Are you based in the Philippines and want to trade forex? There is a valid question about the legality of forex trading in the Philippines, but here’s a hint: trade through international brokers based outside the Philippines.
Best Forex Brokers for the Philippines
eToro USA LLC; Investments are subject to market risk, including possible loss of principal.
Overview: Forex Trading in the Philippines
The Philippine Securities and Exchange Commission (SEC) issued a notice in 2016 and again in 2018 stating that currency trading is illegal in the Philippines. The advisory was issued after complaints of large losses overtook initial deposits in the forex market.
The SEC also intended to avoid investor losses due to people posing as “experts” and acting as brokers or agents of brokers without Philippine regulatory licenses.
The notice also cites a case from the Supreme Court of the Philippines which states that winnings from market fluctuations were “purely gambling and declared null and void by law”. The notice concludes by encouraging people to report to the Commission others “operating in foreign exchange transactions and those acting as agents of such operators”.
Despite the ban, more experienced Filipino forex traders have no intention of closing their existing accounts. They claim that the SEC notices were simply designed to discourage the general population from opening accounts with unregulated local “experts” and that they simply impose a possible “administrative fee” to be levied if they are not not compliant.
Forex Basics for Filipino Natives
Forex trading is not like investing in stocks where you can only lose your initial investment. You may be liable for an amount greater than your deposit if the transaction goes materially against you and is not automatically closed when your account reaches a zero balance.
Forex trading also has a fundamental component due to its exposure to news from the countries issuing the currency. For example, a release of Japan’s Gross Domestic Product (GDP) can have a significant effect on all currency pairs that include the Japanese Yen.
For example, if the release exceeds market expectations, it could have a positive effect on the yen. On the other hand, if the GDP release fails to meet market expectations, it could negatively affect the value of the Japanese yen against other currencies. This type of news, along with geopolitical news and central bank decisions, can lead to considerable volatility in currency pairs.
Forex trading isn’t for everyone, so do some research and try trading on a virtual or demo account to see if forex trading is right for you. Keep in mind that knowing how to trade forex is just as important as choosing the right broker.
There are a number of methods available to choose from when learning to trade forex. The first method includes online educational resources provided by many online brokers and educational companies. You can also educate yourself through many books and ebooks currently available online.
Another option to learn how to trade forex is to join a social trading site like eToro, for example. You can study the forex trading strategies of other traders and help you formulate your own trading plan. You can also follow or replicate another trader’s trades and execute them on your own account.
Like all businesses, knowing what you are getting into after opening and funding your trading account can make a significant difference in whether you produce profits or losses.
Knowing when to trade and what are the best currency pairs to trade in each of the different trading sessions is generally beneficial because you are in a massive market with a daily turnover of over $5 trillion that remains open 24 hours a day, 6 days a week.
You could probably still open an account with a regulated and reputable online broker based outside the Philippines. You must also have a bank account denominated in US dollars and an account with PayPal, Skrill or another online payment company to fund your trading account.
Related Content: Guide to Forex Trading in the Philippines
Characteristics of a Great Forex Broker
Regardless of where a forex broker is located, the best forex brokers generally share some of the following characteristics:
- Strictly regulated in their jurisdiction
- Good reputation with existing customers
- Affordable Minimum Deposit Requirement
- Type of account that suits your needs
- Sufficient leverage ratio for your trading strategy
- Competitive Trading Spreads
- Protection against negative balances
- Minimum order slippage
- Segregated client funds
- Reasonable deposit and withdrawal options
Another important thing to consider is the broker’s trading platform. A demo account with a potential broker will give you an idea of how their trading platform works.
Many brokers offer popular third-party platforms, in addition to their own proprietary platforms. These options typically include MetaTrader 4, NinjaTrader, and cTrader.
Top Picks for Top Brokers in the Philippines
Our list of the best brokers for traders based in the Philippines includes 2 brokers based in the United States, one based in the United Kingdom, and one with several offices in major financial centers. All brokers listed below are reputable and have competent regulatory oversight of at least one major forex regulator, and they may also be regulated in more than one jurisdiction.
These online brokers also have their website, trading platform and customer service available in English. FXCM Indonesia was the only broker reviewed with information in Tagalog (Filipino), so it offers support in your native language.
Best Overall: FOREX.com
This US-based forex broker has over 430,000 customers worldwide and accepts customers from the Philippines.
FOREX.com offers several trading platforms, including the popular MetaTrader 4 and its own proprietary trading platform. Its US base means FOREX.com is supervised by the NFA and CFTC and offers leverage of up to 50:1 on foreign exchange transactions.
FOREX.com requires a minimum deposit of $50 by wire transfer, check or debit card, so online payment services are not supported.
Read the full FOREX.com review of Benzinga
Best for Social Copy Trading: OctaFX
OctaFX is a cross-platform trading company, enabling FX trading the way you prefer. You can use MetaTrader 4, MetaTrader 5, and cTrader depending on your comfort level, as well as web, desktop, Android, and iOS versions of each platform. OctaFX even offers a comparison chart so you know what you’re getting with each trading platform.
Offering negative balance protection and security of funds, OctaFX goes above and beyond with multiple account tiers. Additionally, OctaFX offers an Islamic account with no interest or fixed fees.
With contests, giveaways, and a robust referral program, you can earn more simply by using OctaFX compared to other trading companies. You can even join the CopyTrading program where you copy master traders, thereby increasing your net worth.
Start Trading Forex in the Philippines
Trading in the forex market involves risks not found in other tradable assets like stocks. You buy and sell an asset at one price and often remain unleveraged when trading on the stock exchange. On the other hand, the forex market requires you to use leverage and go long or short depending on a view of the exchange rate in the forex market.
Your losses are usually limited to your investment when buying stocks, but can be much larger when trading forex on margin if you don’t have negative balance protection in your forex trading account.
Also be aware that many experienced traders based in the Philippines have ignored SEC advisories, but a crackdown on forex traders in the Philippines may occur in the future.
Expand your knowledge of how the forex market works with Benzinga’s guide to how to read forex chartsor best forex indicators to use.
Disclosure: eToro USA LLC; Investments are subject to market risk, including possible loss of principal.