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Forex Trading in Peru

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Like most South American countries, the world of forex trading is a relatively new sphere of financial market speculation for Peruvian residents and travelers. As more and more forex brokers begin offering services to Peruvians, however, it’s now easier to get involved in retail forex trading. 

Have you ever wanted to trade forex in Peru? Our comprehensive guide to brokers, trading strategies and opening your first account will make things easier. 

Get Started with Forex in Peru

Before you can begin forex trading, you’ll need to open an account with a broker offering services to traders in Peru. To start your search, make sure that you have a stable connection to the internet and that your connection is private. Investing from a private, secure internet connection doesn’t only help ensure that you have access to the most up-to-date price information, it also helps keep your personal and banking information out of the hands of criminals.

Once you’re sure that your data connection is private, start comparing brokers. There are a number of international forex brokers offering trading capabilities to traders in Peru. Some of the characteristics you might want to consider when you compare brokers include:

  • Trading, margin and account maintenance fees
  • Currency availability
  • Spanish language customer support, if needed
  • Supported trading platforms
  • Supported deposit methods
  • Local and international oversight and regulation

After you choose a broker you’d like to work with, open an account using your broker’s website. You might also need to download a 3rd-party trading platform depending on which broker you choose.

Once you’ve opened your brokerage account, it’s time to add your trading funds. You can add trading funds using a variety of methods, including:

  • Direct bank transfers
  • Transfers from electronic wallets
  • Funds from a debit card

It might take a few days for your trading funds to appear in your account. Once they do, you can officially place your first forex trade. 

Peru Forex Trading Strategies

The base currency of Peru is the Peruvian sol (PEN). The sol is a particularly volatile currency, which makes it most suitable for short-term and medium-term trading with technical analysis (though it is possible to also use fundamental analysis). Technical analysis is a form of market analysis that uses past chart patterns and exchange rate data to predict how a currency pair’s value will change in the future.

There are profitable technical analysis strategies you can use to earn money trading the sol or another currency. Let’s take a look at a few of the most common technical analysis strategies. Though these patterns aren’t foolproof guarantees that you’ll earn money trading, they can provide you with an excellent jumping-off point to formulate your own unique trading strategy. 

Shooting Star

The shooting star formation is a single candlestick pattern that indicates a likely bearish trend.  When the price is pushed upward and immediately rejected, the candlestick will form a high shadow with a small body. The shooting star formation typically indicates that a price will move lower, which is a sell signal. 

Breakout Strategy

The breakout strategy is another simple technical analysis strategy that you can use for beginner short-term or medium-term trading. First, establish a resistance range for the currency you’re trading. When a candlestick “breaks out” of this range, a buy signal is triggered, as the currency moves above the resistance level. 

Forex Trading Example in Peru

Forex traders earn money by taking advantage of the fluctuating values of different currency pairs. Let’s take a look at an example of how profiting from forex trading works.

Pedro is a trader living in Peru who believes that the value of his native Peruvian soles will soon drop in comparison to the value of the euro. He deposits S/5,000 into his brokerage account, and his broker offers him 10:1 leverage when trading. The value of 1 PEN is currently equal to 0.2400 EUR, which means that Pedro is left with a controlled position of €1,183.22.

Soon, the value of the euro starts to rise in relation to the sol. When 1 PEN is equal to 0.2355 EUR, Pedro decides to take his profits by closing out his position. After the transaction is complete, Pedro’s controlled position of €1,183.22 has become S/5,024.28, Pedro has profited about S/24.28 on this trade. 

Making Money with Forex in Peru

Forex trading is completely legal in Peru and there are no legal limitations on the amount of profit that you can take from your trading. Though you are not guaranteed to earn a profit forex trading, it is not against the law. However, you are responsible for documenting the income you earn from trading and reporting it to the Peruvian tax administration, pertinent to the Peruvian Income Tax Law.

The Peruvian government has taken steps since 2016 to limit forex trading in an effort to combat the funding of terrorist groups and money laundering. The new regulation scheme titled, the “Money Laundering and Terrorism Finance Prevention System,” requires that every broker operating in Peru register with the Financial Intelligence Unit of Peru’s Supervisory of Banking, Insurance and Pensions. Under the new law, traders in Peru must submit identification documentation to their broker before making a trade valued at $200 to $5,000 USD.

For exchanges valued at over $5,000, you must sign a sworn affidavit with your broker stating that your identification documentation is correct and that you don’t plan to use the funds for illegal purposes. The new law also places limitations on “politically exposed persons,” which includes politicians, heads of international corporations and high-level international executives. Your broker must also register your trades as “suspicious transactions” if you’re a nonresident of Peru engaged in trading currencies.  

Best Online Forex Brokers in Peru

There is a growing number of international forex brokers offering services to investors in Peru. Choosing the right broker can make trading significantly easier and even save you money in fee and account charges. If you aren’t sure where you’d like to open your account, consider a few of our top choices below.

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

Forex traders have their own language they use to discuss trades and place orders. Familiarize yourself with a few of the most common forex trading terms below to give yourself an advantage when learning about the market.

Pip: A pip is the smallest calculable exchange rate movement in a particular currency pair. In most cases, 1 pip is a movement of 0.0001 in the currency pair’s exchange rate.

Lot size: A lot size is a standardized trading amount. Online forex brokers generally have a lot size of 100,000 base currency units for the various currency pairs.

Orders: To buy or sell a currency pair, you’ll place an order through your broker. There are many types of orders, and you can use a combination of order types to limit loss and automatically take profits.

Margin calls: If you use leverage to trade forex, you’ll need to know about margin calls. A margin call is a notice from your broker requiring you to deposit more trading funds into your account if your trading positions require more margin for you to continue to hold them. 

Keeping Up With the Changing Forex World

Money laundering and the funding of illegal activities has long been a concern for Peruvian lawmakers. In 2015, Peru’s Supervisory of Banking, Insurance and Pensions disclosed that over 3,000 suspicious transactions have taken place since 2010 worth over $8 billion. The majority of these illegal funds were found to be diverted to illegal mining operations and drug trafficking.

While trading forex is legal in Peru, be sure to keep an eye on how laws are changing and your positions. Never risk more money than you are willing to lose — profits are not guaranteed.

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