Forex Trading in Turkey

Online forex trading was first allowed in Turkey in 2011 and has been subject to changing regulations since then. Despite strict oversight of forex brokerages, trading forex is legal for Turkish residents who can open forex accounts with Capital Markets Board of Turkey (CMBT) regulated forex brokers. 

You may have to meet some stringent requirements if you reside in the country and plan to trade forex with a locally-regulated broker. Even if you qualify and have the funds, you’ll still need a plan of action and either a CMBT licensed or an international forex broker to trade through. Read on to find out what you’ll need for trading forex in Turkey. 

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Get Started with Forex in Turkey

After passing legislation to further regulate the forex and other markets in 2017, the CBMT imposed strict guidelines for licensing forex brokers that accept clients from Turkey. This move eliminated many poorly regulated and unregulated forex brokers from operating.   

In addition to the strict requirements for forex brokers operating in Turkey, the CBMT raised the minimum deposit for Turkish forex traders to 50,000 Turkish lira (TRY) to open a forex trading account. Since Turkey has a large Muslim population, Islamic traders who wish to comply with Sharia law may find forex brokers in Turkey that offer swap-free Islamic trading accounts since Islam is the country’s official religion. 

Even if you’re new to trading in any financial market, you can begin trading forex through an online broker. Just take the 6 basic steps listed below:

• Step 1: Obtain a reliable device such as a smartphone, tablet or PC with an internet connection.
• Step 2: Choose an online forex broker that accepts clients from Turkey.
• Step 3: Open a margin account with the broker you’ve selected.
• Step 4: Deposit the required funds in the account via a payment method the broker approves of. 
• Step 5: Download or get access to the broker’s proprietary forex trading platform or a compatible platform accepted by the broker. 
• Step 6: Make your first forex trade. 

Turkey Forex Trading Strategies

After you’ve opened your account and have the capability to execute forex trades, you’ll want to develop a trading plan with a good trading strategy incorporated into it that you have practiced using. Having a viable trading plan and strategy significantly increases your chances of being successful when you trade forex. 

Depending on your preferences, a number of popular strategies could be used to trade forex that might suit your experience level and personality type. The strategies listed below have proven profitable for many traders and have become popular with forex traders.   

• Trend trading: This trading strategy seeks to profit by identifying a long, medium or short-term direction in the market known as a trend that can be rising or falling. A trend trader looks for retracements in the trend to establish positions along with the prevailing trend until closing out positions upon the trend’s conclusion. Many trend traders use trailing stop orders to protect their profits. 

• News trading: An intraday strategy that takes advantage of the extreme volatility in currency pairs often seen after the release of sensitive economic data or other geopolitical news. The news trader generally establishes positions right after the release of the news in either direction depending on how the currency pair reacts. 

• Scalping: This trading strategy relies on very short-term moves in the forex market to take a few pips of profit frequently. Some online forex brokers don’t allow clients to use this strategy, while others might require additional funds for a trader to employ it.    

• Day trading: This intraday trading strategy implies that the trader closes out all positions at the end of the trading session. Day trading means you avoid taking the overnight market risk involved in holding a position after your active trading session concludes. 

• Swing trading: Swing traders generally use momentum-based technical indicators to establish forex positions. These indicators give the trader an idea of which levels may be high or low so that they can take positions accordingly. Unlike day traders, swing traders do not close out positions by the end of their trading session, so they might take overnight positions.

This daily candlestick chart shows an upward trend in the USD/TRY currency pair from 6.0279 on March 3, 2020, to 7.2683 on May 7, 2020. A trend trader could have identified and taken advantage of that move by analyzing the 20-day exponential moving average (EMA) shown in red. The stop and reverse (SAR) indicator displayed on the chart in blue dots might be useful for swing traders. Source: TradingView. 

Forex Trading Example in Turkey

The Turkish lira (TRY) serves as Turkey’s national currency and has the symbol ₺. The Central Bank of the Republic of Turkey issues and manages the Turkish lira which is further broken down into 100 subunits called kuruş. 

