Forex trading in the Netherlands: a comprehensive guide
Forex is legal in the Netherlands, meaning you can trade Forex without the interference of Dutch lawmakers. However, the financial regulators and Forex experts recommend trading with regulated brokers or brokers that have physical offices in the country. So, learn the fundamentals, open a Forex trading account, and deposit funds if you want to start trading Forex in the Netherlands.
As more opportunities to make money online surface, the quest for financial independence is taking on energizing shapes. Forex trading in the Netherlands is becoming a popular method of making a living from the foreign exchange market. Forex trading is a high-risk investment, even though it has the potential to make you wealthy if you take the time to study and comprehend the market.
Interestingly, the Forex marketplace is the largest financial market for trading global currencies. Also, investing in a foreign exchange market is advantageous due to the flexible market hours, high liquidity, and margin trading capabilities.
Before you start, you need to confirm if Forex trading is legal in this jurisdiction and learn about the best trading platform in the Netherlands. So, to assist you in becoming a successful Forex trader in the Netherlands, this article will present you with all the information you need.
What is Forex Trading?
Forex, short for foreign exchange, refers to the global decentralised market where currencies are bought, sold, and exchanged. It is the largest and most liquid financial market in the world, with participants including banks, financial institutions, corporations, governments, and individual traders. Forex trading involves speculating on the price movements of currency pairs, aiming to profit from fluctuations in exchange rates.
Is Forex trading legal in the Netherlands?
Yes. But while Forex trading in the Netherlands is legal, a trader's choice of trading platform or broker can make trading currency pairs illegal. Due to the high-risk trading Forex pairs are known for and the widespread conduct of scam brokers, it is mandated that traders only choose regulated brokers. So, the first factor to consider when choosing a Forex broker to trade currency pairs in the Netherlands is their regulatory status.
Brokers are not required to have AFM authorization to accept Dutch clients, even though the Netherlands Authority for the Financial Markets (AFM) regulates Forex-related activities. Brokers subject to the oversight of financial regulatory bodies in their respective jurisdictions are legally permitted to offer trading services in the Netherlands.
According to the AFM, MiFID regulations allow brokers with licenses from other top-tier EU jurisdictions to operate legally in the nation. This is due to the coordination between the Dutch regulatory framework and the rules established by the European Securities and Markets Authority (ESMA).
The regulators state that licensed broker services must be transparent and report their trading volumes regularly. Forex firms that want to offer trading services in the Netherlands occasionally need to set up local offices. Segregated accounts should be used to hold both the businesses' working capital and the money received from their clients.
There are limits on the highest possible leverage for opening positions to prevent significant losses for novice investors.
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For major Forex pairs, the maximum leverage is 30:1.
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For major indices and minor/exotic pairs, the maximum leverage is 20:1.
How much money do I need to begin?
Forex trading in the Netherlands does not require a particular amount. However, you can check a broker's minimum investments or deposits to find out how much you need to start trading currency pairs. The least investment you can make is equivalent to the smallest deposit a broker needs.
The minimum investment ranges from $10 to $200 on the majority of the best trading platforms in the Netherlands. For instance, the minimum deposit amount required by RoboForex, one of the top Forex brokers in the Netherlands, is $10, which falls below the IC market's $200 minimum requirement.
While you can start trading for profits when you deposit money into your Forex accounts, you can trade currency pairs for nothing when using a demo account. Traders can trade Forex with virtual funds using this type of account, also called a no-deposit account.
With this account, traders can get experience and learn the fundamentals of currency trading. Some brokers reward traders through demo competitions for honing their skills on the demo account.
Again, with micro-lot trading and cent accounts, traders can manage the amounts they trade with when they are ready to trade on a live account. "Micro-lots" are the smallest sum of money that a typical Forex trader can transact, and they are used by those who want to start trading but want to reduce their risk. Additionally, traders can trade with cent balances and cent-based lots thanks to cent accounts.
What are the steps to start trading Forex in the Netherlands? A step-by-step guide
Sales and purchases of currency pairs between two users constitute Forex trading in the Netherlands. Since selecting the appropriate currency pair for trading necessitates specialized knowledge, conduct a thorough analysis of market volatility, economic fundamentals, technical analysis, correlation analysis, and your trading style.
Top options for currency pairs that you should think about trading on the Forex market include GBP/USD, EUR/USD, AUD/USD, USD/CAD, and USD/JPY. Each currency pair has its own distinct traits, advantages, and disadvantages.
For instance, the EUR/USD currency pair is the most liquid and has the tightest spreads, making it the perfect pair for new traders. Also, the GBP/USD is better suited for more seasoned traders due to its higher volatility level and higher margin requirements.
