Although the Central Bank of Mexico (Banxico), the Global Foreign Exchange Committee (GEFC) and the National Banking and Securities Commission (CNBV) all provide regulatory guidance for forex brokers, none of them take full responsibility for forex trading in Mexico. As a result, the safest way for the Mexican retail investor to access the forex market is through offshore brokers.
Regardless of the lack of regulation, Mexico is still 1 of the most vibrant emerging markets in Latin America. The forex industry continues to grow in the country because of the stability and liquidity of the Mexican peso and investor-friendly policies from the government. Learn how to trade forex in Mexico with our guide to the basics.
Getting Started with Forex in Mexico
In order to trade forex safely in Mexico, you should take the time to do business with reputable institutions. There are scams out there that can be easily avoided with a bit of research and due diligence. Here are the basics to get started with forex in Mexico:
- Start with a stable internet: The better your internet connection, the greater your potential for success. Having the ability to execute your winning strategies depends primarily on the connection you have because many strategies require timely input. If you experience downtime or latency when it is time to execute, you can miss your opportunity.
- Create a trading account with a reputable forex trading broker: International brokers do business in Mexico. The Mexican government offers no protection if these brokers are unregulated. Make sure you only do business with a broker that has accreditation from a well-known international regulator.
- Connect your bank account: Accredited brokers should have no trouble connecting to reputable banks. Your broker will have a process for connecting your bank account. Follow the instructions and test the fluidity of deposits and withdrawals before funding the account.
- Deposit funds into your forex broker account: Once you see that you can deposit and withdraw your money when you want, you can think about funding your investment account fully.
- Select your trading platform: The trading interface that you choose may or may not be connected to your forex broker. It should be integrated fully into your setup and add no latency or downtime to your connection.
- Start trading: If all of your working parts are flowing well together, you can begin investing in the foreign exchange market with confidence.
Forex Trading Strategies for Traders in Mexico
There are many different kinds of investors who trade forex successfully. Pick the blueprint that matches your personality for the best results. Here are a few common strategies used by investors:
Speculative Short-Term Trading
Over the short term, investors can make money through high-frequency trading strategies that trim small amounts of profit from the top of a trade. The aptly-named scalp is considered a speculative form of trading.
Experienced investors have the data and experience to invest only when they can predict price action. The fundamentals behind a currency are not very important in this timeframe, which is usually from less than a second to a few minutes.
Mid-Term Trend Investing
Chart patterns have a chance to develop more thoroughly in the mid-term, which could be from a few hours to a few days. Trend investors develop the skill to profit from these patterns that predict movement and price ranges.
If you want to do well in the mid-term, you should also learn how to interpret trend indicators like the Moving Average Convergence Divergence (MACD), Commodity Channel Index (CCI) and Bollinger bands.
Long-Term Position Trading
If you are investing in a position, then you are willing to hold an investment as long as it takes to achieve that position. This type of forex trading is more concerned with how macroeconomics affects the price of a currency. If you like to read about the way that countries interact with each other economically and politically, you may enjoy long-term position trading.
Forex Trading Example in Mexico
Imagine that the current MXN/USD exchange rate of 0.04430/0.04450 seems low. You buy Mex$120,000 to profit from a rise in the rate over the short term. You will need to have $325.01 cash in your brokerage account to hold a Mex$120,000 investment at a margin rate of 6.61%.
After 13 hours, the MXN/USD price is 0.04480/0.05000, a 3-point move. If you sell now, you’ll profit $36 [(Mex$120,000 x 0.04480) – (Mex$120,000 x 0.04450)].
Understanding Forex Trading in Mexico
With your core investment strategy in place, you can now pick 1 or more of the following financial vehicles to drive your investment activities. It is good to have a working knowledge of all strategies even if you choose to focus.
- Short selling: selling a currency before you buy it back and profiting from a lower price
- Contract for difference (CFD): a financial vehicle allowing an investor to profit from price movement in a currency without owning the currency
- Binary options: a speculative investment vehicle that does not directly track the price of a currency pair and offers a binary choice investment model
Best Online Forex Brokers in Mexico
There are many offshore forex brokers that allow Mexicans to invest. Always vet your potential broker for regulation. Here are our top picks for the best online forex brokers in Mexico.
- Best For:Forex Trading in and Outside the U.S.securely through Forex.com NON US's website
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% 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.
The products and services available to you at FOREX.com will depend on your location and on which of its regulated entities holds your account
Over-the-counter derivatives are leveraged products that carry a high level of risk to your capital. Trading is not suitable for everyone and may result in you losing substantially more than your initial investment. You do not own, or have any rights to, the underlying assets. You should only trade with money you can afford to lose.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75.6% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.
CFD trading is not available to U.S. users. 76% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
80.84% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Capital.com is regulated by the Securities and Commodities Authority.
Forex Terminology
Around the world, forex investors have a basic vocabulary for easy communication:
- Pip: a value that is usually pegged at $0.0001 and represents the tiniest fraction of currency allowed in the forex market
- Lot size: normally 100,000 currency units, the lot size is the size of the order with your broker
- Orders: the currency you want from the broker
- Calls: a contract that controls a currency and has a tradable intrinsic value
Forex Mexico: Moving within a Developing System
Mexico is a stable financial system, but the country does not take any responsibility for its forex investors. You’ll be working from a relatively stable currency, but the research to find a reputable broker is your duty alone.
In general, any offer that sounds too good to be true probably is. No broker can guarantee profits in forex — successful investors study the markets relentlessly and practice trading strategies daily. If you aren't sure where to start finding a broker to trade the foreign exchange market, check out Benzinga's Bests Forex Brokers.
Frequently Asked Questions
Can you trade Forex in Mexico?
Yes, it is legal to trade Forex in Mexico.
Is it safe to trade Forex in Mexico?
The Mexican governmet does not regulate Forex brokers closely, so the safest option is to trade Forex in Mexico using an off-shore broker.
How do I find a reputable Forex broker in Mexico?
To find a reputable broker that trades Forex in Mexico, you can use the list above.
Get a Forex Pro on Your Side
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Learn more about FOREX.com’s low pricing and how you can get started trading with FOREX.com.