Contrary to popular belief, the Bank of Namibia does not prohibit online forex trading. Though new rules and regulations have been introduced for traders in late 2019, it’s still very possible to trade forex and make money as a resident of Namibia. Our guide to forex trading in Namibia will help you get started and choose the right forex broker for your needs.
Get Started with Forex in Namibia
No matter where you decide to begin forex trading, you’ll go through a similar process when setting up your account. Here’s how to begin trading forex by opening your account.
- Set up a reliable internet connection. The first thing you’ll need to trade is a reliable internet connection. Run a speed test on your desktop computer, phone or tablet and ensure that your connection is stable before getting started.
- Choose a broker. The Bank of Namibia requires that all forex trading be done through commercial banks, authorized dealers or another bureau of exchange. Research brokers offering forex trading capabilities to Namibian residents before creating an account.
- Download your trading platform. Depending on the broker you choose, you may need to download an independent trading platform like MetaTrader 4 or 5. Decide which platform you’d like to use to trade before you begin.
- Fund your account. Though the Bank of Namibia recommends that you deposit at least N$1.6 million into your account before you begin forex trading, you may deposit up to N$6 million into an international account. Link your bank and fund your forex trading account with the amount of money that’s acceptable to you.
- Make your first trade. After your forex broker receives your transfer and clears your funds, you can place your first trade.
Namibia Forex Trading Strategies
The key to earning money while trading forex is to build a solid trading strategy. Many traders in Namibia utilize technical analysis in order to identify candlestick patterns that signify that a currency will shift in value soon.
Here are some of the most common trading signal traders use to influence their trades. Though these signals aren’t guaranteed indicators of profit, they can provide plenty of useful insight to develop your own unique trading strategy.
Return to Mean Strategy
When a currency pair is following a particular trend, you might want to use the return to mean strategy to calculate where future evaluations might fall. This strategy is popular with traders because it’s simple to use: first, use as many data points as you can gather to determine the general mean trendline for your currency pair of choice.
When your held currency falls on the lower end of the mean, this may indicate a buy signal because it’s likely that the currency will return to the mean in the future. Many traders also set their sell signals at or above the mean to maximize profits.
The breakout strategy is also a simple strategy and you can use it without worrying about math calculations. When you use the breakout strategy, you’ll look for patterns of 1 hour and 30-minute candlesticks begin to form a sideways rectangle. During this period, the currency pair shows very few fluctuations in value and remains relatively consistent.
A buy or sell signal occurs when a candle moves outside of the standard trading zone. It might move up or down in value, but it usually signals the beginning of a short-term trend. Following candles continue in the same direction as the breakout candle. This trend typically continues until a reversal candlestick is identified, which may act as your next buy or sell signal.
Forex Trading Example in Namibia
How does forex trading work? Can you really make money exchanging currencies? Let’s take a look at an example of how forex trading might work as a Namibian trader.
After funding your account with N$2 million, you decide to invest in the USD. After calculating the spread that your broker takes in exchange for servicing your trade, 1 Namibian dollar is equal to $0.057 USD. You convert your N$2 million into USD — you now have $114,000 USD in your forex account.
From here, Namibia sees a period of lowered economic activity and one Namibian dollar is now worth 0.054 USD. You convert your lot of USD back to NAD and are left with about N$2,111,111. From this trade, you’ve gained a profit of N$111,111.
Making Money with Forex in Namibia
Many traders in Namibia believe that there is a limit on the amount of money that they can earn forex trading. This isn’t actually true. The Bank of Namibia only limits the amount of money that you can withdraw into your international brokerage account per year. Though you are limited to depositing a maximum allowance of N$6 million into your brokerage account, there’s no limit to the amount of money you can earn and withdraw back to your domestic bank account. This means that it’s very possible to earn money forex trading as a resident of Namibia.
Though it’s possible to earn money on international exchanges, you are responsible for complying with the regulations set forth by the Currency and Exchanges Act and the Exchange Control Regulations set forth by the Bank of Namibia. You must document and pay taxes on any profit that you earn forex trading and you may only invest with your own money. This means that borrowing money from your broker or trading on behalf of another person may put you at risk of a penalty from the Bank of Namibia.
Best Online Forex Brokers in Namibia
As a trader in Namibia, you may only trade forex through a commercial bank or authorized international dealer per rules set forth by the Bank of Namibia. If you aren’t sure where to get started, consider a few of our favorite forex brokers that offer accessibility to Namibian traders.
Before you trade forex, you should understand some of the basic terminologies you’ll hear from your broker or other traders. Before you make your 1st trade, be sure that you understand the following terms.
- Pip: A pip is the smallest possible unit of any given currency. Every currency except the Japanese yen is calculated to the 4th decimal place. A movement of a single decimal place is considered to be a single pip movement. For example, if the EUR moves from a value of 1.2000 to 1.2010 in relation to the USD, you might hear a trader say that the EUR has increased by 10 pips.
- Lot size: Your lot size is the total number of currency units you’re buying or selling. For example, if you’re selling 1,000 EUR, your lot size is equal to 1,000. Most traders consider 100,000 units of any given currency to be a standard lot.
- Orders: An order is a specific set of instructions you give to your broker to buy or sell a currency. There are a number of order types that you can use to maximize profits, limit loss and ensure that your order is executed at a specific price point.
- Calls: A margin call is one of the risks of using leverage to trade. If you borrow money from your broker and the value of your portfolio goes down, your broker might subject you to a call to deposit more money into your brokerage account to maintain your position. Margin calls can make using leverage especially dangerous, which is 1 of the reasons why the Bank of Namibia requires that you use only your own money to trade forex.
Get Started with Forex Trading in Namibia
Though there is plenty of room for creating profits as a forex trader in Namibia, there is also much room for loss. Before you place your first trade, be sure to cultivate and perfect your trading strategy. Research the many different buy and sell signals and fundamental indicators that traders use to maximize profits. This can help you avoid losing money when exchanging currencies.
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