So, to begin Forex trading in the Netherlands, below are the steps potential traders must take to ensure they get the best experience.
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1
Study the foreign exchange market.
The first step a potential Forex trader must take is to develop a solid understanding of the Forex market. These entail learning about the nuances of currency trading, conducting fundamental and technical analysis, analyzing the financial market, creating trading strategies, and developing risk management strategies. Additionally, you must become completely knowledgeable about the variables that affect the Forex market.
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2
Choose a reputable Forex broker.
Next, research the best trading platform in the Netherlands. After learning about the nuances of the Forex market, conducting in-depth research on the various Forex brokers is critical. This is because you require a Forex broker to trade currency pairs as a middleman between you and the Forex exchange market.
However, how well your career in Forex trading progresses over time will be greatly influenced by the broker you choose. As a result, ensure the Forex broker you select provides an easy-to-use platform, reasonable spreads, and helpful customer support. Additionally, reputable financial institutions should license and regulate the broker.
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3
Open a trading account.
Sign up for a trading account with the broker and submit the required identification paperwork to have your account verified. If you are new to Forex trading in the Netherlands, it may be more beneficial to begin trading on a demo account. A demo account gives you the same trading experience as a live account; the difference is that the funds you trade with on a demo account are not real.
You can get up to $50,000 on the demo accounts of some Forex brokers, while others give you unlimited money. You can practice trading with these funds without risking your money, but any profits you make are locked up and cannot be withdrawn.
The demo account is there to assist you in getting accustomed to the trading platform and the Forex market. While trading on a practice account, it might be necessary for you to reevaluate your financial objectives and goals and make progress toward them.
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4
Deposit funds into your real account.
Your progress on the demo account will determine if you can manage a live trading account. So, if you are ready to trade on a real account and have not made any deposits, go to the deposits section. When you click on deposit, the broker will present you with the payment options available. Wire transfers and credit cards are popular options on many trading platforms in the Netherlands. To fund your trading account, pick the payment option that is convenient to you.
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5
Start trading.
Before beginning to trade, create a clear trading plan that integrates your investment objectives, risk tolerance, entry and exit strategies, and money management principles. Also, place stop-loss decision orders to limit potential losses and prevent over-leveraging. You risk making a hasty decision if you let your emotions influence your trading. Learn to control your emotions so they do not affect your trading decisions, then hold to your trading plan and refrain from making decisions
Best Time to Trade Forex in the Netherlands
Since the market is open daily from Monday to Friday and is accessible around the clock, Forex trading in the Netherlands is a nonstop activity. As a result, many new traders enter the Forex market because of its accessibility but leave after suffering losses and setbacks. While there are several potential causes for these losses, understanding the Forex trading sessions and the best times to trade Forex in the Netherlands might be what the trader overlooked.
The time zone in the Netherlands and the Forex trading session determine the best time to trade currency pairs. The four sessions for trading Forex are:
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Sydney (Pacific session)
Trading time frame: 2:00 to 7:00 GMT. -
Tokyo (Asian session)
Trading time frame: 23:00 to 9:00 GMT -
London (European session)
Trading time frame: 8:00 AM to 5:00 PM GMT. -
New York (American session)
Trading time frame: 12:00 to 22:00 GMT.
The best time to trade Forex in the Netherlands is during the overlap between the London and New York sessions, which occurs from 12:00 to 4:00 PM GMT. The Netherlands observes Central European Time (CET) during standard time and Central European Summer Time (CEST) during daylight saving time; therefore, CET adds 1 hour to GMT, and CEST adds 2 hours to GMT. Thus, 12:00 PM GMT corresponds to 1:00 PM CET (Central European Time) and 4:00 PM GMT to 5:00 PM CET.
If you want to trade during specific Forex sessions, the London session is the best time to do so on the Dutch Forex market. Trading volume is highest, and spreads are tightest during the London session.
Best Forex brokers in the Netherlands
FxPro
Traders registered with FxPro find the trading conditions of the company some of the most attractive in the Forex Market. First of all, these are narrow spreads and zero commissions for trading stocks.
FxPro broker company has many tools that simplify the technical and fundamental analysis and a variety of charts. You can work with a broker on the MetaTrader 4, MetaTrader 5, Edge, and cTrader trading platforms. It is possible to trade online on various operating systems: Windows, Mac, iOS, Android. TradingView charts were added on FxPro Mobile app, so the app now has advanced charting, indicators, chart tools, and other features.
IC Markets
IC Markets is ranked third among the best Forex brokers in the Netherlands by TU experts. Reputable financial institutions like SFSA, ASIC, and CySEC supervise the trading operations of this reliable Forex broker.
IC Markets, which was established in 2007, is the ideal broker for traders in the Netherlands who are into scalping and automated trading. It is also the best Forex broker for beginners and traders seeking a trading platform with an insurance fund.
