In this blog post, I’m going to share how to get started with forex trading in the Philippines. This is a beginner’s guide, so if you’re already familiar with the basics of forex trading, this article may not be for you.
I’ve been trading forex (foreign currencies) for almost three years now, and I often get asked—especially by my friends—how to trade forex. That’s why I finally decided to create this blog post and share everything you need to know as an aspiring Filipino forex trader.
I won’t bore you with too much talk, but before we dive in, I’d like to invite you to join my free Telegram channel, where I share market forecasts and analysis. Just click the button below if you’re interested in checking it out.
Join Telegram ChannelNow, let’s start by explaining what forex trading really is.
What is Forex Trading?
Forex trading simply means buying and selling foreign currencies such as EUR (Euro), USD (US Dollar), JPY (Japanese Yen), and other global currencies. It is always traded in pairs—for example, EUR/USD (Euro against US Dollar).
If you believe the EUR will increase in value against the USD, you place a buy trade (long position) on EUR/USD. If you believe the EUR will decrease, you place a sell trade (short position).
In a currency pair:
- The first currency (EUR in EUR/USD) is called the base currency.
- The second currency (USD in EUR/USD) is called the quote currency.
When you place a trade, you are buying one currency while selling another at the same time. For example, going long (buying) on EUR/USD means you are buying Euros and selling US Dollars.
Who’s Involved in Forex Trading?
Forex trading is not just for retail traders. It is the largest financial market in the world, with trillions of dollars being traded daily. Several key participants influence market movements:
- Retail Traders: These are individual traders who trade forex through online brokers. They use trading platforms like MetaTrader 4/5, cTrader, or TradingView to analyze charts and execute trades. Retail traders range from beginners to professional traders managing large accounts.
- Banks and Financial Institutions: Commercial banks such as JPMorgan Chase, HSBC, and Citibank handle large forex transactions for themselves and their clients. Central banks influence currency prices through interest rate policies and monetary interventions.
- Hedge Funds and Institutional Investors: Large investment firms and hedge funds trade forex as part of their global investment strategies. These firms place high-value trades, which can significantly impact the market.
- Corporations and Businesses: International companies exchange currencies for trade and business operations. For example, a Japanese car manufacturer exporting to the United States may trade USD/JPY to convert its earnings from dollars to yen.
- Forex Brokers and Market Makers: Brokers provide retail traders with access to the forex market by offering trading platforms and execution services. Market makers help maintain liquidity by constantly providing buy and sell prices.
Is Forex Trading Simple?
There are 180 tradable currency pairs in the forex market, and at first glance, it seems simple since it’s just buying and selling currencies. However, it’s far from easy. Currency prices move due to many unpredictable factors, such as:
- Political & Geopolitical Events – Elections, wars, or government policies can affect currency values.
- Economic Growth – A strong economy strengthens a currency, while a weak economy causes depreciation.
- Interest Rates & Inflation – Higher interest rates often strengthen a currency, while inflation can weaken it.
Because of these factors, no one can fully predict market movements. This makes forex trading much riskier than most people think, which is why you should never trade without first gaining proper knowledge and preparation.
How Do We Profit in Forex?
Forex traders make money by taking advantage of price fluctuations, but this doesn’t mean you can simply walk into a bank and exchange currencies for profit. Forex trading operates differently from traditional currency exchange, and here’s why:
- Currency price movements are very small – In forex, price changes are measured in pips, which are tiny fractions of a currency’s value.
- Banks charge high spreads and fees – In contrast, forex brokers provide tighter spreads and lower costs.
- Trading at banks is slow – Online forex brokers allow instant trade execution, which is essential for capitalizing on market movements.
How Do Forex Traders Overcome These Challenges?
Instead of trading through banks, traders use online forex brokers, which serve as a bridge to the forex market. These brokers provide trading platforms like MetaTrader 4 (MT4) or MetaTrader 5 (MT5), allowing traders to execute trades anytime, anywhere.
Another major advantage of using forex brokers is leverage. With an online forex broker, you can start trading with as little as $30 USD because brokers offer leverage.
What is Leverage?
Leverage allows traders to borrow funds from the broker to control a larger position than their actual capital. The amount you can trade depends on your leverage ratio. For example, if your broker offers 1:100 leverage, this means that with just $100 in your account, you can control a trade worth $10,000.
Leverage increases your buying power and the potential for higher profits. However, it also increases risk. If a trade moves in your favor, your profits are multiplied, but if it moves against you, losses are also amplified.
This is why leverage is often called a double-edged sword—it can boost profits, but it can also lead to bigger losses if not managed properly.
Which Forex Broker is the Best for Trading in the Philippines?
Since the Philippine government does not currently regulate forex brokers (as of the time of writing), no locally registered brokers exist. Instead, Filipino traders use offshore brokers that are licensed and regulated by trusted financial authorities abroad.
XM, for example, holds licenses from top-tier regulators, ensuring a secure and transparent trading environment.
Check XM’s WebsiteI personally trade with XM, and one of the things I love about them is their Filipino-focused programs. Unlike many other brokers, XM offers:
- Free webinars and seminars hosted by Filipino trading coaches to help beginners learn the fundamentals.
- Convenient deposit and withdrawal options, including local payment methods like GCash and direct transfers through Philippine banks.
- Competitive spreads and fast execution, which is crucial for both beginners and experienced traders.
XM’s Copy Trading Platform
If you’re still learning the ins and outs of forex trading but want to earn while learning, XM also offers copy trading. This feature allows you to mirror the trades of experienced traders (called master traders) without manually analyzing the market.
All you need to do is:
- Fund your copy trading account.
- Choose a master trader to follow.
- Let them trade on your behalf while you earn a share of their profits.
While copy trading can be a great way to earn passively, it still carries risks like any form of trading. That’s why I’ve also written a blog post guide on how to copy trade profitably.
More Than Just Forex Trading
With XM, you’re not limited to forex trading. They also offer a wide range of other tradable assets, including:
- Precious metals like Gold (XAUUSD) and Silver (XAGUSD)
- Cryptocurrencies like Bitcoin, Ethereum, and Ripple
- Stocks from global markets
- Commodities, indices, and more
In total, XM offers over 1,400 trading instruments, giving traders multiple opportunities to diversify their portfolios.
Watch XM Video TutorialThings Beginners Must Know Before Trading Real Money
Before jumping into live forex trading, beginners need to understand several key aspects to avoid costly mistakes. Here are the most important things to know:
- Forex Trading is Risky – The forex market is highly volatile. Prices can change rapidly due to global events, and there is no guarantee of profit. Always trade with caution.
- Start with a Demo Account – A demo account allows you to practice trading with virtual money, helping you learn how to execute trades and test strategies before risking real funds.
- Learn How Leverage Works – While leverage can amplify profits, it can also lead to significant losses. Beginners should use low leverage until they gain more experience.
- Master Basic Trading Strategies – Avoid random trading or gambling. Learn technical and fundamental analysis to make informed decisions.
- Learn Risk Management – Never risk more than 1-2% of your account per trade. Use stop-loss orders to protect your capital from large losses.
- Control Your Emotions – Fear and greed often lead to poor trading decisions. Stay disciplined and follow your trading plan.
- Stay Updated with Market News – Economic reports, interest rate changes, and political events can impact currency prices. Keep up with the latest news.
- Accept That Losses Are Part of Trading – Even the best traders experience losses. The key is to stay consistent, learn from mistakes, and continuously improve.
Check out the blog section of this website for more helpful content. If you have any questions, drop them in the comments below.
You can also subscribe to my YouTube channel for detailed tutorials!
