Financial authorities in Trinidad and Tobago list the shortage of U.S. dollars in the local economy as one of the country’s biggest problems. Since 2013, Trinidad has experienced a decline in its energy export industry, an industry that makes up around 90% of the economy. Trinidad gets the overwhelming majority of its foreign currency from taxes taken from its energy companies. As a result, the central bank is tightening its hold on foreign exchange, fueling an underground market where USD is sold at a premium.
Many individuals in Trinidad and Tobago are using the retail forex market to stabilize their personal finances without paying this premium. Holding savings in USD and other currencies shields the investor from potential overpricing in the Trinidad and Tobago dollar (TTD). With the central bank doing little to counter the currency overpricing, the local economy is experiencing a flight to quality away from the uncertainty of the TTD.
Get Started with Forex in Trinidad and Tobago
Retail forex investors in Trinidad and Tobago should take steps to ensure their financial protection before getting into the forex market. Follow the steps below, checking the reputation of all institutions involved:
- Have a good internet connection. The relationships you have with your broker, trading platform and banks depend on the strength of your internet connection. Do not begin trading until you have a reliable connection with low latency.
- Choose a broker that is regulated. There are a substantial number of offshore forex brokers doing business in Trinidad and Tobago. If you do business with one, make sure that broker is regulated through a reputable financial institution.
- Set up a brokerage account. You will invest in forex from an investment account that is connected with your broker. Once you choose a broker, the platform will move you through the process of connecting the account and identifying you as its owner.
- Fund your investment activities. After choosing your broker and setting up your account, fund that account through a debit card, credit card or outside account.
- Choose your trading software. Your trading software connects you directly to the forex market through the orders you make. The user interface that connects you will also affect how you invest, so choose wisely.
- Trade forex. Now that you have all of the tools that you need, you can start trading forex — although you should probably use a virtual account (account with fake money) first.
Trinidad and Tobago Forex Trading Strategies
If you are looking to trade forex in Trinidad and Tobago, you should be aware of the basic strategies that many traders use.
Attribution: Livewire Shell
Day traders are fast movers in the forex market. They are masters of the bid-ask spread and know how to make money on very small moves in the market. The day trader is usually in all cash at the close of day (or whenever his personal trading session stops). To invest this quickly, your internet connection must be top-notch. You should also learn about the automated tools that many traders use to speed up the frequency of their investing.
Trend traders know how to profit from moves in the forex market that occur over weeks or months. In this time frame, currencies may trade within a certain range or make a significant directional move. The art of trend trading is knowing which will occur and investing based on that movement. Trend traders, also known as swing traders, may hold a trade for a few hours, but usually no longer than a few weeks.
Over the long term, bigger macroeconomic conditions have much more influence over forex prices than any other variable. Investors who are trading fundamentals search for currencies with prices that are far different from their value. For example, many experts believe the TTD to be overvalued because of International Monetary Fund (IMF) reports and the number of people in the country hoarding USD. A long-term trader that believed in a price correction on TTD might hold a trade for months or even years.
Forex Trading Example in Trinidad and Tobago
You want to buy TT$75,000 of TTD/USD when it is trading at 0.15220/0.15260. You are a day trader and you think the price will go up before you shut down your daily session. The margin rate of this currency pair is 3.99%, meaning that you can control a TT$75,000 investment with only a small portion of the investment — $456.06 — in your account as cash.
The TTD/USD price moves up within the day and is now trading at 0.15310/0.15350. This is a 5-point increase, and you made (TT$75,000 x 0.15310) – (TT$75,000 x 0.15260), or $37.50 on the trade.
Making Money with Forex in Trinidad and Tobago
Attribution: Gtreview – The Port of Spain in Trinidad and Tobago
There are many ways to use the forex market to make money. Here are a few of the most important financial vehicles to know and understand.
- Short selling: You can make money if the price of a currency goes down if you short sell instead of buy. Short selling means that you sell first and buy later rather than buying first and selling after.
- CFDs: Contracts for differences (CFDs) allow you to trade in and out of forex currencies without ever owning the currency. Brokers use CFDs to get around certain regulations. If you are thinking of using a broker that uses CFDs, understand that you will never actually own the currency. Your account, however, will lose and gain value as if you owned them.
- Binary options: Binary options don’t track the price of currencies directly. They offer you a win/lose scenario. The percentage lost or gained is usually much higher per trade, because you are agreeing to a fixed amount won or lost based on your choice in the trade.
Best Online Forex Brokers in Trinidad and Tobago
Many forex brokers used in Trinidad and Tobago are offshore. It is important to know who you are doing business with. Compare a number of brokers before making your choice.
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.
- 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)
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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
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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
Here are a few important terms that you will see everywhere when investing in forex:
- Pip: In the forex market, a pip is the smallest basis of movement. It is equal to $0.0001.
- Lot size: You will automatically trade a lot size of 100,000 currency units if you do not specify otherwise.
- Orders: Your order contains the type and lot size of the currency you want to invest in or sell out of.
- Calls: The call option is a contract that you can invest in. Instead of profiting from the direct price movement of the currency, you profit from the value of a contract that allows you to control currency until a certain date.
Investing Ahead of the Curve
Trinidad and Tobago has many issues to work out in its financial infrastructure. This has not stopped many savvy retail traders from finding a way to stabilize their personal economies. Government officials have stated there is no quick fix, but investors in the country are not waiting on policy changes. The decentralized nature of the forex market means that anyone around the world can participate, and investors in Trinidad and Tobago are doing just that.
If you need an up-to-date resource on the forex market, bookmark this website. The strategies in forex are always changing, so come back for the latest information.
Frequently Asked Questions
What are the best strategies for trading forex in Trinidad and Tobago?
Some good strategies include trend, fundamentals and day trading.
Who are the wealthiest forex traders?
The richest forex traders include George Soros, Joe Lewis and Paul Tudor Jones.
FOREX.com, registered with the Commodity Futures Trading Commission (CFTC), lets you trade a wide range of forex markets plus spot metals with low pricing and fast, quality execution on every trade.
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