The Bank for International Settlements (BIS) reported that the Turkish lira accounted for about 1.1% of daily turnover in the forex market in April 2019. The BIS also ranked the TRY 19th in trading activity in that period among the world’s currencies.

Imagine that a current quote for the USD/TRY exchange rate is 6.8600 Turkish lira to 1 U.S. dollar.  If you had the view that the USD/TRY rate was going to rise, then you could purchase 100,000 U.S. dollars against the Turkish lira at that 6.8600 exchange rate. If the USD/TRY rate then rallied to 6.9600, you can compute your trading profit with the following equation: 

100,000 USD x (6.96-6.86 TRY/USD) = 10,000 TRY

To convert your profit in Turkish lira into U.S. dollars, you would perform this calculation:

10,000 TRY ÷ 6.96 TRY/USD = 1,436.78 USD

Conversely, if your view was wrong, and the USD/TRY exchange rate instead declined to 6.7600, then you could compute your trading loss as follows:

100,000 USD x (6.76-6.86 TRY/USD) = -10,000 TRY

When converted into U.S. dollars at the USD/TRY exchange rate of 6.76, that loss would be:

-10,000 TRY ÷ 6.76 TRY/USD = -1,479.29 USD

Making Money with Forex in Turkey

Making money trading forex from Turkey, as from anywhere else in the world, requires a profitable trading strategy and the discipline to follow your trading plan. If you want to start trading without going through that process, you can use another trader’s trading plan or copy a successful trader via a social trading platform. 

Due to constantly changing market conditions, however, no matter how good your trading plan and strategy are, you may eventually find that an initially successful trading plan might require revisions to remain profitable.    

Best Online Forex Brokers in Turkey

Due to the regulations enacted in 2017, trading forex from Turkey has become very challenging for retail forex traders. For example, locally-regulated forex brokers require a high minimum deposit of 50,000 TRY or roughly $7,288 at current exchange levels to open a forex trading account for Turkish residents.

Additionally, trading in a leveraged account with local brokers is limited to a leverage ratio of only 10:1. Opening a leveraged account with a foreign broker without a CMBT license is strictly forbidden for Turkish residents, although some traders still take the risk of doing this. Taxation of forex trading profits in Turkey may also be an issue, so it may be wise to consult with your tax accountant before getting started. 

Despite those restrictive Turkish regulations, some brokers based outside of Turkey continue to accept retail clients based in Turkey. They also provide them with higher-leveraged margin accounts and a low minimum deposit requirement. Check out the table below for a list of brokers that will accept Turkish clients. 

Forex Terminology

Professional forex traders use a special set of jargon terms among themselves. It will probably help if you familiarize yourself with these terms before beginning to trade or learn about trading. You will probably find knowing these common terms useful:
 

• Pip: This acronym stands for “point in percentage.” It refers to the smallest increment in a currency pair’s exchange rate.
• Lot size: A standardized number of currency units traded. Standard lots consist of 100,000 base currency units, mini-lots consist of 10,000 units and micro-lots consist of 1,000 units. 
• Orders: Instructions made to a broker to execute trades on your behalf. Common order types include limit, take profit, stop loss and market orders.
• Margin calls: When trading positions require extra margin funding as a result of a market move or change in regulations, your broker may call you to ask for more money to be deposited. Some online brokers will instead automatically close out your positions. 

Is Trading Forex in Turkey Right for You?

Trading forex profitably generally requires a trader to accumulate considerable knowledge about the market and how to analyze it. They usually also develop a trading plan that incorporates a strategy they can stick to in a disciplined manner. 

Traders also need sufficient risk capital to fund their strategy adequately and the free time to execute it. If you think you can meet those requirements from Turkey, then consider getting started trading forex.

If you would like to practice forex trading to see if it might suit you, consider opening up a demo account with one of the forex brokers we mentioned. Once you feel comfortable with your strategy’s profitability, you can approach any broker that accepts Turkish clients to open up a funded trading account.