Slovakia may not be the 1st country you think of when you imagine a forex trading hub, but it is certainly no slouch. Connecting to the retail forex market is as easy as connecting to the internet, and Slovakia has coverage from 4 pan-European operators. Since 2018, the country has been preparing for 5G and building out its banking sector with a wide variety of digital only banks.
The retail forex market has grown alongside the expansion of the country’s financial and technical infrastructure. Some experts argue that the decentralized nature of forex works especially well with digital finance because money can move and change forms quickly. With Slovakia taking an active role in banking, we can expect the forex market to continue its upward trajectory.
Get Started with Forex in Slovakia
There are plenty of reasons to get involved in the Slovakian forex market, but there are plenty of reasons to be careful as well. The NBS offers some protection, but it can’t catch every fraud. Here are some ways to protect yourself while trading forex in Slovakia.
- Your web connection: The growing infrastructure in Slovakia makes it easier than ever to find a good internet connection. You’ll need 1 that can handle a broker, digital bank and trading interface at once.
- Your broker: Your forex broker is perhaps the most important aspect of your digital connection to the market. Choose a regulated broker with a reputation for good customer service.
- Your account: Set up your investment account with your broker after vetting it for the proper regulation. Your broker should provide features such as transaction guarantees and funds separation, among other protections for your money.
- Your funding: If you have found a broker with the right money protections, you can begin funding that investment account. You can usually fund yourself through a bank, credit card or app.
- Your trading interface: Your money and broker are set. All you need now is a way to connect your order book to the market. You do this through an interface, which can be provided through a broker or by a third party.
- Your first trade: Begin with a virtual (fake money) account to test your digital chain. After that, you can begin trading.
Slovakia Forex Trading Strategies
Now that you are safely set up with a digital chain in Slovakia, you can move into the strategies that will inform your daily market movements.
Breakout trading: Breakouts literally break a pattern in a currency’s chart. Breakouts happen quickly and provide substantial moves in the price. Day traders often use the breakout to turn quick profits using a technique known as scalping.
Return to the mean: Moving around an average price is what a price does when it is in a range. Investors who find this average can often trade around it because the price will oscillate around it.
Retracement: This chart pattern provides a chance to profit from a temporary reversal in a long-term trend. They also offer a chance for an investor to “get in” on a trend that otherwise seems unstoppable.
Carry trading: If you hold a currency in the forex market overnight, they earn interest as though you were holding it in a commercial bank. Some currencies have higher interest rates than others. The carry trader knows how to profit from the differences in these rates.
Forex Trading Example in Slovakia
EUR/USD is trading at 1.1310/1.1330. You think the price will go up, so you buy €64,000 with $2412.52 in your brokerage account. Your broker allows this because of the 3.33% margin rate on this currency pair.
EUR/USD is trading at 1.1350/1.1370 after a few hours. Your profit on a sell is (€64,0001.1350) – (€64,0001.1330) or $128, on the 20-point move.
Making Money with Forex in Slovakia
Your vision is now in place. You can start looking at the tactics and financial vehicles that will help you take advantage of the opportunities you see. Here are a few techniques to know.
- Shorting a market: You can play the long side or the short side of a currency pair. Playing the short side is also known as “shorting the market” and profits when you buy back a currency that you’ve borrowed money to sell 1st.
- Contract for differences (CFDs): Contrary to popular belief, you do not have to own a currency to trade it. The CFD is the financial vehicle you use to do this.
- Binary options: Binary options have a fixed choice and a fixed return on investment. You can only choose yes or no, and you either win or lose cleanly based on your choice.