A Guide to Trading Forex in the Philippines

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Are you based in the Philippines and want to trade forex? There’s a valid question about the legality of trading forex in the Philippines, but here’s a hint: Trade through international brokers based outside of the Philippines.

The Philippines has an emerging nation status and has become a minor hub for forex trading. The country is also home to a growing clientele for foreign-based forex brokers that accepts clients from the southeast Asian nation. 

The SEC in the Philippines has also taken an unusually adversarial stand against forex trading. It has issued 2 advisories over the past few years stating that forex trading is illegal in order to discourage fraud and debilitating losses among private individuals. 

Quick Look: The Best Forex Brokers in the Philippines

  • Forex trading is illegal in the Philippines. However, you can use a reputable broker based outside of the Philippines in order to participate in this market.
  • Forex trading is different than stock trading. Before you dive into this market, take time to explore educational resources to learn about how to trade.
  • Picking a broker is just as important as the trades you make. We explore criteria you can use for choosing a broker below.

What You’ll Need to Know Before You Start Trading

The forex market is a $5 trillion-a-day market that stays open 24 hours a day, 6 days a week.  Knowing the best hours to trade and which are the best currency pairs to trade during those times could be a factor to incorporate into your trading plan.

Since questions may exist about the legality of trading in the forex market among those who live in the Philippines, you’ll need to find a reputable broker based outside of the Philippines to accept you as a client.

Trading successfully in the forex market is not especially easy, so if you have no experience trading and are completely unfamiliar with currencies, you might want to do some research and open a demo account with an offshore forex broker for practice. 

Forex trading has a well-earned reputation for causing retail trader losses, so the more you know about the factors that affect the valuation of currencies, the more likely you’ll succeed in a market where the vast majority of retail traders fail to profit. 

You can learn how to trade forex

  • Through online resources provided by educational firms or prospective brokers that offer services in the Philippines. 
  • By learning forex trading strategies.  
  • By immersing yourself by practicing in a demo account. 
  • Using a social trading platform that lets you follow and execute the transactions of more experienced traders with well-established and profitable track records in your own account.  

Knowing what you’re getting into when you finally open and fund a live account can be invaluable to your success as a trader. 

The first thing you’ll need is a U.S. dollar-denominated bank account and a PayPal account or an account with another international online payment company that your chosen broker can accept for deposits. 

You may be able to open trading accounts with other major currencies, like euros or pounds sterling, but the U.S. dollar often makes the most sense since it’s universally accepted by forex brokers and banks. You could then arrange to transfer funds from your dollar-denominated bank account into your online payments account and then into your online brokerage account to make a margin deposit. 

This route involves an additional step, but it may be preferable to making a bank transfer directly to your forex broker just in case that could be observed by local authorities in the Philippines who are against forex trading. 

All About the PHP 

With a population of 102 million, the Philippines is the 13th-largest country in the world. The nation’s currency, the Philippine peso or piso (ISO:PHP), is symbolized by ₱ and ranks 33rd among the world’s currencies by turnover. 

The PHP currency has historically declined against the U.S. dollar, from 3:1, which was its black market price during the Bretton Woods-dominated era of the 1950s, to 2 successive devaluations that left the PHP at pegs of 3.90:1 and 6.43:1 in 1970. The currency continued to devalue despite efforts to stabilize it, was pegged at 11:1 by 1983 and 20:1 against the U.S. dollar by 1986. 

The Philippines’ New Central Bank Act paved the road for PHP to become a free-floating currency in 1993. The PHP currency has since stabilized after an initial decline, and over the last 10 years it has traded from a high of 40.52:1 to a low of 54.36:1 against the greenback, with its all-time low in October 2018.  

Laws and Regulations

Due to a wave of complaints of people losing money in the forex market that involved entities acting as brokers or agents without Philippine regulatory licenses, an advisory was issued by the Philippine Securities and Exchange Commission (SEC). The advisory states that foreign exchange trading in the Philippines is illegal.

It cites a “huge amount of money” invested in U.S. dollars in forex companies to execute forex trades on investors’ behalf. The ‘“experts”’ represented to their clients that they would make a profit trading that was similar or better than investing in the stock market. 

The advisory concludes with: “The public is encouraged to report to the Commission entities operating Foreign Exchange Trading and those acting as agents of these operators.”

You haven’t violated a specific law if you open an online forex account with a foreign broker from the Philippines, according to some Philippine online forex traders who have been trading in the forex market since before these advisories were issued.

They claim that the advisory was simply designed to discourage the general population from opening accounts with local unregulated “experts.” The advisory threatens the imposition of “administrative fees” that will be levied on individuals if they are not in compliance. 

Also, forex trading is not like investing in stocks where you can only lose what you invest. If you take a leveraged forex position, you may be liable for more than your initial margin deposit if the trade goes against you and is not closed out once your account reaches a zero balance. 

Pick a Philippino Forex Broker

Unless you have special authorization, a large amount of money to commit and a bank to trade currencies, you will not be able to open a forex trading account with a Philippine-based broker. Many reputable online forex brokers will accept clients from the Philippines.

You can open an account with an international broker such as IG, Interactive Brokers or FOREX.com if you’re based in the Philippines and are serious about trading forex instead of waiting for the SEC to pass guidelines supportive of forex brokers, which currently looks unlikely.

As long as you meet the broker’s requirements, you can probably open an account with a payment service such as PayPal or Skrill so you can make your deposit. It may be riskier to use direct bank transfers or a credit/debit card as a deposit method from the Philippines, so contact your potential broker for more information. 

No instance of arrest or conviction for a violation of the SEC’s advisory could be found online, although that does not mean that efforts for its enforcement have not been undertaken by Philippine authorities. The penalty, which is not published on either advisory, is merely an imposition of “administrative fees” and the exact amount is not specified by the SEC. 

No target date or schedule for allowing firms to open and conduct regulated forex business has yet been determined. 

How to Execute Your First Trade

Before you execute your first forex trade, learn how to use your chosen broker’s trading platform through its demo account and have an idea of how to place a forex order. 

Depending on the protocol required by your chosen broker’s trading platform, you can buy or sell a currency pair, indicate the quantity you wish to buy or sell and either enter a market order that would get executed immediately at the best price available or a limit order and the exchange rate where you want to deal. 

Trade Forex in the Philippines

No domestic forex brokers currently do business in the country due to an unfavorable local regulatory environment, though established forex traders still use U.S. dollar-denominated bank accounts and make deposits through PayPal, Skrill or other online payment services.

Would you be taking a risk as a Philippine resident opening a forex account with an international broker? Maybe. However, trading any asset involves taking risk, including in the forex market. 

Until regulatory guidelines are structured and implemented, keep in mind that trading forex from the Philippines could present legal risks in addition to the normal forex market risks. 

Looking for more resources on forex trading? Check out Benzinga’s guide on the basics of forex trading, or some of the best books to read as a forex trader.

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