According to the World Bank, the Solomon Islands is not considered an easy place to do business. The scattered geography includes some incredibly scenic islands but creates huge logistical challenges for foreign industry. Land tenure issues play a part in the high costs of energy and communications, and the government has committed to a constrained tax policy that limits currency movement.
Despite the challenges, those living in the Solomon Islands can still participate in the active forex market. The government can’t do much to stop foreign brokers from offering services, which is a good or bad thing depending on the broker.
If you plan to trade forex from here, make sure that you are willing to put in the time to secure the required facilities and create a strong trading plan.
Get Started with Forex in the Solomon Islands
Trading forex can now be done from virtually anywhere you can get a stable internet connection. Follow these tips to set yourself up to trade forex:
- Fast Internet. The Solomon Islands is not known for its blazing Internet speeds. Islands in general are known for spotty connections, so be sure you have a solid provider before you initiate any forex trades. .
- Select a regulated online broker. You will find various foreign brokers that are willing to do business with traders in the Solomon Islands. Some of them are regulated, but some are not. It’s good practice to stay away from any broker that is not regulated by a well-known financial regulatory agency.
- Open an account. Open a trading account at the broker you decided to use. Some brokers offer several account types, so choose the best for you. .
- Fund your account. You can usually fund your trading account with a bank wire transfer. Even if your bank does not allow efficient account funding, you can usually still get it done through an eWallet account or your debit card.
- Lag-free trading platform. The trading platform you pick should be efficient, intuitive, fully-functional and supported by your chosen broker. You want to avoid input errors, and you don’t want to add any lag-related delays to your trade execution times. .
- Your 1st trade. Now that you are properly set up to trade forex online, you can begin to trade in the forex market from the Solomon Islands.
Solomon Islands Forex Trading Strategies
A good trading setup can make you money, but educating yourself on how to trade forex means finding strategies that suit your personality and that you can use over and over again. Start with the blueprint before you try to drill down into specific tactics.
The Day Trader
Are you someone who prefers to trade fast and take quick profits? If so, then you may want to focus on day trading. As wild as it seems on the surface, the day trader is actually one of the most disciplined types of trader. Because the decision making process needs to take place quickly, success as a day trader depends on preparation.
Working from the Solomon Islands as a day trader may be difficult if you can’t find a solid internet connection. You will need enough bandwidth to allow you to operate efficiently when you have all of your required charts, news services, websites and your trading platform open.
The Swing Trader
Swing trading may work better for someone without a high-grade internet connection. Swing traders may hold a trade for days or even weeks at a time, so you don’t have to have lightning fast reflexes.
Swing trading requires excellent decision making, a knack for following trends and knowing how to determine when trends are about to correct or reverse entirely. Swing traders typically know how to read momentum technical indicators very well and how they can be used to signal market reversals.
The Position Trader
Position or trend traders are generally patient and often focus on long term valuation analysis. Although many trend traders use technical analysis, they might also look for situations when a currency’s market value against another currency is straying away from its actual value in terms of its purchasing power.
You may not need speed, but you need to have the right market view to profit from it. Over the months or years that they may hold a trade, position traders need to have confidence that their analysis was correct. A wrong marketcall can mean a sustained and substantial loss, so discipline and advance planning is required to cut losing positions when appropriate.
Forex Trading Example in the Solomon Islands
The currency used in the Solomon Islands is the Solomon Islands dollar (SBD) that has the code SI$ to distinguish it from other dollar currencies. A current quote for the USD/SBD exchange rate is 8.1777/8.1787.
If you think the SBD will fall against the USD, you may want to buy $100,000 and sell 817,870 SBD at 8.1787. If your broker offers a leverage ratio of 30:1, then that means you can control that position with an initial margin deposit of $3,333.33 in your trading account.
After 11 hours, the USD/SBD exchange rate moves up to 8.1797/8.1807 and you close out your trade for 10 pips profit at 8.1797. Your realized gain is ($100,000 x 0.00100) or SI$100.
If the market instead stayed stable, and you decided to close the position out at the bid side of 8.1777 for a loss of 10 pips, you would have lost SI$100.
Making Money with Forex in the Solomon Islands
Once you have chosen an overall trading strategy type, you can begin to choose the specific tactics you will use and incorporate them into your trading plan. Here are some common terms that many traders use:
- Going short. When a trader expects a currency pair to fall in value, they may sell the base currency and buy the counter currency. That is called “going short” the currency pair.
- CFDs. Traders can trade contracts for differences (CFDs) that have a currency pair as the underlying asset as a proxy for trading the currency pair itself. These derivative contracts are generally cash settled.
- Binary options. Binary options are an exotic option type that gives the holder a fixed payout in return for an up front premium if a specific market scenario occurs either during its lifetime or at expiration.
Best Online Forex Brokers in the Solomon Islands
There are plenty of international online forex brokers that will accept residents of the Solomon Islands as clients. Be very careful to avoid using any online broker that lacks oversight from a reputable financial regulatory authority.
- securely through Forex.com's websiteBest For:Forex Trading
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 72% 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.
- securely through IG Markets's websiteBest For:Forex Execution
Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. You could sustain a loss of some or all of your initial investment and should not invest money that you cannot afford to lose.
- securely through eToro Forex's websiteBest For:Demo Accounts
CFD trading is not available to U.S. users. 74% 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.
Below are some of the most commonly used forex terms that you should get to know before you start trading.
- Pip: the smallest exchange rate movement in a currency pair. Usually represents a move of 0.0001 in the exchange rate.
- Lot size: a standardized trading amount. Usually 100,000 base currency units at online forex brokers.
- Orders: commands given to your broker to execute transactions on your behalf in the market.
- Calls: contracts that give the holders the right, but not the obligation, to purchase an asset at a specific price at or before some specified point in the future. Forex options are always both calls and puts since their underlying asset is an exchange of currencies.
Trade Forex from the Solomon Islands
The Solomon Islands may not provide ideal conditions for trading currencies. The government does very little to make the concept inviting and the required stable internet connection may not be available in your area.
However, those who can access the internet can open a trading account with an online forex broker to trade currencies through while enjoying the incredibly scenic islands of this beautiful country. Take your time to educate yourself about how to trade and to find the right tools and a good broker to trade with.
You might also want to pick a trading style that does not require the fastest internet, if you find internet speeds in your area too slow. Having the best information will also give you an advantage over other traders. Bookmark our website to connect yourself to the latest financial market information.
Get a Forex Pro on Your Side
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