Ins and outs of Forex trading in Ethiopia

Ins and outs of Forex trading in Ethiopia

With the low average salary per month, Forex trading is becoming very popular in Ethiopia. The reason is understandable, financial markets have the potential to help local traders achieve financial goals and become financially free. However, it is essential to consider several factors before starting a trader’s career in Ethiopia. Let’s dive deep and discover all the key factors to start successful trading in Ethiopia. 

Forex Trading in Ethiopia

Forex trading is legal and regulated in Ethiopia. The main regulator overseeing brokers and financial markets is the National Bank of Ethiopia (NBE). All brokers who are operating within the country must adhere to the rules and regulations of NBE. 

As for the FX trading itself, it can be super appealing for Ethiopian traders as the average salary in the country is low at an average of 203 USD per month. With this low salary, financial trading may be the key to becoming financially independent when trading from Ethiopia. 

The Role of a Forex Broker

Selecting a proper broker can be critical, as there are a multitude of scams and frauds in the financial industry. A safe and reliable broker can play a key role in a trader’s success. This is true because the broker can offer educational resources and easy access to global financial markets. Spreads, fees, trading asset diversity, trading platforms, and support are among the top reasons why selecting the broker is crucial when trading Forex from Ethiopia. After reviewing a multitude of Forex brokers and ranking them on our platform, we have selected the three most prominent and safe brokers that can be recommended for Ethiopian Forex traders: XM, AvaTrade, and HFM. We will provide a mini review for each of these brokers where traders can see all important specs at one glance.

XM Broker Mini Review

XM is one of the most popular Forex brokers out there that offers over 1,200 tradable instruments in diverse asset classes. The minimum deposit starts from 5 USD. The broker recently launched a dedicated low-cost account for stocks and is by far the most appealing broker in the retail FX trading scene. XM is regulated over five jurisdictions including Cyprus, the UK, Belize, Australia, and Dubai. The broker has negative balance protection for all retail traders and keeps trader funds in segregated bank accounts. Trading assets include Forex pairs, cryptos, indices, commodities, and stocks. Both CFDs and real stocks are offered for trading, making the broker the ideal choice for both beginner and experienced traders. Trading accounts are Micro Account, Standard Account, XM Ultra Low Account, and shares account. The maximum leverage is capped at 1:1000 for Forex pairs. Real shares can not be traded using leverage, unlike the CFDs. Spreads start from 0.6 pips for commission-free trading, which is one of the best in the FX industry right now. The inactivity fee is 15 USD after one year of dormancy. XM provides access to MT4 and MT5 advanced platforms and allows EAs or automated trading robots. All platforms are available on both Desktop and mobile devices, enabling traders to speculate on markets on the go. Diverse educational resources are offered by the XM including guides, courses, videos, research tools, and market updates. Support is provided using live chat, email, and phone and is super responsive and quick. Both the website of XM and support are available in multiple different languages. Withdrawals are free of charge and quick. 

XM gets a 4.2 score on investfox for providing a top-quality trading experience in a safe environment. 

AvaTrade Broker Mini Review

AvaTrade is a well-regulated and well-established online financial broker founded in 2005. It offers a wide range of assets including Forex pairs, cryptos, stocks, commodities, indices, and more. Multiple trading platforms are offered including MT4, MT5, and custom trading platforms. There is also a web trader and AvaOptions. The broker is licensed in nine jurisdictions including Canada, Ireland, Cyprus, Poland, Australia, British Virgin Islands, Japan, South Africa, UAE, and Israel. It offers negative balance protection and keeps user funds in segregated bank accounts. The total tradable instruments are around 1,250 which is more than enough. AvaTrade charges no fees for deposits and withdrawals and has an inactivity fee of 50 USD after 3 months of dormancy and a 100 USD administration fee after a year of inactivity. 

The minimum deposit is 100 USD and the account types offered are retail, professional, and Islamic accounts.

Multiple customer support options are available in over 20 different languages. The broker is not shy to offer diverse educational and market research resources with market analysis and tools to assist traders. AvaTrade is a mobile-friendly broker and offers all its platforms for mobile devices, which is crucial for Ethiopian traders as smartphones are becoming super popular for financial trading. 

