Known as “Africa in miniature” for its geological and cultural diversity, Cameroon became a republic in 1984. This central African nation uses English and French as their official languages, but Cameroon’s ethnically diverse population of 20 million speaks over 250 native languages.
While the country has strict controls over its currency, Cameroonians can trade in the forex market with a number of international brokers that accept clients from Cameroon. Think you’re ready to try your hand at trading in the forex market? You’ll first need to find a reputable forex broker to get started trading forex in Cameroon, and it’ll also help to develop a profitable trading plan.
Get Started with Forex in Cameroon
Getting started as a forex trader in Cameroon is fairly easy. Just follow the steps below to open a trading account to begin to trade forex online:
- Obtain a modern device such as a smartphone, computer or tablet that you can connect to the internet.
- Research the best forex brokers that accept clients from Cameroon.
- Apply for and open a margin trading account with the broker that you’ve selected.
- Deposit funds into the account via a payment method that the broker accepts.
- Download the broker’s proprietary trading platform or a trading platform supported by the broker.
- Make your first trade.
Once you’ve completed these steps, you’ll have a funded trading account with an online forex broker, which is all you need to begin trading forex from Cameroon.
Cameroon Forex Trading Strategies
If you want to trade forex successfully, the next step consists of developing a profitable trading strategy that you can incorporate into a trading plan. The type of strategy you decide to use will depend in part on your personality type, trading experience and the time that you’ll have available to dedicate to developing and using your trading skills.
Many successful forex traders make money by using one or more of the following popular strategies:
Day trading: The term refers to a wide range of strategies, although a day trader generally closes out all positions at the end of the trading session or “day.” By closing all positions, the day trader avoids taking risks in other less liquid sessions that holding positions overnight can entail. Since the forex market stays open continuously between 5 p.m. EST Sunday and 5 p.m. EST Friday, the forex day trader typically selects a specific trading session to operate in.
Trend trading: One of the most traditional trading strategies, trend trading involves the identification of a major or minor trend and then looking for opportunities to establish a position in a currency pair to profit from that trend. The trend trader generally liquidates their position once they have determined that the trend has concluded.
Scalping: This short-term trading strategy involves profiting from many very small market moves. The scalper enters and liquidates positions quickly with the goal of capturing small profits each time.
Momentum or swing trading: Swing traders take advantage of directional shifts in the market signaled by technical momentum indicators. These indicators are often used to show when a market reversal seems likely. Since this strategy has no time constraints, swing traders often take overnight or multi-session positions.
News trading: This strategy involves keeping a keen eye on geopolitical news and economic releases. News traders generally wait for an important economic release and then set up their positions accordingly to profit from the increased market volatility.
This daily 1-year chart displays a year of the exchange rate and trading volume figures for the USD/XAF currency pair. A trend trader could have profited from the significant market decline seen in the pair from April to July 2020. Source: XE.
Forex Trading Example in Cameroon
Cameroon’s national currency is the Central African CFA franc (XAF). CFA stands for Coopération financière en Afrique centrale in French or Financial Cooperation in Central Africa in
English. The XAF currency is the currency of 6 independent Central African states that include the Central African Republic, Chad, the Republic of the Congo, Equatorial Guinea and Gabon, in addition to Cameroon.
As 1 of the 6-member states of the Central African Economic and Monetary Community or in the original French, Communauté Economique et Monétaire de l’Afrique Centrale (CEMAC), Cameroon maintains strict regulations on its national currency. The currency has oversight from CEMAC that works along with the Bank of Central African States (BEAC) to fight money laundering that has caused dire currency shortages in the region.
The CFA franc is further divided into 100 smaller units known as centimes in French. BEAC issues the banknotes and manages the CFA franc’s value, which is pegged to the EU’s euro at a rate of 655.957 CFA francs to 1 euro.
A recent quote for the USD/XAF exchange rate was 558.46 CFA francs to 1 U.S. dollar. If you have the view that the USD/XAF exchange rate will rise, then you can buy 100,000 U.S. dollars versus the CFA franc today at that 558.46 exchange rate.
If the USD/XAF exchange rate subsequently rose to 600.00, then you would calculate your trading gains using the formula below:
100,000 USD x (600-558.46 XAF/USD) =4,154,000 XAF
To convert that profit in CFA francs profit into U.S. dollars, you would do the following calculation:
4,154,000 XAF ÷ 600 XAF/USD = 6,923.33 USD
On the other hand, if the USD/XAF exchange rate were to fall to 500, then your trading loss would be calculated as follows:
100,000 USD x (558.46-500 XAF/USD) = -5,846,000 XAF
That loss would be converted into U.S. dollars at the 500 USD/XAF exchange rate using this equation:
-5,846,000 XAF ÷ 500 XAF/USD = -11,692 USD
Making Money with Forex in Cameroon
Making profits in the forex market trading from Cameroon, or from anywhere else for that matter, depends largely on your ability to develop a successful trading plan. The plan should include a profitable strategy, position sizing guidelines and a sound money management component.
Your success depends in large part on how well your trading strategy performs and whether you have the patience and discipline to follow your plan. Any viable strategy that has proven profitable can be incorporated into your trading plan, whether you trade for long-term profits through trend trading, or for short-term profits via scalping and day trading.
Despite the work involved in the development of a viable trading plan, the potential rewards make this a worthy endeavor. Keep in mind that your strategy may yield diminishing results because of constantly changing market dynamics.
Best Online Forex Brokers in Cameroon
To begin trading forex from Cameroon, your first step would be to find a dependable online forex broker that meets your needs. You’ll also want to have a viable trading plan with a profitable strategy, or you could follow a successful trader and copy their trades through a social trading platform.
Retail forex transactions have no oversight from the BEAC in Cameroon, but many forex brokers that accept clients from Cameroon are regulated in their local jurisdictions by agencies such as the Financial Conduct Authority (FCA) in the UK and the Australian Securities and Investment Commission (ASIC). EU brokers also need to operate under the Markets in Financial Instruments Directive II (MiFID II) in the EU.
If you choose a U.S.-based broker, their oversight probably comes from the National Futures Administration (NFA) and the Commodities Futures Trading Commission (CFTC). As you can note from the table below, you have many well-regulated forex brokers to choose to trade with from Cameroon.
Forex traders have their own jargon that new traders need to learn as part of their forex training. These unique terms refer to certain aspects of the market that you should be familiar with before you begin to trade. These terms include:
- Pip: An abbreviation for “point in percentage,” the term refers to the smallest movement that can occur in a given exchange rate.
- Lot size: Describes a standardized trading unit. For example, a standard forex lot consists of 100,000 base units. Smaller lot sizes include a mini lot (10,000 units) and a micro lot (1,000 units).
- Orders: A command for your broker to execute transactions in the market on your behalf. Common orders include market, limit, stop-loss and take profit orders.
- Margin call: A form of notice a broker gives to a client to add additional margin funds to their trading account to cover open positions. These days, many online forex brokers just automatically liquidate positions when the margin required to hold them exceeds your account balance.
Is Trading Forex from Cameroon for You?
To achieve success trading in the forex market from Cameroon, or anywhere else for that matter, you’ll probably need knowledge of the forex market and a comprehensive trading strategy incorporated into a viable trading plan. Traders who meet these requirements generally have a much better chance of success than those who don’t.
Also, the broker that you select should be regulated by a respectable financial regulator. You can begin your search for a forex broker by researching the ones we recommend and by opening a demo account to assess their trading platform and evaluate your trading plan.
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