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Forex Trading in Latvia

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As an up and coming European economy, Latvia is enjoying a new level of interest in its economy in recent years. The country’s financial markets have enjoyed an expansion and increased foreign interest based upon the last 15 years of relative stability. The laws regulating forex companies in Latvia are considered some of the more transparent and clear among experts. The Latvian government has also been praised for its business-friendly policies, encouraging a rise in trade over the past decade.

The Baltic Course

Forex brokers doing business in Latvia must pass through 2 levels of regulation — one at the Eurozone level and another at the level of the Latvian government. This regulatory oversight allows forex traders to operate with greater security, although it does introduce some limitations that may disadvantage certain traders while protecting most others. For instance, forex brokers based in Latvia are required under EU regulations to limit leverage to 30:1 and protect nonprofessional traders against negative balances.

Get Started with Forex in Latvia

If you are looking to trade currencies in an unregulated space, then you may need to move outside of Latvia. If you want structure and clearly set conservative rules, then Latvia may be the place for you to begin trading forex. Get started trading forex in Latvia by following these basic steps.

  1. Your internet connection: Latvia provides fast internet in most of its developed regions. You may want to invest in business class internet if you plan on keeping up with forex news and charts in real-time, but more than 10 Mbps of bandwidth is usually not necessary for basic forex trading purposes.
  2. Your broker: Latvia has access to virtually all of the online brokers that are doing business in the Eurozone, so you have plenty to choose from. All of these brokers must submit to strict regulation. There is really no need to go outside of this structure unless you are looking to trade using higher leverage ratios.
  3. Your trading account: Your trading account is the account opened with your chosen broker that holds your funds deposited to use as margin when you trade. The amount that you initially deposit will often determine the level of features you have access to at the broker. Putting more money in the brokerage account connects you to better-dealing spreads, as well as more information and trading perks. Choose the account type that suits you best. 
  4. Your trading platform: Most well known online brokers will give you access to a suitable trading interface. You can typically either use the broker’s proprietary trading platform or one developed by a 3rd party.  
  5. Your trades: You can now begin trading forex once you have taken all of the preceding steps. Remember to trade using only capital you can afford to lose as margin since trading is a speculative activity. 

Latvia Forex Trading Strategies

The first question to consider before you trade forex is what type of trader you want to be. The strategies you will use on a daily basis as a forex trader generally comes from the overall vision you have of yourself as a trader. Take a look at some of the types of strategies that successful traders often use.

BNN News – Meeting between Latvian and Vietnamese officials to discuss financial issues

The Day Trader

As the name implies, day traders will usually close out trading positions by the end of each trading session to avoid unanticipated overnight market risk. Day traders typically need to react quickly to changing exchange rates and market conditions. Sophisticated day traders use automated trading tools that can help increase their trading frequency and take advantage of more trading opportunities by monitoring a broader range of currency pairs. 

The Swing Trader

Swing or momentum traders zoom out a bit more than day traders into the daily and weekly charts, and they may take overnight positions either in the direction of or against the underlying trend with the goal of maximizing profits. News releases and trader emotions may affect exchange rate movements at this scale, so the swing trader typically needs to be aware of both factors. They usually have a working knowledge of momentum technical indicators that they use to signal when markets are due for a reversal, and they generally understand how the news might affect the movement of a particular currency pair. 

The Position Trader

The position or trend trader analyzes the long-term repercussions of economic, monetary and political policies on currency pairs. Short term swings are much less important, and position traders look to identify and follow the underlying trend in a currency pair, so they often do not trade in and out of a currency pair for months at a time. Traders who hold positions for this long must remain patient and avoid the temptation to react impulsively to short-term volatile market moves.

Forex Trading Example in Latvia

Latvia is part of the Eurozone that uses the EU’s euro (code EUR, symbol €) as its currency. Consider the situation where the EUR/USD bid/ask quote is currently at 1.1410/1.1415. You place an order with your broker to buy €40,000 against the U.S. dollar at 1.1415 to take advantage of an expected short-term rise in the EUR/USD exchange rate. Your broker allows you to use a leverage ratio of 30:1, so that will require a margin deposit of at least  €1,333.33 in your trading account to hold that position. 

