Forex Trading In Sri Lanka: A Comprehensive Guide

What is Forex trading?

Forex, short for foreign exchange, refers to the global decentralized 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.

How much money do I need to begin?

Forex trading in Sri Lanka does not require significant initial capital. The minimum investment required by most of the offshore brokers you will find in Sri Lanka is between $10 and $100. For instance, RoboForex, one of the top Forex brokers in Sri Lanka, has a $10 minimum deposit requirement.

If you sign up for a demo account offered by the most reputable brokers as a beginner, you will have the best chance of learning Forex trading in Sri Lanka without making a deposit. Demo accounts, also known as no-deposit accounts, let traders trade foreign exchange for free. Using a demo account, traders can practice and get a feel for the nature of currency trading. Some brokers run demo competitions to reward traders who have honed their skills on the demo account.

Again, with microlot trading and cent accounts, traders can manage the amounts they trade with when they are ready to trade on a live account. A micro lot, which is typically the smallest block of currency a Forex trader can trade, is used by those who want to start trading but want to minimize the risk. A cent account also enables traders to use cent lots and a balance that is expressed in cents rather than US dollars when trading.

How to start trading Forex in Sri Lanka: a step-by-step guide

Before you begin trading currencies on the foreign exchange market in Sri Lanka, be aware that there is a certain amount of speculation. There is a high risk because variables like time differences, the volatility of leveraged trades, and political unrest can all result in sizable losses. Any factor that could influence the value of the currency pairs you are trading on the Forex market is referred to as a market risk element.

So, before you sign up for Forex trading in Sri Lanka, ensure you have spare funds you would not mind losing. However, if you take the five steps listed below, your career in currency trading will get off to a smooth start.

1 Research the Forex market

Getting a firm grasp of the Forex market is what a beginner should do. Study market analysis, trading tactics, and risk management while learning about currency pairs. Additionally, familiarize yourself with all the variables that affect the Forex market.

2 Choose a reputable broker

The broker you select will determine how successful your Forex trading is in Sri Lanka. So ensure your choice of Forex broker offers an easy-to-use platform, reasonable spreads, and helpful customer support. Additionally, reputable financial institutions should license and regulate the broker.

3 Choose a reputable broker

Open a trading account with the broker, providing the necessary identification documents to verify your account. If you are new to Forex trading in Sri Lanka, hold off on making a deposit. You might need to evaluate your financial goals and objectives, trade on a practice account, and work toward your financial objectives.

With a demo account, you can practice trading without risking any money because you are not using real money. It will also help you become familiar with the Forex market and the trading platform.

4 Deposit funds in your real account

If you know your way around the platform and have a clear view of Forex trading in Sri Lanka, select the most convenient payment method offered by the broker to fund your trading account.

5 Start trading

You can only begin trading after your trading plan is explicit about your objectives, risk tolerance, entry and exit strategies, and money management principles. Set stop-loss orders for your positions to limit potential losses and avoid overleveraging them. Additionally, learn to avoid letting emotions influence your trading decisions. If you let your emotions play a role in your trading, you might make rash decisions. Maintain your trading strategy, avoid decisions motivated by fear or greed, and examine your trades while closely monitoring the market.

Best time to trade Forex in Sri Lanka

The window between the London and New York sessions, or from 12:00 to 4:00 PM GMT, is the best time to trade Forex in Sri Lanka. The London session is the ideal time to trade on the Forex market in Sri Lanka if you want to trade during particular Forex sessions. The spreads are tighter because there is a lot of trading and more buyers than sellers.

To benefit from the most advantageous time in local time, you must comprehend how the Forex market's hours correspond to Sri Lankan local time. Therefore, when choosing the trading session, convert the time to Sri Lanka time. Sri Lanka is 9.5 hours ahead of Eastern Standard Time (EST), and Greenwich Mean Time (GMT) is typically advanced by 5 hours and 30 minutes during standard time.

The currency trading session and time zone in Sri Lanka play a major role in determining the ideal time to trade currencies. Furthermore, there are 4 sessions for trading Forex:

Best Forex brokers in Sri Lanka

Selecting the best Forex brokers is important for successful trading in the Forex market. It is a challenge for professional and novice traders to choose the best brokerage firms with the best trading conditions. Learning the details regarding commissions and the availability and types of trading instruments; and analyzing various types of trading accounts are tasks that must be mastered before choosing the best Forex broker for traders.