Spreads are very competitive for retail accounts, starting from 0.9 pips on major pairs. Professional accounts offer even lower spreads for pro traders. 

AvaTrade has a 4.4 score on Investfox for its excellent services and top-notch safety. 

HFM Broker Mini Review

Another reliable broker is HFM, a regulated broker with more than 10 years of experience in the industry. HFM holds licenses in Kenya, Seychelles, South Africa, St. Vincent, the Grenadines, UAE, and the UK. The broker has a negative balance protection and keeps clients’ funds in segregated accounts. With a leverage of 1:1000 and spreads of 0 pips for major pairs, HFM is a very attractive broker for retail traders. A wide range of trading instruments are above 3100 including Forex, cryptos, stocks, indices, and commodities. Bonds and ETFs are also provided for experienced traders. Both deposits and withdrawals are free of charge, but HFM charges inactivity fees. A 5 USD after 6 months of inactivity is charged for dormant trading accounts. Diverse trading accounts offer both zero spreads for small commissions and low spreads with zero commissions. Accounts are also diverse Micro, Premium, Zero Spread, PAMM, and HFCOPY. With the minimum deposit being 5 USD, it is cheap to start trading at HFM similar to XM. Swap-free accounts and free demo accounts are also available, enabling traders from all over the world to find their preferred option. 

All assets can be traded on advanced MetaTrader 4 and MetaTrader 5 platforms, available for all devices. HFM gets a 3.5 score on the Investfox platform. 

Choosing the Right Broker for You

All three brokers, above, are decent for trading Forex and other popular financial markets. Safety-wise, all three are reliable. However, selecting a suitable broker requires considering many things such as spreads on specific instruments, trading platforms, and so on. Since all three offer top-notch safety, the choice may be difficult between them. All brokers offer multilingual support enabling Ethiopian traders to get quick assistance and possibly education as well. 

Trading Strategies and Tips for Ethiopian Traders

Strategies must be completely adjusted to the trader’s style and personality. The trading budget is also critical when developing a trading strategy. Traders from Ethiopia who want to start small and become successful should consider the following list of tips:

  • Start small - Especially for new traders it is critical to start trading with capital that you can afford to lose. This will help t develop trading skills and balance the emotional side of trading by increasing capital slowly. 
  • Get education - Good books and other educational resources are a must for beginners to make sense of financial trading and key concepts. 
  • Develop a trading plan - A trading strategy is a template that every trader follows to ensure they do not open trades out of boredom. It consists of important rules for entry, exit, stop loss, take profits, and more. Without strict strategy and flawless execution, it is impossible to become a successful trader. 
  • Risk management - although part of every trading strategy, risk management must be mentioned extra time. It is one of the most significant aspects of trading to stay in the game long-term. Preserving your capital will play a crucial role in becoming a financially free and successful trader. 
  • Set realistic goals - trading is not a get-rich-quick scheme, it is a profession. All professions need study and development of practical skills and trading is similar, you need to have considerable experience and knowledge before you become a professional trader.

The above tips are just the most basic and essential tips for becoming a successful trader in Ethiopia. 

Risks and Challenges in Forex Trading

Forex trading is risky as the real money is on the line. It is emotionally difficult to watch your money get eaten by markets. The loss of real money puts significant emotional distress on traders and is one of the most important factors to consider. This is why starting small and slowly increasing your capital is key in this endeavor. Markets are dynamic, meaning the environment is constantly changing, which makes it tricky to predict the future. Experienced traders never try to predict the markets, but rather, they react to ongoing trends and make money while following strong movements. When trading on the live account using your real money, different emotions kick in, such as fear and greed. Emotional imbalance can seriously affect a trader’s performance if left unchecked. To counter all the risks in FX trading, Forex traders in Ethiopia must be disciplined and consistent. Disciplined traders are among the most successful traders in the world. Books such as “Disciplined Trader” and Trading in the Zone by Mark Douglas will offer superior assistance in resolving many psychological challenges in financial trading.