How to Start Forex Trading in Taiwan

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Contributor, Benzinga
April 5, 2024

Taiwan puts a huge emphasis on its forex, recently hitting a record high with its reserves. It is currently No. 4 in the world in foreign exchange reserves with around $484.52 billion in its coffers. The central bank is known for its shrewd management of forex reserves, and more than a small portion of Taiwan’s security comes from its propensity to trade in the marketplace. Taiwan currently boasts the No. 21 economy in the world by gross domestic product (GDP).

Disclosure: 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.
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Attribution: Wikimedia

The government provides a strong regulatory structure for citizens who want to participate in the retail forex market. The New Taiwan dollar has also gained a reputation as a stable currency. Currently, around $24 billion in Taiwanese dollars makes its way around the forex market on a daily basis.

Get Started with Forex in Taiwan

Taiwan’s tight regulation allows it to play host to many reputable forex brokers. Most investors from Taiwan have no need to go offshore. There are measures of protection for those that do, although they are not quite as straightforward. If you want to get started with forex in Taiwan, here are some tips to consider.

  • Connect to the internet: Taiwan is a technologically forward country, so getting a good internet connection should not be difficult. You may need business-class internet to handle all of the information you will take in during trading hours.
  • Finding a forex broker: There are many forex brokers in Taiwan, enough that you can choose the one that most accurately meets your individual idiosyncrasies. If you like trading on the go, choose a forex broker with a mobile platform. You can also get involved in social trading through brokers like eToro.
  • Connecting your bank: Most brokers doing business in Taiwan have competitive transaction fees and industry-standard processing. Most banks in Taiwan integrate well with reputable brokers.
  • Funding your account: You can fund your account from the bank you connected above, your debit card or selected fintech apps.
  • Getting on a trading interface: Your interface should give you information in the format you prefer to see it. If you want simple and straightforward screens because you trade on your phone, don’t stop your search until you find that.
  • Starting to invest: Trade confidently knowing that you have the support of the government as well as clear access to the market through a reputable broker.

Taiwanese Forex Trading Strategies

The type of investor you are plays a big part in how successfully you will trade forex. Take a look at some of the more common profiles to see where you fit in.

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Attribution: The Myanmar Times – President Tsai Ing-wen of Taiwan, known for business-friendly policies

Day Trader

Day traders like to move fast in the market and make money fast. The name day trader comes from the propensity of these traders to be in all cash before they call it quits for the day. The forex market does not close, but that doesn’t mean the day trader is always engaging the market. Cash holdings are an important strategy for this kind of investor, who usually only buys in when there is an instant opportunity. 

Swing Trader

Swing traders do not move quite as fast as day traders, but they are just as focused on the charts. Instead of using minute and hour charts, the swing trader looks at daily and weekly charts to react to and predict patterns. The swing trader is also very good at using trading indicators to help determine where a currency price may move next.

Position Trader

The positional investor is the long-term investor. If you are invested in a position, then you are willing to hold a certain currency until it either hits that position or your assumptions for the investment change. This can take months or even years, but position traders have the patience to wait this out. They are also unemotional about the news cycle, preferring to believe in the long-term balance between price and value.

Forex Trading Example in Taiwan

Imagine that 0.0340/0.0360 is the current price for TWD/USD. You want to order NT$50,000. The margin account with your broker has a rate of 5.55% for the TWD/USD pair, so you can take on the entire NT$50,000 investment and hold only $97.13 cash in your account. 

After 6 hours, the new TWD/USD price is 0.0380/0.0400. This is a 20-point move that grosses you a total profit of (NT$50,000 x 0.0380) – (NT$50,000 x 0.0360), or $100.

Making Money with Forex in Taiwan

With a core strategy in place, you can begin to choose some strategies for your daily actions in the forex market. Here are some strategies that you should be familiar with.

  • Short selling: The strength of the New Taiwan dollar gives Taiwanese investors the ability to short sell more often than traders in other countries. When you short sell, you make money from the weakness of a currency rather than its strength.
  • CFDs: Contracts for differences, or CFDs, allow an investor to trade in and out of currencies without owning them. The CFD is a tool that follows the price of a currency exactly.
  • Binary options: Binary options give investors a yes or no option and a reward or financial punishment based on getting the answer right or wrong. In most cases, the question is about the price of a currency on a certain date.

Best Online Forex Brokers in Taiwan

Choose between the list of solid forex brokers that do business in Taiwan.

  • Forex.com
    Best For:
    U.S. and Global Forex Traders
    securely through Forex.com's website

    CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% to 77.7% 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

  • Pepperstone FX
    Best For:
    Trading Experience
    securely through Pepperstone FX's website

    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.

  • BlackBull Markets
    Best For:
    Lightning Fast Execution Speed
    securely through BlackBull Markets's website
  • AvaTrade
    Best For:
    Non U.S. Forex & CFD Traders
    securely through AvaTrade's website
  • eToro Forex
    Best For:
    Copy Trading
    securely through eToro Forex's website

    CFD trading is not available to U.S. users. 51% 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.

Forex Terminology

Learn the following short list of forex terms to help you in the market.

  • Pip: “Percentage in point,” also called the forex “basis point” 
  • Lot size: The order size you choose
  • Orders: The details of your investment
  • Calls: A contract you can use to control currency and trade

Showing What Financial Independence Can Do

If nothing else, Taiwan is a shining example of how good money management can create other kinds of freedom. The country’s stable currency and top-tier money management have kept its standard of living high even in the midst of one of the most famous autonomy battles on the globe. Taiwan also knows how to step back and let its retail trading space function on its own while providing guidance and protection for investors.

Success in forex comes from studying good examples like Taiwan. Keep your eyes on this website for the latest information and news to help you in the market.

Frequently Asked Questions

Q

Is trading forex in Taiwan legal?

A

Yes, trading forex in Taiwan is legal as long as you use a licensed broker and comply with the regulations set by the Financial Supervisory Commission. It is important to do thorough research and understand the risks involved before engaging in forex trading in Taiwan.

Q

Is trading forex in Taiwan safe?

A

Taiwan is a safe place to trade forex because it has ample regulations to encourage credible brokers to trade in the country.

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 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.