Forex Trading in Gibraltar

Many traders are surprised to learn that the forex market in Gibraltar is so well-regulated and advantageous for investors. Though the forex trading sphere of Gibraltar is small, the country’s generous tax code and strict forex broker regulations make it an excellent base to trade from. If you’ve ever wanted to learn more about how to trade forex, our guide will help you navigate the forex market.

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Disclosure: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 68% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

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Get Started with Forex in Gibraltar 

Getting started with forex trading in Gibraltar is easy, as most international brokers offer service in this territory. Before you open a brokerage account, check and make sure that you have a private connection to the internet. Operating on an unstable or public account can put your information at risk, so be sure to run a speed test on your device before you proceed.

Next, choose a broker you’d like to work with. Your forex broker will determine which currencies you’ll have access to and your overall trading experience. Some of the factors you should take into account before you open your account include:

• Available base currencies
• Available currencies to trade
• Supported platforms (some brokers may require you to download a 3rd-party platform like MetaTrader 4 or 5 before you can place an order)
• Any account maintenance or trading fees
• Territories where the broker’s services are available
• International and domestic regulatory status

Open your brokerage account using your broker’s online process. If you need to download a separate trading platform, check which platforms are supported before you choose your trading software.

After your broker opens your account, add your trading funds. You may be able to add your funds using a variety of methods, including:

• Direct bank transfer
• Credit or debit card purchase
• Transfer from an electronic wallet service like Skrill or PayPal

It might take a few days for your deposit to appear in your account, especially on your first transaction. After your deposit makes it into your account, you can begin forex trading by placing your order. 

Gibraltar Forex Trading Strategies

With a strong base currency and stable international relationships, you’ll find a wide range of forex trading strategies to use to earn a profit in Gibraltar. Most traders in Gibraltar use 1 of 2 major market analysis methods to inform their trades: fundamental analysis and technical analysis.

The right trading strategy for you will vary depending on the currency pairs you want to trade and the length of time you intend to hold each position. Let’s take a closer look at when each market analysis method is best used and how you can get started with each option. 

Fundamental Analysis

Fundamental analysis is a type of market study that examines the underlying economic forces and market conditions that drive currency values to shift. If a country has a strong, stable economy, its currency will be worth more when compared to countries with less stable political structures and economic institutions. Traders who use a strategy based on fundamental analysis examine a range of primary sources to gather “clues” on the underlying state of a country’s economy, including:

• GDP reports
• Unemployment data
• Federal interest rates
• Business sentiment and consumer confidence indexes

The majority of traders who use fundamental analysis take a long-term approach to trading, holding their positions for weeks or months at a time to make an attempt at the largest possible profit. 

Technical Analysis

Unlike traders who use fundamental analysis, traders who focus on technical analysis typically don’t spend much time reading economic reports. Instead, they rely on chart patterns and past exchange rate data to predict how a currency pair will move in the future. Some indicators that a trader using technical analysis might search for can include:

• Reversal candlesticks that indicate that a currency pair will soon change its exchange rate direction
• Chart formations that signal a bullish or bearish trend
• “Breakout” candlesticks that indicate a quick increase in price

The breakout trading strategy is a very common pattern used by traders who use technical analysis as their primary market analysis strategy.

Traders who use technical analysis typically take a much shorter-term approach to trading, holding their positions for a few days or hours. In some cases, a trader using technical analysis might use a trading software program to execute trades automatically when buy and sell signals are triggered. 

Forex Trading Example in Gibraltar 

How exactly do forex traders earn money? Let’s take a look at an example of how you can earn a profit by strategically exchanging currencies when your base currency is strong.

Imagine that you believe that the value of the USD will soon rise in comparison to the Gibraltar pound. You deposit £1,000 into your brokerage account. Your broker offers you a maximum of 100:1 leverage, which allows you to place trades worth up to £100,000. In this example, 1 GIP is worth 1.2565 USD. You use your entire amount to take a position in the dollar, which changes your position to a value of $125,650.00.

Soon, you see that the value of the Gibraltar pound is falling in comparison to the U.S. dollar. When 1 GIP is equal to just 1.2500 USD, you decide to close out of your position. You close out your position of USD back to GIP, which leaves you with £100,524.44. Now you’ve made a total profit of £524.44 on this trade. 

Making Money with Forex in Gibraltar

Trading forex in Gibraltar is completely legal — and traders in Gibraltar enjoy a number of advantages when trading, including:

• A strict regulatory system: Every broker offering services in Gibraltar must be registered with the Gibraltar Financial Services Commission or a comparable international regulatory body. 
• A strong base currency: The Gibraltar pound is tied to the British pound sterling, 1 of the world’s major reserve currencies. This means that 1 British pound will always be equal to 1 Gibraltar pound, increasing your buying power when competing with international currencies.

Although traders in Gibraltar have a well-regulated forex system, forex scams are still present. Be sure to check on the regulatory status before you open an account with any broker. 

Best Online Forex Brokers in Gibraltar 

Forex brokers in Gibraltar are required to adhere to strict local licensing statutes. As an investor in Gibraltar, you can choose from a wide selection of licensed, reputable brokers operating internationally. If you aren’t sure where to begin your research, consider a few of our top options below. 

Forex Terminology

When you start trading forex, it’s normal to be overwhelmed by the number of unique terms you’ll need to memorize. Explore some of the most common terminologies below before you start developing your trading strategy.

Pip: A pip is the smallest unit by which a currency pair can move. In most cases, a single pip is equal to 0.0001 of any given currency pair.  

Lot size: A lot size is a standardized trading amount typically set by retail forex brokers at 100,000 base currency units. 

Orders: Most retail forex traders place orders through their broker, who executes the trade on your behalf. An order tells your broker which currency pair you’re buying or selling, the exchange rate you need the order to be executed at and your trading amount. Evaluate the many different types of orders and use a variety of order types to limit loss and automatically take profits.

Margin calls: If you trade on margin, you’ll need to be prepared to handle margin calls (or be prepared to have your positions closed automatically by the broker). A margin call is a broker notification that says if you use leverage to trade and if the losses on your trading positions approach or exceed your available margin on deposit, you must deposit more capital into your account. 

Exploring Forex in Gibraltar

As a territory of the United Kingdom, forex investors in Gibraltar enjoy a comparatively stronger base currency and a high level of market oversight. While Gibraltar has taken steps to ensure that traders only have access to regulated, legal brokers, forex scams are still present in the country. Be sure that the broker you’re working with is registered with the Gibraltar Financial Services Commission or an international regulatory body before you open an account to protect yourself and your capital.