The Somali central bank is not a fan of forex. Recently, Resolution Number 43/G from the institution ordered the closure of all forex trader accounts in private commercial banks.
According to officials, the lack of a strong regulatory structure within the country invited unscrupulous offshore companies to exploit regulatory loopholes and increase risk beyond acceptable metrics for the average investor.
Regardless, the forex industry in Somalia is booming. Savvy investors, mostly centralized in the capital of Mogadishu, avoid Ponzi schemes and research to find well-regulated offshore brokers.
Although the Somali regulatory structure lags behind the schemers, the decentralized nature of the forex market means that everyone has the same opportunity to connect with reputable brokers and invest fairly. We will discuss how to safely engage the forex market from Somalia along with common strategies to profit in the market.
Best Online Forex Brokers in Somalia
Choose only regulated forex brokers to make sure that your information is protected and your account receives payouts when you profit.
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.
- MetaTrader 4 users
- Beginner forex traders
- Active forex traders
- 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
- Cannot buy and sell other securities (like stocks and bonds)
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.
- 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
- 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
- U.S. traders currently limited to cryptocurrencies
- Only 15 major coins available to trade
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.
- Advanced traders
- Traders looking for a well-diversified portfolio
- 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
- 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
Get Started with Forex in Somalia
The way that you start your forex career in Somalia will set the tone for every future interaction you have with the market. Avoiding the scams in the industry also comes from a solid technical foundation. Follow these steps to get started:
- Get the best internet connection. Successful forex trading starts with a solid internet connection. Latency or downtime can mean a missed opportunity. Your broker, trading interface and bank all talk to each other through the connection. Reliable, efficient communication is your best friend in the field.
- Choose a reputable offshore broker. The regulatory structure in many neighboring countries helps to protect your investments. You can find reviews of brokers through a simple Google search. You should also visit the websites of the agencies that regulate the brokerages you are vetting.
- Connect your bank account to your broker. You will move money in and out of your investment account through your outside bank account. Any reputable broker will also make you verify your identity. Make sure your broker allows you to withdraw money when you want. You can check this through online reviews and the broker’s written policy.
- Fund your investment account. After you make sure that your broker lets you move your money as you please, you can feel safe transferring money from your 3rd party account into your brokerage account. Only transfer money you are willing to lose.
- Choose a trading interface. You may work through your broker’s trading user interface (UI). You may also choose a popular UI such as Metatrader.
- Invest. After you have a stable and reliable investment setup, you can begin to trade.
Somalia Forex Trading Strategies
Now that you have protected your investment from fraudulent brokers, you can begin to learn the strategies to trade forex. Here are some of the most common trading strategies to learn:
Scalpers move in and out of the market very quickly, sometimes holding trades for no more than a second. This kind of trading is agile and high frequency. It requires a sophisticated trading setup that may include automated bots that trade according to a program.
Scalpers must also have incredibly fast reflexes to react to sudden market moves. These moves are based almost completely off chart patterns — long-term fundamentals don’t matter much to this type of forex investor.
Short-term traders who don’t necessarily want to be scalpers can learn momentum trading. In order to trade successfully in this space, you need to learn to read trends and ranges in currency patterns. Trends occur when a currency price moves quickly in 1 direction. Ranges create support and resistance levels for prices to bounce within for a while. News events usually drive the momentum of currencies, and traders need to have a way to access news feeds in real time. In many cases, your broker can help with this.
If you are a position trader, you are nearly the exact opposite of a scalper. Position traders are very concerned with long-term fundamentals. Position traders may stay in 1 investment for months or years before moving on. Investors in this space are looking for larger profit margins because the frequency of their trading is relatively low.
Forex Trading Example in Somalia
SOS/USD is currently trading at 0.00175/0.00195. You want to buy Sh.so.250,000 now and sell when the price goes up later. You will need $30.67 cash in your account to control Sh.so.250,000 because the margin rate for the SOS/USD currency pair is 6.63%.
After 5 hours, you note that the price of SOS/USD has risen to 0.00200/0.00220. This is a 0.5 point increase, and your final profit will be $12.50 — (Sh.so.250,000 x 0.00200) – (Sh.so.250,000 x 0.00195) — if you sell at that point.
Make Money with Forex in Somalia
Now that you know the common types of forex investor, you can start looking at the different ways to make money in forex:
- Short selling. Weak currencies may be more likely to fall in price than rise over time. If you believe this is true, you can short sell the currency and profit when the price goes down instead of waiting for it to go up.
- Contract for differences (CFDs). CFDs track forex currency prices. Certain brokers deal in CFDs instead of currencies. For all practical purposes, they behave the same way. However, you do not actually buy or sell currencies when you buy and sell CFDs although your account value moves with the price.
- Binary options. The binary option allows you to profit from a yes or no decision. These kinds of options don’t directly track forex currency prices. Your wins and losses are usually larger than traditional forex trading.
Work Around Regulation
Somalian officials are trying to catch up to the rest of the financial world in terms of regulation. This doesn’t mean you have to wait until they get it right to trade from Somalia. The steps above will help to ensure your financial safety should you choose to join the global financial retail space.
Get a Forex Pro on Your Side
FOREX.com, registered with the Commodity Futures Trading Commission (CFTC), lets you trade a wide range of forex markets plus spot metals with low pricing and fast, quality execution on every trade.
You can also tap into:
- EUR/USD as low as 0.2 with fixed $5 commissions per 100,000
- Powerful, purpose-built currency trading platforms
- Monthly cash rebates of up to $9 per million dollars traded with FOREX.com’s Active Trader Program
Learn more about FOREX.com’s low pricing and how you can get started trading with FOREX.com.
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