After 13 hours, the EUR/USD bid/ask exchange rate quote is 1.1470/1.1475. The market has moved up by 55 pips. You earn (€40,000 x 0.0055) or $220. Had the market instead declined by 55 pips when you closed the position out, you would have lost $220. 

Making Money with Forex in Latvia

Latvia Immigration

The blueprint or trading plan that you set up for yourself should carefully direct your trading activities and lay out the tools and strategies you will use to trade the forex market. Some of the financial vehicles that every forex trader should know about are defined below.

  • Going short: Establishing a position where you have net sold the base currency and bought the counter currency in a particular currency pair. This is the opposite of going long the currency pair. You’ll need to have a margin account with your online broker to go short or long a currency pair. You’ll also need to deposit money to use as margin because taking a position requires collateral in case your trade loses money. 
  • CFDs: Contracts for difference are derivative financial instruments that allow you to speculate on market movements in their underlying assets without actually having a position in those assets. Brokers that allow you to trade CFDs often make a wider asset range available to their clients than regular forex brokers that can include stocks and commodities. 
  • Binary options: Exotic option contracts where the holder pays a fixed premium to receive a fixed reward from the writer if a certain market condition is observed before or upon its expiration. For forex binary options, the market condition is generally connected to the exchange rate of a currency pair. Binaries can be used to take long, short or neutral market views. Binary options are often associated with high leverage accounts. 

Best Online Forex Brokers in Latvia

You have a wide selection of forex brokers that will accept clients based in Latvia to choose from. Make sure that your selected broker is strictly regulated by a reputable regulatory authority either within the EU or its local foreign jurisdiction to help assure the safety of your margin deposit.

Account Minimum
100 of your selected base currency
Pairs Offered
80+
Get started securely through FOREX.com’s website
Account Minimum
100 of your selected base currency
Pairs Offered
80+
1 Minute Review

FOREX.com is a one-stop-shop for forex traders. With a massive range of tradable currencies, low account minimums and an impressive trading platform, FOREX.com is an excellent choice for brokers searching for a home base for their currency trading. New traders and seasoned veterans alike will love FOREX.com’s extensive education and research center that provides free, informative forex trading courses at multiple skill levels. While FOREX.com is impressive, remember that it isn’t a standard broker. You can’t invest in the stock or bond market through your FOREX.com and you cannot open an account with tax advantages. The confusing pricing and margin structures may also be overwhelming for new forex traders.

Best For
  • MetaTrader 4 users
  • Beginner forex traders
  • Active forex traders
Pros
  • Impressive, easy-to-navigate platform
  • Wide range of education and research tools
  • Access to over 80 currencies to buy and sell
  • Leverage available up to 50:1
Cons
  • Cannot buy and sell other securities (like stocks and bonds)
  • Confusing margin requirements that vary by currency
  • Limited customer support options
  • Cannot open an IRA or other retirement account
Commissions
$10 value per pip
Account Minimum
$0
Get started securely through IG Group’s website
Commissions
$10 value per pip
Account Minimum
$0
1 Minute Review

IG is a comprehensive forex broker that offers full access to the currency market and support for over 80 currency pairs. The broker only offers forex trading to its U.S.-based customers, the brokerage does it spectacularly well. Novice traders will love IG’s intuitive mobile and desktop platforms, while advanced traders will revel in the platform’s selection of indicators and charting tools. Though IG could work on its customer service and fees, the broker is an asset to new forex traders and those who prefer a more streamlined interface.  

Best For
  • New forex traders who are still learning the ropes
  • Traders who prefer a simple, clean interface
  • Forex traders who trade primarily on a tablet
Pros
  • Easy-to-navigate platform is easy for beginners to master
  • Mobile and tablet platforms offer full functionality of the desktop version
  • Margin rates are easy to understand and affordable
  • Access to over 80 currency pairs
Cons
  • U.S. traders can currently only trade forex
  • Customer service options are lacking
  • No 2-factor authentication on mobile
Account Minimum
$50 USD
Pairs Offered
47
Get started securely through eToro’s website
Account Minimum
$50 USD
Pairs Offered
47
1 Minute Review

Though Australian and British traders might know eToro for its easy stock and mobile trading, the broker is now expanding into the United States with cryptocurrency trading. U.S. traders can begin buying and selling both major cryptocurrencies (like Bitcoin and Ethereum) as well as smaller names (like Tron Coin and Stellar Lumens).

eToro offers traders the opportunity to invest their assets into premade portfolios or cryptocurrencies, similar to services offered by robo-advisors through traditional brokers. Though eToro isn’t a one-stop-shop for everything an investor needs, its easy-to-use platform and low spreads is a great way to enter the cryptocurrency market.