Libertex
Libertex is among the best Forex brokers in the Netherlands that traders can rely on for online trading. The 2012-founded Forex broker provides advantageous conditions for both trading and investing. Because of CySEC regulation, the broker enjoys a solid reputation in the financial industry and online trading.
It is also the best Forex broker for beginners due to its excellent selection of cryptocurrency CFDs and competitive, commission-free trading costs for cryptocurrency CFD trading. Libertex has an attractive, user-friendly interface and top-notch trading tools and software.
Best brokers for beginners in the Netherlands
Tickmill
Tickmill is a suitable broker for both professional traders and novices. The company is good for robotic trading as well as for short-term strategies.
FxPro
FxPro is a reliable broker company that offers market access to all traders, regardless of their level of knowledge and experience. Broker's clients are protected from negative balance; their activities are carried out in comfortable conditions and with competent professional support.
eToro
eToro is an international broker for trading and investing in assets, copying trades of experienced market players and earning income on offering your own successful strategy. The activities of eToro are controlled by European financial regulators: CySEC and FCA. The broker offers its clients the opportunity to trade indices with a maximum leverage of 1:20 and ETF instruments with a leverage of 1:5. Size of leverage in eToro can also vary depending on the regulation of the division of the broker you work with.
Best prop firms in the Netherlands
TopStep
Topstep has established itself as a trusted and innovative leader in the industry. To participate in Topstep's funded account program, all traders begin by completing the Trading Combine stage. This allows you to open a real-time simulated futures account with buying power options of $150,000, $200,000, or $300,000.
During the Trading Combine, you have the opportunity to earn a funded trading account by showcasing consistent profitability and effectively managing risk. Once you qualify, you can trade in real time using Topstep's capital, eliminating the personal financial risk. Impressively, traders can qualify for a funded account in as little as eight trading days, with the amount of funding provided determined by the selected Trading Combine plan.
When it comes to profit withdrawals, you can withdraw the first $5,000 in profits in full, and 90% of any profits exceeding that amount are also available for withdrawal.
Topstep's commitment to trader development is evident through their range of services. They provide instruction from professional traders, offer tools and daily live videos, deliver personalized analytics on performance, and even provide bonuses to traders. Topstep supports a variety of trading platforms, including TradingView, NinjaTrader, Sierra Chart, TSTrader, MultiCharts, and many more. This allows traders to choose the platform that best suits their preferences and trading strategies.
Pricing for Topstep varies depending on the account size. For a $50,000 account, pricing starts at $165 per month. $100,000 accounts cost $325 per month, and $150,000 accounts are priced at $375 per month. Additionally, Topstep offers a 14-day free trial, allowing traders to experience their services before committing.
Fidelcrest
With more than 6,000 traders worldwide, Fidelcrest has a strong reputation. The company offers performance coaching, million dollar account sizes, and up to a 90% profit split. During a limited time, Fidelcrest is also offering three bonuses, including a second chance challenge, fast track qualification, and double assets.
In terms of tradeable assets, Fidelcrest also stands out. In addition to Forex, you can also trade, commodities, indices, and stock shares.
Fidelcrest is one of the prop firms that pays you a commission during the evaluation process. You can receive up to 50% of your earnings after you pass the second evaluation stage. As a funded Findelcrest trader, you’ll make an additional 80-90%.
The number of account options Fidelcrest offers is unmatched by any other company. There is an account that will meet your needs regardless of your risk tolerance, trading strategy, level of experience, or budget. There are three types of accounts: Pro Accounts, Aggressive Accounts, and Micro Accounts. You can open an account with funding of $10,000, all the way up to an account worth $1 million.
SurgeTrader
SurgeTrader is an excellent choice for Italian traders looking for the leading prop firm. This prop firm offers a competitive profit split up to 75% to funded traders who meet their trading criteria. Unlike many other prop trading entities, SurgeTrader follows a streamlined evaluation process with only one phase.
Traders of all skill levels can select from six different packages offered by SurgeTrader. The Starter Package, ideal for beginners, provides $25,000 in instant funding and sets a 10% profit target. With a maximum trailing drawdown of 5%, this package offers a more conservative approach.
On the other hand, the Master Package, which is the highest-tier account, comes with a funding size of up to $1 million and a 75% profit split. It sets a 10% profit target, a four-percent daily loss limit, and a five-percent maximum trailing drawdown. This package is suitable for experienced traders.
SurgeTrader provides a wide variety of tradable securities, including cryptocurrencies, gold, and popular stock indices. Traders have the flexibility to leverage up to 1:20, allowing them to amplify their trading positions.
