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Forex Trading in Senegal

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The French served as Senegal’s No. 1 trading partner as recently as 2016 but are not even in the top 10 trading partners today. West Africa’s economic shift away from its former colonial master has created what some experts believe to be a more open and free market economy in the region. This marks the year that Senegal and 7 other West African countries moved away from using the West African Communauté Financière Africaine franc (CFA franc), ISO currency code XOF, as their main currency. The countries will begin using the eco in its place this year.

Best Exchange Rates — the CFA franc, which Senegal will change to the eco if everything stays on schedule

The eco remains pegged to the euro with a French guarantee of its value, prompting some to call it nothing more than a renaming. The major difference between the eco and CFA franc is that Senegal and its other trading bloc countries will no longer be required to keep 50% of its foreign exchange reserves with the French Treasury. Some experts believe this would disincentivize the French to back the eco should a crisis arise. The forex market awaits more information.  

Get Started with Forex in Senegal

The Central Bank of West African States (BCEAO) is currently the only financial authority with the ability to regulate foreign exchange activities in the region of West Africa. It does regulate banks and pensions, but it currently has no requirements for forex and CFD brokers. To trade forex safely, remember the following tips.

  1. Strong internet: Maintain your connection to the forex market through a strong and stable internet connection. 
  2. Regulated broker: You will want to choose a broker that is regulated by a reputable regulatory agency, such as the UK’s Financial Conduct Authority (FCA), the Australian Securities and Investments Commission (ASIC) or the Cyprus Securities and Exchange Commission (CySEC). You should have little trouble finding a broker that accepts residents of Senegal.
  3. Acceptable account funding method: You should be able to fund your online trading account using a bank wire transfer, a fintech app, an ewallet or a debit card.
  4. Fast trading platform: Your broker may offer a proprietary trading platform and/or allow you to choose from one of several popular trading platforms that have made a name for themselves over the years, such as MetaTrader. Your main trading platform concerns should be execution times, functionality and efficiency. 
  5. Your 1st trade: Once your trading account is open and funded, you can begin to make transactions in the forex market.

Senegalese Forex Trading Strategies

Opening up a trading account is only a part of the process you will need to go through to become a successful forex trader. Learning to trade forex using one or more of the well-established trading strategies mentioned below is just as important. You will probably also want to develop an overall trading plan that outlines the type of trading you want to do and how you intend to do it. 

Dezeen – Senegal has attracted substantial investments in recent years, most famously Akon’s cryptocity

The Day Trader

Day traders generally open and close positions within a single trading session. These traders sometimes focus on very short-term technical indicators and chart patterns to inform their trading decisions. While financial news releases can also substantially influence their trades, the larger movements of currency pairs based on long-term economic trends and monetary policy shifts often do not interest them as much. 

The Swing Trader

Swing traders tend to be very good at interpreting momentum technical indicators for signs of market reversals. There are some unique traits the swing trader possesses. For one, a good swing trader needs to sense when a trend is ripe for reversal without relying on a set timeline to give them the answer. Because market swings can happen in the course of hours or weeks, the swing trader may run overnight positions.

The Position Trader

Position or trend trading generally involves following longer-term market moves. Some position traders can be very good at identifying currency pairs that are misaligned from their purchasing power parity values, for example. They expect the value discrepancy to eventually correct itself, so they might enter a trade to profit from that. 

Forex Trading Example in Senegal

In this example, 549.86/96 is what USD/XOF is currently trading at. You want to buy $25,000 using a leverage ratio of 30 to 1 at your online forex broker. Your broker lets you control that position with a margin deposit of $833.33 in your trading account. 

After 7 hours, USD/XOF makes a 20-pip move to 550.16/26, so you decide to sell out your long $25,000 position versus the XOF. Your profit is ($25,000 x 0.20) or 5,000 XOF.

Making Money with Forex in Senegal

Source

You can look for focused strategies to incorporate into your trading plan that you can lean on and master.

  • Going short: Traders will sell a currency pair to go short when they expect a currency pair’s exchange rate is likely to fall.
  • CFDs: Traders can use contracts for differences, or CFDs, when they do not wish to involve themselves with delivering or receiving the actual underlying asset. The values of CFDs are pegged to the underlying asset’s market value, but you never own the asset. 
  • Binary options: Binary options are exotic derivatives that confer the right to receive a fixed payout in return for an upfront premium if a certain pre-specified market condition exists at or before expiration. 

Best Online Forex Brokers in Senegal

Many foreign online forex brokers will do business with Senegal residents. Choose the brokers you work through by their feature set and integration with the rest of your digital financial chain, as well as by the quality of their regulatory environment.

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

You’ll benefit from having a clear grasp of the terms that are commonly used among forex traders in fast-paced market trading.

  • Pip: The smallest unit of movement in an exchange rate
  • Lot size: A standardized trading amount 
  • Orders: Instructions given to your broker to execute trades for you
  • Calls: Contracts granting the holder the right, but not the obligation, to purchase an asset at a given price at or before a specified date. An option granting the right to sell is called a put. Currency options are always calls on one currency and puts on another currency since the underlying asset is a pair of currencies. 

The New West African Currency Ecosystem

Senegal and its West African neighbors are embarking on an interesting journey of independence from France with the birth of the eco. It remains to be seen whether the country will maintain the monetary and fiscal discipline necessary to preserve the value of the eco. 

If you are looking to profit from these once-in-a-lifetime changes in African-European relations, or if you just have an interest in trading more common currency pairs, you will need a regularly updated source of information from experts. Be sure to bookmark our website so that you can keep abreast of relevant news and bright ideas you can put into practice in the exciting foreign exchange market.

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