Best For
  • International Forex/CFD Traders
  • New cryptocurrency traders looking for an easy-to-use platform
  • Traders who want to buy and sell cryptocurrencies on-the-go
Pros
  • Simple platform that is easy to master
  • CopyTrader feature that allows new traders to copy the same strategies used by professionals
  • Virtual dummy account that gives you $100,000 to practice trades
Cons
  • U.S. traders currently limited to cryptocurrencies
  • Only 15 major coins available to trade
Account Minimum
$100 USD (or equivalent)
Pairs Offered
69
Get started securely through HYCM’s website
Account Minimum
$100 USD (or equivalent)
Pairs Offered
69
1 Minute Review

HYCM is 1 of the world’s leading forex brokers, offering investors access to over 69 unique currency pairs. However, forex isn’t the only thing the broker offers — HYCM also offers high rates of leverage, stock and ETF trading, commodity investing and much more. Getting started with HYCM is quick and easy, and most investors can open an account in as little as 10 minutes.

HYCM offers a varying fee structure, which allows investors to choose the spread option that’s best for them. A wide range of educational and investing tools are available, which can be equally beneficial to both experienced and novice traders. Though HYCM isn’t currently available in the United States, it can be a great choice for residents of the other 140 countries where it offers service. 

Best For
  • Investors who want a customizable fee schedule
  • Traders comfortable using the MetaTrader platform
  • Islamic traders who need swap-free accounts that don’t build interest
Pros
  • Wide range of currency pairs available
  • Excellent selection of educational tools
  • $0 deposit and withdrawal fees
Cons
  • Not currently available to traders based in the U.S.
Account Minimum
100 EURO
Pairs Offered
50+
Get started securely through AvaTrade’s website
Account Minimum
100 EURO
Pairs Offered
50+
1 Minute Review

A fully regulated broker with a presence in Europe, South Africa, the Middle East, British Virgin Islands, Australia and Japan, Avatrade deals with mainly forex and CFDs on stocks, commodities, indexes, forex, cryptocurrencies, etc. This brokerage is headquartered in Dublin, Ireland and began offering its services in 2006. It offers multiple trading platforms and earns mainly through spreads.

Best For
  • Beginners
  • Advanced traders
  • Traders looking for a well-diversified portfolio
Pros
  • Controlled by regulatory agencies of multiple countries
  • Choice offered in terms of trading platforms
  • Support available in 14 languages and trading platforms in 20 languages
  • Practice/demo account available for trying out
  • Breadth of trading assets
Cons
  • Does not accept customers from the U.S. as it isn’t regulated in the U.S.
  • Transferring funds to the account may take up to five days; withdrawals could take up to 10 days

Forex Terminology

The terminology commonly used among forex traders is very important to learn before you start trading.

  • Pip: The minimum movement in a particular exchange rate, usually a movement of 0.0001 for most currency pairs. 
  • Lot size: A standardized trading amount, usually 100,000 base currency units at most online forex brokers. 
  • Orders: Instructions given to your broker to execute a trade on your behalf. 
  • Calls: An option, but not an obligation, to buy an asset at a particular price at or before a given date. The underlying asset of currency options is an exchange of currencies, so they are always both calls on one currency and puts on the other currency in the underlying pair. 

Does Trading the Forex Market Make Sense for You?

You may not have access to the most exotic trading instruments when trading forex from Latvia, but you should still be able to engage in basic currency trading. Decide what kinds of risks you want to be exposed to when trading. It helps to be systematic about your trading decisions by laying out the specifics of your trading process in a detailed trade plan. Most successful traders build their profits over time by maintaining the discipline required to stick to a consistent, tested and well-planned strategy.

Make sure that you only take in the most relevant and reputable information. Give yourself a better chance of success by bookmarking us and coming back often. We take pride in offering helpful advice about the financial markets.

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