based on your financial means and trading needs. 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 transfers, wire transfers and debit cards, as well as ewallet transfers.
Step 5: Download a forex trading platform.
You need to download the forex trading platform on your computer or smartphone. Take the time to customize the look and feel of the platform to help you better take advantage of forex trading opportunities.
Step 6: Begin your forex trading journey.
Before you start trading forex, you might want to open a demo account using virtual money. Demo accounts can help you get used to the interface of the forex broker without taking unnecessary real money losses. After you feel confident using the platform and your trading strategy, you can start trading forex in a live account.
Bulgaria Forex Trading Strategies
Forex traders from all over the world rely on a few simple strategies with the goal of maximizing their profits and minimizing losses. You can consider using these forex trading strategies to earn better results from your trades.
Global economic news and 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 forex currency pairs.
For example, you can look for information coming out about inflation rates, trade policies and multinational deals made between countries. News trading generally requires careful risk management, good timing 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.
Day trading involves closely monitoring the intraday exchange rate movements of forex currency pairs within a single trading session. These trades can take place anytime during the day and the trader generally exits all positions on the same day. Traders have adopted this method to reduce losses from overnight market volatility.
Some day traders watch the market continuously, while others leave orders and log into their account a few times over the day to adjust trade positions. Day trading is quite common among short-term traders.
Scalping is a strategy that generally involves making numerous trades throughout the day with the goal of taking many small gains and fewer small losses. The small profits earned from minor price movements can add up to a sizable income, although transaction costs can be substantial and need to be factored in.
Rapid price movements during intraday trading sessions can cause significant slippage on your stop-loss trade executions at some brokers. These losses can quickly negate your earnings and eat away at your profits. This method of trading requires a lot of time and focus to track exchange rate movements. Scalping may not be suitable for traders with a full-time job outside of trading.
Momentum trading or swing trading can involve taking overnight positions. Swing traders prefer to buy currency pairs low and sell them high as their exchange rate fluctuates during the week. These traders rely on shifts in market momentum and significant market volatility to profit.
With this method of trading, you can adjust your entry and exit positions throughout the week based on signals from momentum indicators to take profits and cut losses.
Forex Trading Example in Bulgaria
Trading currencies can be a rewarding opportunity to supplement your income. The lev is currently pegged to the EU euro at the rate of 1.9558, so Bulgarians can instead trade the highly liquid euro as a proxy for their own currency.
EUR/USD exchange rate over the last 5 years.
As an example, the EUR/USD forex currency pair is currently trading at 1.1800. You can consider buying €100,000 against the USD. After 1 month, the EUR/USD exchange rate might have risen to 1.2000. You can sell your long €100,000 position at that point and earn a profit of $2,000. If the market had instead declined to 1.1600, you would show a loss of $2,000.
Making Money with Forex in Bulgaria
In Europe, the Bulgarian lev has a higher value relative to the euro than the currencies of some of its neighboring countries, including Russia, Norway and Denmark. The image below shows the current EUR/BGN exchange rate and some of its recent trading ranges.
Best Online Forex Brokers in Bulgaria
Online forex brokers let you trade a variety of currency pairs in the forex market. You can easily manage your trading positions on these platforms. Most of these forex brokers allow you the luxury of 24-hour trading commission-free, although you will still pay away the dealing spread whenever you trade. You generally trade currency pairs on margin using these online platforms.
Take a look at these top forex brokers available online.
You should be familiar with a few basic forex terms before you start trading. Millions of forex traders use these terms regularly during intraday trading sessions.
Pip: The smallest unit of exchange rate movement for a particular currency pair is a pip. Generally, forex pips are a 1-unit movement of the 4th decimal point.
Lot size: The lot size is a standardized trading amount and 100,000 base currency units are the standard lot size at most online forex brokers. You can buy and sell currency pairs in smaller lot sizes at most brokers.
Orders: An order is a command issued to an online forex broker to carry out your trade. When you want to buy one currency against another, you place an order to do so with your broker. To close out that long position, you can then place an order to sell the base currency against the counter currency.
Margin calls: An online forex broker can send you notifications called margin calls asking you to deposit more money. This might occur when you have 1 or more forex trades open and your margin account requires additional funds to maintain the existing position. Many online brokers will automatically close out your positions in this situation rather than issuing a margin call.
Trading European Currencies Can Be Rewarding
Bulgaria has a steady economy. The Bulgarian National Bank is actively engaged in maintaining the value of its lev steady against the euro. Trading currencies can also be a profitable strategy for Bulgarians with short-term and long-term forex market views. You can get involved in trading forex from Bulgaria now.
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