To become a part of SurgeTrader, all clients are required to undergo evaluations. The SurgeTrader Audition process consists of a single phase, and there is no specific requirement to earn over 10% of your account balance to pass the audition.
The audition fees range from $250 (Starter package) to $6,500 per account, and there is no limit to the number of times you can take the audition. Payments and withdrawals can be made conveniently using credit/debit cards and PayPal.
Best Copy Trading Platforms in the Netherlands
Tickmill
Tickmill is a suitable broker for both professional traders and novices. The company is good for robotic trading as well as for short-term strategies.
Bybit
Bybit is an exchange for those who have mastered classic cryptocurrency platforms and are ready to move on to more complex derivatives. The arsenal of Bybit Wallet is still limited but the developers plan to expand it by adding BCH, ADA, DOT, and other altcoins.
HFM
The HFM broker focuses on traders from Europe. The company offers a variety of investment options and is suitable for both novice and professional traders.
Do I Pay Taxes for Forex Trading in the Netherlands?
Profits from trading currency pairs are subject to capital gains tax in the Netherlands, which is applied under Box 3 of the tax classification. You do pay tax on your box 3 capital, but it is good to know that you do not pay tax on the actual profit from trading assets. Trades may not be subject to these taxes if they do not exceed the value of typical assets. Due to the Dutch Supreme Court's ruling that foreign exchange gains are not subject to the Dutch corporate income tax, the Netherlands does not have a capital gains tax.
The implication is that you are exempt from paying taxes on your foreign exchange or stock market gains. Asking financial professionals about the tax repercussions of activities like Forex trading is a good idea if you are Dutch.
Rules and Regulation
Licensing in the Netherlands
Forex trading in the Netherlands is regulated by the Authority for the Financial Markets (Autoriteit Financiële Markten, AFM) and the Dutch Central Bank (De Nederlandsche Bank, DNB).
The Netherlands has a two-side approach to licensing for businesses:
- general business registration
- specific permits and licenses
Investor protection in the Netherlands
The Netherlands implements Forex investor protection measures through a combination of regulations and membership in European Union (EU) directives. Investors are protected by the Authority for the Financial Markets (Autoriteit Financiële Markten, AFM).
Taxation in the Netherlands
The income tax rates in the Netherlands are progressive and range from 37.1% to 49.5% for individuals, depending on their total taxable income.
Can I trade with internationally regulated Forex brokers in the Netherlands?
Yes. You can trade with internationally regulated Forex brokers in the Netherlands. However, before selecting an offshore broker, confirm that an organization with a solid reputation monitors its services. These include regulators like the ASIC, FCA, Cysec, etc.
Can I trade Forex with minimum investment in the Netherlands?
Yes. But since every broker that offers Forex trading services sets a minimum investment level on their platform, everything ultimately comes down to your financial capacity. The cost ranges from $5 to $100. Options like cent accounts, copy trading, PAMM, and demo accounts are available from top brokers with low minimum investment requirements. You can use cent accounts in the Netherlands to trade Forex with a small initial investment.
How much can I earn in the Netherlands?
There is no proof that this is a constant since the foreign exchange market is unpredictable, and you might learn a different amount each month. Again, it can be difficult to forecast a trader's likely earnings in the Netherlands because income will also depend on their experience, the sum they invest, the state of the market, the broker's fees, and how often they trade.
FAQs
Can I trade Forex in the Netherlands?
Yes. You can trade Forex in the Netherlands, and the financial regulators and Forex experts recommend trading with regulated brokers or brokers that have physical offices in the country.
Which country is best for Forex traders to live in?
Singapore, Switzerland, and New Zealand top the list of the best places to live for Forex traders.
Which country has the most Forex traders in Europe?
The United Kingdom has the most Forex traders in Europe.
Can I use OANDA in the Netherlands?
Yes. OANDA can legally operate in the Netherlands thanks to the appropriate licenses the broker has.
Team that worked on the article
Peter Emmanuel Chijioke is a professional personal finance, Forex, crypto, blockchain, NFT, and Web3 writer and a contributor to the Traders Union website. As a computer science graduate with a robust background in programming, machine learning, and blockchain technology, he possesses a comprehensive understanding of software, technologies, cryptocurrency, and Forex trading.
Having skills in blockchain technology and over 7 years of experience in crafting technical articles on trading, software, and personal finance, he brings a unique blend of theoretical knowledge and practical expertise to the table. His skill set encompasses a diverse range of personal finance technologies and industries, making him a valuable asset to any team or project focused on innovative solutions, personal finance, and investing technologies.
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.
Mirjan Hipolito is a journalist and news editor at Traders Union. She is an expert crypto writer with five years of experience in the financial markets. Her specialties are daily market news, price predictions, and Initial Coin Offerings (ICO).