Denmark and the other Nordic countries in the European Union (EU) all have very strict financial regulations that pertain to the forex market. While this may limit the number of brokers willing to deal with Danish clients, the big benefit to Danish traders includes the security of their funds and the solvency and reliability of the forex brokers that accept clients from Denmark.
Keep in mind that not all forex brokers are created equal, so determine your needs as a trader first before selecting a broker to trade through. Once you know your needs, you have a higher likelihood of finding the right broker to fulfill them.
If you think you’re prepared to start trading forex from Denmark, then the next step is to formulate a viable trading strategy that you can incorporate into a trading plan. Keep reading for more info on how to trade forex from Denmark and find the best online forex broker that accepts Danish clients.
Get Started with Forex in Denmark
Getting started as a forex trader in Denmark is relatively easy. Just follow the simple steps to open a brokerage account outlined below so that you can trade forex online.
- Obtain a reliable device such as a smartphone, tablet or computer that you can connect to the internet.
- Research which online forex brokers accept clients from Denmark.
- Apply for and open a margin account with the broker of your choice.
- Use a deposit method accepted by the broker to fund your account.
- Download the broker’s proprietary trading platform software or get access to another platform that the broker supports.
- Make your first trade.
Once you’ve completed these steps, you’ll have a funded trading account with an online forex broker, so you’ll be ready to trade currencies from Denmark.
Denmark Forex Trading Strategies
The next key step consists of developing a profitable trading strategy to improve your chances of success when trading forex. Your choice of strategy could depend on your level of experience, your personality type and the time available for you to trade.
Some of the most popular trading strategies that have yielded positive results for traders are listed below:
Day trading: This strategy limits all of the trader’s transactions to a single trading session. Day trading involves using a variety of trading techniques, although all trades are closed at the end of the trading session to avoid additional overnight risk.
News trading: News traders try to profit from strong moves in exchange rates often seen after the release of sensitive economic or other news.
Scalping: This technique aims to profit from extremely short-term market moves. The scalper typically enters and exits the market quickly to capture small profits.
Swing trading: Also known as momentum trading, swing traders generally use momentum technical indicators like the relative strength index (RSI) to anticipate highs and lows in the market so that they can position accordingly. Since the strategy has no time constraints, swing traders can take overnight positions.
Trend trading: Identifying an overall trend and taking a position in the market is the basis for this often long-term strategy. Trend traders typically establish positions along with the trend and stay in the trade until the end of the trend when they close out their positions.
This daily chart shows a downtrend in the USD/DKK currency pair from 6.95 in April 2020 to 6.50 in July 2020 that a trend trader could have benefited from by shorting the market. Also shown are the 10-day moving average and 14-day ADX trend indicators that a technical analyst might use to assess trend direction and strength. Source: MetaTrader.
Forex Trading Example in Denmark
Denmark’s national currency is the Danish krone that has the ISO code DKK and the currency sign “kr.” The Danish krone is further broken down into 100 smaller units known as øre.
The krone is pegged to the EU’s euro within the ERM II, and the Danish central bank, known as Danmarks Nationalbank, issues the krone and manages its value. According to the Bank for International Settlements (BIS), the DKK ranked 22nd in forex market turnover with a market share of 0.6% among global currencies in April 2019.
A recent quote for the USD/DKK exchange rate was 6.50 Danish krone to 1 U.S. dollar. If you expect the USD/DKK exchange rate to rise in future, then you could buy 100,000 U.S. dollars versus the Danish krone today at that 6.50 exchange rate.
If your view turns out to be correct and the USD/DKK exchange rate rallies to 6.55, then your trading gains could be computed as follows:
100,000 USD x (6.55-6.50 DKK/USD) = 5,000 DKK
To convert that amount of Danish krone to U.S. dollars, you would use this calculation:
5,000 DKK ÷ 6.55 DKK/USD = 763.36 USD
On the other hand, if your view turned out to be wrong and the USD/DKK exchange rate fell to 6.45, your trading loss would be calculated as follows:
100,000 USD x (6.45-6.50 DKK/USD) = -5,000 DKK
When converted into U.S. dollars at the current exchange rate, that loss would be:
-5,000 DKK ÷ 6.45 DKK/USD = -775.19 USD
Making Money with Forex in Denmark
The key to making money trading forex from Denmark involves developing a successful trading plan. The core of this plan should consist of a profitable trading strategy, but you’ll also need sound rules for position sizing and managing your money, as well as the discipline required to stick to your plan.
Coming up with a good trading strategy incorporated into a decent trading plan takes time and effort, but you’ll find the rewards worthwhile. Remember, strategies that show initial promise might ultimately yield lackluster results as market conditions shift.
If all of that advance planning lies outside your current skill set, then you can also easily get started trading forex by following a forex trader with a proven track record. All you will need to do is open an account with a broker that supports that form of copy trading.
Best Online Forex Brokers in Denmark
If you’re based in Denmark, your options for a forex broker include many top-level online brokers that meet the strict requirements of the local regulatory authority, Finanstilsynet or the Danish Financial Supervisory Authority (FSA). Danish FSA-regulated forex brokers can be found on the FSA Company Register.
Even if the broker lacks oversight from the Danish FSA, under EU law Danish traders can still access the forex market through any broker regulated in another EU jurisdiction within the European Economic Area. Furthermore, the European Securities and Markets Authority (ESMA) provides considerable protection for traders within the framework of its Market in Financial Instruments Directive II (MiFID II) and Markets in Financial Instruments Regulation (MiFIR).
If you’ve never traded or are completely unfamiliar with the forex market, many of the top forex brokers offer excellent educational resources. You can browse among the following online brokers available to Danish traders to find the one best suited for your needs and experience level.
The many unique terms used by forex traders to describe features of the currency market have evolved into a form of jargon novices should familiarize themselves with. Here’s some of the more common of these terms:
- Lot size: A standardized trading unit. In the retail forex market, a standard lot generally refers to 100,000 base currency units, while a mini lot refers to 10,000 units and a micro lot to 1,000 units.
- Pip: Originally an acronym that stands for “percentage in price,” a pip refers to the smallest exchange rate movement for a currency pair.
- Margin call: Refers to when a broker requests additional margin for you to continue to hold your existing positions in your trading account. Some online brokers instead automatically liquidate positions if there’s insufficient margin in your account.
- Order: Instructions given to your broker to make trades for you. Common forex market orders include market, limit, take profit and stop-loss orders.
Is Trading Forex from Denmark for You?
No matter whether you wish to trade forex from Denmark or anywhere else, you’ll need market knowledge, a successful trading strategy and enough discipline to follow your trading plan. Traders who meet those requirements generally stand a far better chance of trading forex profitably.
Any broker you select to trade through from Denmark should have strict oversight by a respectable financial regulator. You can browse through our list of recommended brokers today to start the process of opening a forex trading account.
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