How To Legally Start Forex Trading In Bangladesh
Yes, Forex trading is available in Bangladesh. As long as certain rules are followed (no excessive trading without leverage), trading is considered halal in Bangladesh. When considering Forex brokers in Bangladesh, there are two main options:
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Bangladesh regulates brokers. Traders may face restrictions such as lack of leverage and a limited selection of instruments
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Internationally regulated brokers offer a wider range of trading options, including higher leverage, different currencies, commodities, and CFDs
The popularity of Forex trading has seen a significant rise in Bangladesh, providing individuals with an avenue to supplement their income or engage in full-time trading. The expensive and liquid foreign exchange market presents an appealing opportunity for residents in Bangladesh to profit. However, the presence of unclear regulations and restrictions in the country introduces risk for traders needing more knowledge.
This article explores the legality of Forex trading in Bangladesh, examines its alignment with Islamic beliefs, and provides tips on initiating successful trading within the established rules.
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Is Forex trading available in Bangladesh?
Yes. Forex trading is legally permitted in Bangladesh and is regulated by the Bangladesh Securities and Exchange Commission (BSEC). While BSEC regulation is not mandatory for brokers in the country, they can provide Forex trading and CFDs if regulated within their jurisdiction. This flexibility allows for the participation of well-regulated international forex brokers.
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Is Forex trading halal in Islam?
The permissibility of Forex trading in Islam is a subject that lacks a definitive consensus among Islamic scholars. The acceptability of Forex trading according to Islamic principles hinges on factors such as adherence to Sharia principles, engagement in real economic activity, avoidance of interest-based transactions (riba), and excessive leverage.
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Which Forex brokers are available in Bangladesh?
When considering Forex brokers in Bangladesh, two primary options are available:
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Bangladeshi-regulated brokers. Traders may encounter limitations such as no leverage and restricted instrument choices
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Internationally regulated brokers offer a broader spectrum of trading options, including higher leverage, various currencies, commodities, and CFDs
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Do Forex traders have to pay tax in Bangladesh?
Yes, income from Forex trading is subject to taxation for traders in Bangladesh. Traders need to adhere to relevant tax regulations, and seeking guidance from a tax advisor well-versed in local regulations is advisable to ensure proper compliance with tax obligations. Understanding the specific tax rules and consulting with a tax professional can contribute to a smooth and compliant approach to managing taxation related to Forex trading income in Bangladesh.
Rules and Regulation
Regulation (licensing) in Bangladesh
The primary regulatory body overseeing Forex activities in Bangladesh is the Bangladesh Bank, the central bank of the country. Established in 1971, Bangladesh Bank regulates and supervises the financial sector, including foreign exchange transactions. Its regulatory responsibilities cover a wide range of areas, including monetary policy formulation, currency issuance, and management of foreign exchange reserves. Bangladesh Bank plays a crucial role in maintaining stability in the Forex market by implementing policies to control exchange rate fluctuations and ensuring compliance with relevant regulations.
Requirements for the company to be licensed in Bangladesh:
- maintain a specified minimum capital threshold.
- appointment of compliance officers to monitor regulatory adherence.
- implementation of stringent protocols to prevent money laundering.
- submission of detailed plans and statements for regulatory scrutiny.
- mandatory registration with relevant authorities to promote transparency.
Investor protection in Bangladesh
The following bodies provide investor protection in Bangladesh and stand for market transparency and investor interests:
- Bangladesh Bank — Regulatory oversight of Forex activities.
- Securities and Exchange Commission of Bangladesh (SEC) — Ensures fair trading practices.
- Financial Reporting Council (FRC) — Ensures transparency in financial reporting.
- Bangladesh Securities and Exchange Commission (BSEC) — Regulates securities market operations.
- Investor Education and Protection Fund (IEPF) — Educates and protects investor interests.
These bodies protect Forex investors in Bangladesh through regulatory measures, enforcement of laws, monitoring market activities, ensuring transparency, and providing education and awareness programs to investors.
