As with other countries, Q1 2020 may not have been perfect for Russia, but the forex market flourished. The government invested in a $2.7 billion increase in its reserves month over month. Year over year, reserves have risen $50 billion. Most tellingly, the government has been reducing its share of the U.S. dollar while boosting gold, which recently flirted with its all-time highs.
Attrition: The Moscow Times
The government also bolstered the retail forex market through successful implementation of regulatory measures meant to reduce fraud. The Central Bank of Russia reported a 4% decline in complaints about forex brokers year over year. The country only licenses 4 stateside forex dealers, which helps the government more easily regulate the market. According to the Federal Financial Monitoring Service (FFMS), most of the fraud comes from offshore brokers illegally providing service in the country.
Get Started with Forex in Russia
The Russian forex market is ripe with opportunity and it is more secure than ever. The investor retains primary responsibility to avoid the pitfalls, however. No FFMS warning can take the place of individual due diligence. Here are tips you can follow to fill in the holes and ensure your protection while trading forex in Russia.
- Check your online connection. You need a strong, latency-free internet connection to trade in the forex market. Every step of your process means connecting through a digital pipeline, and these are pieces that must work in tandem with each other.
- Check your broker. Before you decide on a forex broker, take a look at the 12 fake brokers the Russian government identified as frauds (use the Google Translate if needed). Make sure that your broker is properly regulated before committing any funds to it.
- Check your account. Your broker should have a strong policy concerning the rights of your money. Customer service is also very important. Check the terms of service before committing any funds.
- Check your funding. Once you have fully vetted your broker’s money pipeline, you can fund your investment account with the bank account, a debit card attached to your account, a check or the bank account previously connected.
- Check your trading platform. There are many industry standard trading interfaces that you can choose from. Your broker may also have its own interface. Make sure your platform doesn’t add any latency.
- Check your trading strategy. Test your digital chain with a virtual account (an account that works properly but trades with fake money). After you see that everything is working properly, you can begin to invest real money.
Russia Forex Trading Strategies
Attribution: Daily Mail
Now that you have provided for your safety, you can enhance your investment blueprint into a full-bodied strategy. Here are a few of the most successful ways to invest.
Breakout trading: Breakouts literally break patterns previously set within a range. When a currency breaks away from a range, it can attract even more investors that will emphasize the trend. Properly managed, breakouts can make relatively large profits in a short amount of time.
Return to the mean: If a currency stays in a range, it usually returns to a mean, or average price. Investors looking for a price to return to the mean will invest looking for the price to go back to the average.
Retracement: A retracement momentarily stops a trend and moves sharply in the other direction. Day traders can use this price action for a fast profit.
Carry trading: Forex currencies earn interest just like holding money in a commercial bank. Some currencies earn more than others. If you are a carry trader, you can make money from the differences in the interest rates.
Forex Trading Example in Russia
RUB/USD is trading at 0.0140/0.0160. You think the price will go up, so you buy ₽80,000 with $80.16 in your brokerage account. You can do this because the margin rate of this currency pair is 6.68%.
RUB/USD is trading at 0.0180/0.0200 after a few hours of trading. If you sell out of the trade right now, your profit is (₽80,000 x* 0.0180) –- (₽80,000 x* 0.0160), or $160, on the 20-point move.
Making Money with Forex in Russia
Once you have your investment vision in place, you can create a day-to-day strategy. Here are some of the tools that you can use.
- Shorting a market: You can profit from a price fall in a currency if you short it rather than “playing the long side.”
- Contracts for difference (CFDs): You do not have to own a currency to trade it. You can use CFDs and give yourself more leverage depending on the broker that you choose.
- Binary options: Binary options simplify investing down to a yes or no choice. The amount that you gain or lose is also fixed.
Best Online Forex Brokers in Russia
Choose your selection of forex brokers in Russia wisely, and remember the list of brokers that the Russian government has found fraudulent.
100 of your selected base currency
1 Minute Review
FOREX.com is a one-stop-shop for forex traders. With a massive range of tradable currencies, low account minimums and an impressive trading platform, FOREX.com is an excellent choice for brokers searching for a home base for their currency trading. New traders and seasoned veterans alike will love FOREX.com’s extensive education and research center that provides free, informative forex trading courses at multiple skill levels. While FOREX.com is impressive, remember that it isn’t a standard broker. You can’t invest in the stock or bond market through your FOREX.com and you cannot open an account with tax advantages. The confusing pricing and margin structures may also be overwhelming for new forex traders.
- MetaTrader 4 users
- Beginner forex traders
- Active forex traders
- Impressive, easy-to-navigate platform
- Wide range of education and research tools
- Access to over 80 currencies to buy and sell
- Leverage available up to 50:1
- Cannot buy and sell other securities (like stocks and bonds)
- Confusing margin requirements that vary by currency
- Limited customer support options
- Cannot open an IRA or other retirement account
1 Minute Review
Though Australian and British traders might know eToro for its easy stock and mobile trading, the broker is now expanding into the United States with cryptocurrency trading. U.S. traders can begin buying and selling both major cryptocurrencies (like Bitcoin and Ethereum) as well as smaller names (like Tron Coin and Stellar Lumens).
eToro offers traders the opportunity to invest their assets into premade portfolios or cryptocurrencies, similar to services offered by robo-advisors through traditional brokers. Though eToro isn’t a one-stop-shop for everything an investor needs, its easy-to-use platform and low spreads is a great way to enter the cryptocurrency market.
- International Forex/CFD Traders
- New cryptocurrency traders looking for an easy-to-use platform
- Traders who want to buy and sell cryptocurrencies on-the-go
- Simple platform that is easy to master
- CopyTrader feature that allows new traders to copy the same strategies used by professionals
- Virtual dummy account that gives you $100,000 to practice trades
- U.S. traders currently limited to cryptocurrencies
- Only 15 major coins available to trade
1 Minute Review
A fully regulated broker with a presence in Europe, South Africa, the Middle East, British Virgin Islands, Australia and Japan, Avatrade deals with mainly forex and CFDs on stocks, commodities, indexes, forex, cryptocurrencies, etc. This brokerage is headquartered in Dublin, Ireland and began offering its services in 2006. It offers multiple trading platforms and earns mainly through spreads.
- Advanced traders
- Traders looking for a well-diversified portfolio
- Controlled by regulatory agencies of multiple countries
- Choice offered in terms of trading platforms
- Support available in 14 languages and trading platforms in 20 languages
- Practice/demo account available for trying out
- Breadth of trading assets
- Does not accept customers from the U.S. as it isn’t regulated in the U.S.
- Transferring funds to the account may take up to five days; withdrawals could take up to 10 days
Although forex moves across the world, the terminology is the same no matter where you are. Here are the terms that you need to know.
Pip: Pegged to U.S. $0.0001, the “basis unit” of forex
Lot size: The currency amount transacted in a deal, which has a default of 100,000 units
Orders: The description of what you trade
Calls: A buyer-seller contract in forex that will execute on a future date
Creating a Safe Haven
The Russian government seems to be creating a safe haven for foreign exchange outside of U.S. and China hegemony. They are making the right moves so far, and now may be the time to capitalize on the security being provided.
With a constant flow of information and the right tactics, you can create a good opportunity for trade in the forex market from Russia. For the latest strategies and information, bookmark this website and come back to this webpage.