More and more forex brokers have expanded their services to traders in Ecuador. There’s never been an easier time to explore the world of forex trading. Trading forex has limitless potential for traders from all walks of life, with over $5 trillion in currency movements every day. If you’d like to learn more about getting started trading forex in Ecuador, be sure to read our comprehensive guide to brokers, terminology, strategies and more.
Get Started with Forex in Ecuador
Before you can trade forex, you’ll need to open an account with a brokerage firm offering services in Ecuador. No matter where you choose to open an account, you’ll go through these 5 basic steps when you begin trading.
- Step 1:Get a stable internet connection. A stable, consistent connection to the internet is required to trade forex, as most trades are now done completely online. Whether you’re using a mobile device or a desktop computer, make sure that your connection is secure and private before you proceed.
- Step 2: Choose a brokerage and open an account. There are a number of international and local forex brokers offering accounts to traders in Ecuador. Research fees, licensing status, account minimums and other requirements to open an account before you choose where to trade. When you’ve found an option that works with your needs, open an account following your broker’s instructions.
- Step 3: Download a trading platform. Though many brokers offer their own trading platform free of charge, you might also want to trade with a 3rd-party charting software like MetaTrader 4 or 5. Check and make sure your platform of choice is supported by your broker before you download.
- Step 4: Fund your account. After your account is fully opened, you’ll need to add trading funds. Most traders in Ecuador accomplish this by linking their bank account and transferring money directly to their brokerage account. It may take a few days for your funds to clear.
- Step 5: Place your first trade. Once your account is open, you can officially place your first order with your broker.
Ecuador Forex Trading Strategies
Many traders in Ecuador trade the USD-EUR currency pair. As 2 of the most liquid and stable currencies in the world, the USD-EUR pair is an ideal choice for beginner forex traders. We recommend using this pair if you’re a beginner to practice and perfect your trading strategy. Let’s take a look at a few technical analysis strategies that are commonly used when trading the USD-EUR.
Triple Moving Average Crossover Strategy
The triple cross moving average strategy is a mid-term to long-term trading strategy that takes a moving average over a set period of days and creates a buy signal when the price moves outside of the average. A moving average takes the average price over a set period of days and recalculates the average for each successive bar created. Then, the trader takes 2 more moving averages, 1 with a longer period than the original and 1 with a shorter period.
A popular combination is the 55-day moving average, the 13-day moving average and the original moving average of 21 days. As the 13-day moving average cross above the 21-day and 55-day moving average, it creates a buy signal.
The breakout strategy is a short-term trading strategy popular with beginner traders. When you use the breakout strategy, you’ll begin by identifying periods where the currency you’re holding doesn’t fluctuate in value. When a candlestick “breaks out” of the limitations of the period, a buy or sell signal is triggered. The signal is confirmed if the proceeding candlestick matches the predicted movement, which is often a signal of a stronger trend.
Forex Trading Example in Ecuador
Making money while trading forex relies on purchasing currencies that will increase in value in relation to your base currency and selling them off when your base currency falls in value. Let’s take a look at a basic example of how forex traders earn money.
Imagine that you fund your brokerage account with $1,000. Your broker offers you 100:1 leverage, which means that you can make trades worth $100,000 despite only having $1,000 in your account. You believe that the value of the USD will fall in comparison to the EUR, so you decide to convert your entire lot of dollars into euros. After the trade is complete, you’re left with 88,000 EUR, as 1 euro is currently equal to $0.88.
Soon, you see that your analysis was correct — 1 euro is now worth $0.85, and you decide to transfer your funds back. After converting your 88,000 EUR back to dollars, you’re left with about $103,529. After accounting for the money you borrowed in leverage, you made a total profit of about $3,529 on this trade.
Making Money with Forex in Ecuador
Forex trading in Ecuador is completely legal, with almost no restrictions on the amount of profit you can take and leverage you can use. While this can be a dream for profitable traders and traders with a solid brokerage strategy, it can also be exceptionally dangerous for new traders. If you decide to trade forex, be sure to follow these safety precautions to protect your investments.
- Only work with registered brokers. Local forex brokers in Ecuador aren’t required to be licensed, which can lead to an increased number of forex scams. Research each broker’s licensure and international oversight before you open an account.
- Be mindful of how much you use leverage. Many forex traders love using leverage because it allows them to compound their profits. However, leverage can also quickly compound losses as well. Use as little leverage as possible when trading, especially as a novice currency trader.
- Keep track of your profits. Traders in Ecuador are required to pay taxes on the money they earn from trading forex. Be sure to keep detailed records of any trades you execute in order to pay your taxes on time.