Forex Taxation in Bangladesh
Forex taxation in Bangladesh is governed by the National Board of Revenue (NBR). Generally, income from Forex trading is subject to taxation under the Income Tax Ordinance. Traders are required to report their Forex income accurately, and tax rates vary based on the individual's tax bracket. Additionally, withholding tax may apply to certain transactions. The NBR periodically updates tax regulations, and compliance is essential to avoid penalties.
Is Forex trading haram in Bangladesh?
The permissibility of Forex trading in Bangladesh within the context of Islamic finance is subject to individual interpretations rather than a universal ruling. It revolves around aligning trading practices with specific principles to ensure ethical and responsible engagement in the financial market. To adhere to Sharia principles, traders should prioritize ethical practices, avoiding speculation, excessive risk-taking, and activities like interest-based transactions.
Traders are advised to educate themselves on the Islamic perspective regarding risk, intention, and ethical conduct. Choosing platforms and instruments carefully, opting for brokers offering Sharia-compliant accounts, and avoiding instruments that might raise concerns, such as CFDs, are essential.
Seeking professional advice from a financial advisor well-versed in Forex trading and Islamic finance can provide personalized guidance on aligning trading practices with individual faith.
How to start Forex trading in Bangladesh?
Before executing any trades, invest in education. Engage in courses, webinars, and resources to grasp fundamental and technical analysis, trading strategies, and risk management techniques. Knowledge serves as a shield against impulsive decisions and costly mistakes.
Step 1. Choose broker and open account
This decision holds significant weight. Before choosing, evaluate factors like fees, trading platforms, instrument availability, and customer support. You can refer to this article to find licensed Bangladeshi brokers: Best MT4 Brokers In Bangladesh -
Step 2. Setup platform and analyze the market
Subsequently, delve into market research. Analyze economic trends, geopolitical events, and currency movements to make informed trading decisions.
You will benefit from resources to analyse the market and find trading ideas:
Step 3. Trade and control your risks
Never underestimate the inherent risks of Forex trading. Utilize tools like stop-loss orders to limit potential losses, and always trade within your risk tolerance. Remember, responsible trading prioritizes capital preservation over chasing quick gains.
To help beginners avoid mistakes and raise their level to a professional one faster, we have written an article: How to Become a Forex Trader – A Full Beginner's Guide
Tips for beginner Forex traders in Bangladesh
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Begin by practicing with small demo accounts to hone trading strategies without risking real capital, emphasizing a solid understanding of fundamental and technical analysis through educational resources
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Prioritize risk management by consistently using stop-loss orders, avoiding trading beyond affordable limits, and allocating only a small percentage of your portfolio to Forex trading
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Stay informed and adaptable by keeping up-to-date on global economic news, geopolitical events, and central bank policies influencing currency movements, and be ready to adjust trading strategies based on market changes
Final Tip. Don't be in a hurry to get rich easily. On the one hand, Forex trading is a chance to become financially secure and independent. On the other hand, it is a small chance. Read more: Is Forex Worth it? Can Forex Trading Make Me Rich?
Summary
While legally permitted, Forex trading in Bangladesh is subject to stringent regulations and limitations, resulting in a less open and accessible environment than in other countries. Traders can opt for Islamic accounts and explore international brokers to navigate these regulatory constraints.
Team that worked on the article
Upendra Goswami is a full-time digital content creator, marketer, and active investor. As a creator, he loves writing about online trading, blockchain, cryptocurrency, and stock trading.
Dr. BJ Johnson is a PhD in English Language and an editor with over 15 years of experience. He earned his degree in English Language in the U.S and the UK. In 2020, Dr. Johnson joined the Traders Union team. Since then, he has created over 100 exclusive articles and edited over 300 articles of other authors.
Tobi Opeyemi Amure is an editor and expert writer with over 7 years of experience. In 2023, Tobi joined the Traders Union team as an editor and fact checker, making sure to deliver trustworthy and reliable content. The topics he covers include trading signals, cryptocurrencies, Forex brokers, stock brokers, expert advisors, binary options.
Tobi Opeyemi Amure motto: The journey of a thousand miles begins with a single step.