How to start forex trading in Nepal

Why Forex Trading Is Popular in Nepal ?

Nepal has more than 28 Million population and in the middle of a rebuilding phase following the civil war, which saw the last Hindu monarchy replaced with a secular republic in 2008. The Nepalese Constitution was adopted in 2015.

In approximately twenty years, the country is forecast to eradicate poverty, but today about one-third lives just above it in a vulnerable financial condition. One of the fastest-growing economies in the world, it ranks today at 165th in nominal GDP per capita, with a per capita income of just above $1,000 per year.

The Nepalese labor force is the 37th largest in the world, with three-quarters employed in the agricultural sector. Nepal ranks 19th globally in total foreign exchange remittances, which account for as much as 28% of GDP. Many adults are working in foreign countries and sending their earnings back to their families. Foreign exchange is, therefore, something well understood in Nepal.

One encouraging sign for Nepal’s development is the fast spread of internet accessibility. Trading is in the DNA of this landlocked country, which has historically been a key trading post along the ancient Silk Road and a strategic location between China and India.

Steps to start trading forex in Nepal for beginners:

  1. Learn the basics of Forex Trading
  2. Learn about the different Currency pairs
  3. Choose a broker & open your Forex Trading Account 
  4. Learn the different Forex Trading Strategies

Learn the basics of Forex Trading

What is Forex Market?

Forex refers to Foreign Exchange , or simply FX , sometimes even called Spot FX, where the global currencies are traded against each other.

You may have seen ticker symbols of currencies like USD/NPR , EUR/NPR etc. while visiting your bank. These are the rates of the currencies from the live Forex market.

Forex is the most liquid market in the world, operating 24 hours, nearly five and a half days in a week. The global daily average trading volume of this market is over $6.5 Trillion, making it the largest financial market in the world. The number is so big that a big Stock exchange like a New York Stock Exchange (NYSE) has to operate for about a month just to catch-up to the Forex market’s daily average volume.

Forex Trading

Have you travelled abroad to another country?

If you been to a foreign country, then it is likely that you may have converted your local currency i.e. Nepal rupee (NPR) to another currency like Euro or a US Dollar. If you exchanged your currency before, then you have already traded in the forex market.

Let's assume that you exchange R15,000 for $1000 through your bank or local regulated exchanger, for traveling abroad to US. In this example, you would be physically selling your home currency ( Nepal rupee ) for buying US Dollar. When you are exchanging your money for traveling abroad, you (through your bank) are making a forex transaction in the global forex market without even knowing

Learn about the different Currency pairs

What are Currency Pairs?

Currency Pair is the quote of one currency relative to the other currency. In the Forex market, all currency are traded against each other, therefore being called 'currency pairs'. So when you are trading in the forex market you are actually trading 2 currencies simultaneously.

Currency Pair Terms:

1) Base & Quote Currency: In every currency pair like EUR/USD, USD/NPR , the first currency mentioned is the ‘Base Currency’ which is being compared to the second currency called ‘Quote Currency’.

2) Bid & Ask prices: 'Bid price' is the market price at which you can sell the base currency. And 'Ask price' is the price at which you can buy the base currency in the pair.

3) Spread: Spread is the difference between the ask and the bid price. This is the fees charged by the forex brokers for each trade trade, and it depends on the market liquidity, and the currency pair that you are trading. The lower the spread, the better it is for you.

4) Pips: Pip stands for Percentage in Point, and it is the most common term in forex trading. Simply put, 1 pip is the smallest measure at which the market moves. It is normally the change/fluctuation in points of the last decimal for a currency pair.

Choose a broker & open your Forex Trading Account 

1- Open Trading Account with a Regulated Forex Broker

The first step to start trading forex is to choose a reputed & regulated forex broker, and then open an account with it. Choosing a 'good' broker is an important step because the broker plays a pivotal role in your trade.

Top 5 Forex Brokers in Nepal

Here are the April 2021 best forex brokers in Nepal by forex trading category

1.XTB

XTB is a global CFD and forex broker with headquarters in London and Warsaw, founded in 2002. The company is regulated by several financial authorities worldwide, including the top-tier UK Financial Conduct Authority (FCA). In addition, XTB is listed on the Warsaw Stock Exchange, and as such is required to disclose its financials.

2.City Index

City Index is a global CFD and FX broker founded in 1983. City Index is the trading brand of StoneX Financial Ltd., whose parent company StoneX Group Inc. is listed on the NASDAQ Stock Exchange. The company is regulated by top-tier financial authorities, such as the UK's Financial Conduct Authority (FCA), the Australian Securities and Investments Commission (ASIC) and the Monetary Authority of Singapore (MAS). 


3. ActiveTrades

ActivTrades is a global forex broker founded in 2001. It is regulated by the UK's Financial Conduct Authority (FCA) and the Securities Commission of the Bahamas (SCB). 

ActivTrades is considered safe because it has a long track record and it is regulated by the FCA, a top-tier financial authority.

4.Spreadex

Spreadex is a global CFD and forex broker founded in 1999. It is regulated by the top-tier UK Financial Conduct Authority (FCA). The company also operates a separate sports betting service.

Spreadex is considered safe because it has a long track record and is regulated by a top-tier financial authority.

5.Trading 212

Trading 212 is a global CFD and forex broker, but clients can also trade stocks and ETFs free of charge. The company was founded in 2004 and is now headquartered in London. Trading 212 is regulated by the UK Financial Conduct Authority (FCA) and the Bulgarian Financial Supervision Commission (FSC). 

Trading 212 is considered safe as it is regulated by the top-tier FCA. 

2- Understanding Forex trade

We will first dive into some important terms that you would need to know while placing your trade.

1. Lot Sizes
2. Leverage
3. Margin
4. Stop Loss

 

3- How to place a trade in forex market?

1. Buy Order in Forex

2. Sell Order in Forex 

 

Nepal Forex Trading Strategies

1.Scalping

Scalping is a forex trading strategy that involves making small profits with multiple trades. You can set the entry and exit positions with minor changes in the currencies to achieve low margins. Scalping needs precise execution to make the most of your trades. 

These are short-term trades that can last anywhere between 1 to 60 minutes. Being well-informed about currency trends is crucial to successful scalping. 

2.Day trading

As the name suggests, day trading involves opening and closing a trade on the same day. These trades can take place anywhere between a few minutes to a couple of hours. This way you can avoid running through unprecedented losses due to overnight price volatility. 

If you’re new to forex trading, day trading is a simple and straightforward method to start earning. It can limit your risk while improving your chances of profitability.  

3.Swing trading

Swing trading is a strategy that involves trading forex currencies over a day or a week. This method gives you plenty of time to deflect daily ups and downs in the value of currency pairs. You can skip through needless stop losses along the way with this medium-term forex trading strategy. 

4.Position trading

Position trading is a strategy that involves holding your trade positions open for the long term. These trades can take place anywhere between a week to several months or even years. This method lets you take advantage of major shifts in the value of currency pairs without stressing over micro changes in the market. 

You can set the entry and exit positions for lengthier durations with position trading. Keeping a watchful eye over current events and socio-economic policies that affect the world at large is key to making this type of trading work. You can casually sign-in to your account once or twice a week. 


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