Tickmill

Tickmill Review

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Trading conditions are suitable for both novice traders and professionals. The broker offers several account types. The broker does not charge fees on its Classic account, which is a good option for novice traders, with a transparent spread. Pro and VIP are professional ECN accounts with near-zero spread, instant order execution, and a fixed fee per lot. These accounts are suitable for those who work with large trading volumes and use high-frequency trading strategies. The minimum deposit for Classic and Pro accounts is $100, regardless of the trader’s jurisdiction.

Leverage depends on the broker’s subdivision. In Europe, the conditions are more stringent. Leverage for retail clients is up to 1:30, depending on the asset type. It can increase up to 1:300 only once the "Qualified/Professional" status is obtained. For traders of other jurisdictions, the conditions are more loyal. Leverage is up to 1:500, regardless of the status. Almost any assets, except for ETFs and derivatives, are available for trading (exception: futures are available in the UK). Payment methods include bank systems and e-wallets. Cryptocurrency deposits are available for traders outside Europe.

FxPro

FxPro Review

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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.

Pocket Option

Pocket Option Review

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Pocket Option trading conditions are classic for the binary options market. You can trade currency pairs, stocks, commodities, and cryptocurrencies using a web platform, designed with the inherent characteristics of working with options in mind. The minimum initial deposit for all accounts is $5, but hereinafter the balance should be from $100 to $50,000 (depending on the profile). The minimum bit is $1.

Best paper trading brokers in Sri Lanka

Paper trading refers to a simulated platform that allows you to buy and sell stocks with virtual money.

Revolut

Revolut Review

Revolut offers commission-free trading with no minimum deposit requirements. Stocks, cryptocurrencies, and precious metals are available for trading. Client funds are kept on segregated accounts, which is a guarantee of their safety. Since fractional share trading is available at Revolut and there is no brokerage commission per transaction per month, you can start with a minimal investment. Deposits can be made in 28 currencies, but the broker translates them into USD since trading is only on the US stock market.

Interactive Brokers

IBKR Review

Interactive Brokers is militantly developing, offering services to investors regardless of their trading experience. For this purpose, the broker doesn’t ask for a fixed minimum deposit but has margin requirements for accounts of various structures to make trading financially safe. The size of the leverage and Margin call and Stop out levels depends directly on the asset that the client is trading.

E-Trade

ETrade Review

E-Trade terms are great for traders who prefer to work in the American stock and options market. There is no brokerage fee for trading this type of asset. But, you need to pay $25 for a partial withdrawal of capital from portfolios and $75 for a full transfer of funds. A commission is also levied on the client for the transfer of money between accounts. Trading is carried out through Etrade's proprietary terminals. Mobile versions are available. The broker delivers analytics with stock quotes and technical analysis.

Best copy trading platforms in Sri Lanka

Granted that mastering the art of Forex trading is beyond the grasp of the average trader, сopy trading allows inexperienced, amateur traders directly copy time-tested trading patterns specially curated by professionals.

Today’s copy trading platforms feature a wide set of functions, including searching for a suitable manager and setting up risk management settings.

The benefits of copy trading for an investor are rather evident – it provides a possibility to earn as much as professionals earn, without putting too much effort into it. The traders, whose positions are copied, also benefit, as they gain recognition of their colleagues, a possibility to attract additional capital, and, on some platforms, a part of the profit earned by those traders who copied his/her trades.

Tickmill

Tickmill Review

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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 Review

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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.

InstaForex

InstaForex Review

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InstaForex is the best option for traders with any level of experience. For active professional traders, there is a large pool of non-standard technological solutions for more accurate analysis. For novice traders, there are comfortable starting conditions, such as a $1 minimum deposit under the regulation of FSC and a $200 minimum deposit with the broker regulated by CySEC. There are PAMM accounts and social trading for investors.

Can I trade with internationally regulated Forex brokers in Sri Lanka?

Yes. You can trade with foreign brokers, but ensure they have a license from a reputable regulator like FCA, Cysec, FSCA, ASIC, etc.

Can I trade Forex with a minimum investment in Sri Lanka?

Yes. However, it all depends on your financial capacity because each broker that provides Forex trading services establishes a minimum investment level on their platform. And the price falls between $5 and $100. Top brokers with low minimum investment requirements offer options like cent accounts, copy trading, PAMM, and demo accounts. In Sri Lanka, you can use cent accounts specifically to trade Forex with a small investment.

How much can I earn in Sri Lanka?

According to research, a retail trader typically makes between $300 and $5,000 per month. Since the foreign exchange market is unpredictable and you might learn a different amount each month, there is no proof that this is a constant. Again, estimating a trader's likely earnings in Sri Lanka can be difficult because your income will also depend on your experience, the amount invested, the trading environment, the broker's fees, and how often you trade.