There are more than 1 million active foreign exchange (forex) traders in Africa. Forex markets have been growing steadily in the country and young Egyptians, in particular, are starting to trade from their smartphones and earn good profits. Here is how you can start forex trading in Egypt.
Get Started with Forex in Egypt
Gold and silver coins were among the earliest known currencies exchanged in Egypt. It wasn’t until 1836 that the 1st Egyptian pound (EGP) was coined and circulated. After the National Bank of Egypt was formed in 1898, banknotes in denominations of 50 piastres, £1, £5, £10, £50 and £100 were released to the public.
You can find Arabic texts and Islamic architecture imprinted on Egyptian banknotes.
Banknotes of Egyptian Currency
International brokers have been breaking new ground in Africa by opening up forex markets to Egyptians. Although forex trading is making waves for Egyptians seeking financial freedom, it is restricted by certain local laws and regulations. Some of the imposed restrictions may include a maximum trade amount and maximum balance in your trading account.
The Financial Regulatory Authority (FRA) was established in 2009. It is responsible for supervising and regulating non-banking financial markets in Africa. These markets include capital market, futures exchanges, insurance activities, mortgage finance and forex.
Here’s a step-by-step guide to help you get started with forex trading in Egypt.
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 on the stock exchanges 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 currency pairs with EGP.
Be sure to check the footer of their website for information on the regulatory bodies. If you can’t find any such information from the Securities Exchange Commission (SEC), the Financial Industry Regulatory Authority (FINRA) or other 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 its website. Some forex brokers require a minimum amount of deposit to open an account. These brokers also offer different kinds of accounts based on your financial goals. 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 native currency and fund your account using several options. Generally, these funding options include bank transfers, wire transfers and debit cards.
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 maximize forex trading opportunities.
Step 6: Begin Your Forex Trading Journey
Before you start trading forex, you might want to run a few demos using virtual money. These demos can help you get used to the interface of the forex broker without conceding unnecessary losses. After you feel confident using the platform, you can start trading forex using real money.
Egypt Forex Trading Strategies
Professional forex traders apply certain strategies to improve their chances of making a profit.
Scalping is a forex trading strategy that involves making multiple trades for small margins throughout the day. These short-term trades can last between 1 minute to 1 hour. The cumulative profits gained by the end of the day can be surprisingly high. But beware, you could just as easily miss your profits due to rapid price movements.
This method of trading requires you to actively monitor the forex market on a daily basis. It could prove difficult to sustain profits without ample time to view the forex screeners constantly.
Seasoned forex traders will often exit all their trade positions by the end of the day. This trading strategy is called day trading and can help you avoid unexpected losses from overnight price fluctuations.
Day trading is perfect for traders tending to a full-time job as you can adjust your positions once or twice a day to earn profits. You can manage your account and maintain your margins on the go with this simple method of trading.
Remember, though, that day trading is a risky business and you must be prepared to manage your cash flow carefully. At times, some day traders may not have much cash to work with because it’s tied up in other investments. If you trade on margin, remember that those loans need to be paid back whether the investment works out or not.
Many traders find it hard to strike a good forex trade in a single day. Swing trading is a strategy applied by these traders to identify dips and peaks in currency pair prices. You can look at historical data from previous weeks to determine the movement of currency pair prices and set entry and exit positions accordingly.
These mid-term trades can take place anywhere from a couple of days to 1 week. Swing trading also lets you look past any short-term volatility incurred in the market.
Buying and holding forex currency pairs over a long period is called position trading. Traders can hold their investments for several months or even years before selling. Researching long-term charts and evaluating macroeconomic decisions are essential to making this method of forex trading profitable.
By applying the range trading strategy, you can set suitable entry and exit positions on a forex trade that are within a specific price range. To be successful with range trading, you need to track the performance of trending currency pairs and spot recurring points of highs and lows.
Global economic news that impacts currency rates can be crucial to turning a profit with range trading. Volatile market conditions can present you with plenty of range trading opportunities.
Forex Trading Example in Egypt
Smartphones and fast internet have made forex a trending platform to earn profits in Egypt. The most-traded forex currency pair in Egypt is the USD/EGP.
Currently, the USD/EGP is trading at 15.9896 pounds. If you want to make money off of USD/EGP, you can buy $100,000 worth of currency pairs. Many online brokers let you borrow money as leverage to encourage forex trading, so you won’t have to shell out the entire amount to start trading.
After 3 months, let’s say the USD/EGP is trading at 16 pounds per dollar. If you sell the $100,000 worth of currency pairs you bought, you can make a profit of 80,104 pounds in 90 days.
Making Money With Forex in Egypt
The Egyptian pound is slowly starting to gain value in forex markets. International investors and day traders have made a fortune trading the EGP.
Forex traders in Egypt have had experience building vast wealth in a short time. After the Egyptian pound was trading at 8.88 EGP per dollar, it was devalued in November 2016. Following the breakout of this financial news, the International Monetary Fund (IMF) issued a 3-year loan of USD 12 billion to the government of Egypt. By December 2016, the Egyptian pound had dropped to 19.62 EGP per dollar.
During this period, if you had invested $100,000 in USD/EGP, you could have earned an enormous profit of 1,074,000 EGP by buying and holding your investments for 1 month. These chances are rare but similar price movements could recur for various socioeconomic reasons in the future.
Best Online Forex Brokers in Egypt
Online brokers let you instantly track and trade forex currency pairs on the market. You can sign up for an account on their website and start trading forex within minutes. These forex brokers give you access to financial data such as 52-week highs and lows, price forecasts and historical performances on a single platform.
Many online brokers keep you up to date with current events and news that shape the world’s economies. They also provide a plethora of educational resources and expert analysis to help you gain an edge in your trading tactics.
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Before you begin forex trading in Egypt, you should be familiar with certain terms and meanings. These financial lingos will help you understand the forex market.
Pip: The smallest unit of price movement is called a pip. Currency pairs are generally listed up to the 4th decimal point. For example, if the price of USD/EGP moved from 15.9896 to 16.9899, it is considered a rise of 3 pips.
Lot size: The total number of currency pair units you want to buy or sell is called the lot size. The standard lot size is 100,000 units. You can also trade in micro-lots, which are units below the standard lot size.
Orders: An order is a command sent to the broker for executing a trade. When you want to buy currency pairs, you send out a buy order. Similarly, when you want to sell forex pairs, you place a sell order.
Calls: A call is a notification that the broker sends to your account. This can happen when you have a trade position open for a long time and needs additional funds.
Forex Egypt Provides Pips, Pounds and Profits
The Egyptian pound is luring tech-savvy Africans to trade international currencies for huge margins. The potential to earn profits from minor pip changes has piqued the interest of young Egyptians. Consider trading these pounds for sizable profits.
Frequently Asked Questions
Can you make money with forex trading?
Yes, you can make money with forex trading, but you must invest wisely and monitor the markets carefully, spending only money you can afford to lose.
Is forex investing legal?
Yes, forex investing is legal, but make sure that you’re using a brokerage that is certified or licensed to operate where you live.
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