If you are looking to get into currency trading as a Singaporean resident, why not try trading the Singaporean dollar? With a stable economy and a strong currency, Singapore is an attractive destination for investors from all over the world, and particularly from Singapore.
In this article, we will explore how you can make the most of trading the SGD. We will first look at what forex trading is and how it is regulated in Singapore. Then, we will look at optimal trading times for Singapore traders, and ways you can make the most of trading the dollar. Finally, we will examine how you can try online currency trading with your own forex account. Without further ado, let’s get started.
What is forex trading?
Forex trading, also known as foreign exchange trading or currency trading, involves buying and selling currencies in the global market with the goal of making a profit. The forex market is the largest financial market in the world, with an average daily trading volume of around $6 trillion.
The most active session for trading the SGD
The forex market is split into four major trading sessions. They are the Sydney (Australian) session, the Tokyo (Asian) session, the London (European) session, and the New York (North American) session. All traders, regardless of where they are located, can participate in any session.
When it comes to trading the SGD specifically, the currency is most actively traded during Singapore trading hours, which are from 9:00 am to 5:00 pm Singapore time. This is because Singapore is the home country of the SGD, and during these hours, the financial markets of Singapore and other major financial centres in the Asia-Pacific region are open for business.
However, the best time to trade the SGD will ultimately depend on your individual trading strategy and goals.
Is forex trading regulated in Singapore?
Yes, forex trading is regulated in Singapore. The country’s central bank and primary regulatory body for the financial industry is the Monetary Authority of Singapore (MAS), and it oversees all activities in relation to forex trading.
The MAS is responsible for regulating forex brokers operating in the country and requires them to hold a valid license to provide forex trading services. Forex brokers in Singapore therefore must comply with strict regulatory requirements. This includes having sufficient capital reserves, maintaining transparent and fair pricing, and ensuring client funds are well protected. The last of which means brokers must keep client funds in segregated accounts.
How to make the most of trading the SGD
Whether you are looking to diversify your investment portfolio and explore new opportunities, or you are new to trading, the Singaporean dollar is a great option. When you trade this currency, below are some ways you can maximise your potential for profits.
Stay up to date with economic news
The first thing you can do is stay up to date with economic news, as certain news and announcements can impact the Singaporean dollar’s value. You should regularly monitor news from the MAS and other reputable sources, keep an eye on Singapore’s diplomatic relations, and on key economic indicators such as the nation’s GDP growth, inflation rates, and employment figures.
Keep an eye on market sentiment
Market sentiment is the overall mood of traders and investors in the market, and it can have a significant impact on the value of the SGD. If investors are optimistic about the future of the Singaporean economy, the SGD may appreciate. Negative sentiment, on the other hand, can cause it to depreciate. Monitoring market sentiment can help you stay aware of any shifts in sentiment that can affect the price of SGD.
Use technical analysis tools
Aside from conducting fundamental and sentiment analysis, you should also ensure you know how to analyse the market with technical analysis tools. This means you should spend time identifying trends, patterns, and signals in the market, as they can inform your trading decisions. You can use charts, indicators, and other tools to analyse price movements of the SGD and make informed predictions.
Some popular technical tools include moving averages and oscillators such as the Relative Strength Index (RSI) and the Stochastic oscillator. Combining the use of technical analysis with fundamental and sentiment analyses can give you the well-rounded view of the situation.
Trade during active market hours
If you want to increase the presence of opportunities, trading during the SGD’s most active trading hours can greatly help you. As mentioned, the forex market is open 24 hours a day, for 5 days a week. The SGD is most active during Singaporean trading hours, which are from 9:00 am to 5:00 pm Singaporean local time.
This means that trading the SGD during these hours can provide you with greater liquidity, tighter spreads, and more trading opportunities. However, you should also be aware of any market-moving events that can occur outside of these hours.
Manage your risks
Finally, managing your risks properly is one of the best ways you can maximise your potential for profit, and it is a must for anyone who wants to participate in the financial markets. The common risks associated with trading the SGD include market risk and leverage risk. Market risk is the possibility that the market will fluctuate in unexpected ways, while leverage risk is the possibility that you may suffer substantial losses from increasing your exposure on the market.
You should have a clear risk management plan in place when trading the SGD. This can not only protect your capital but also minimise your potential losses. This may include setting stop-loss orders, trailing-stops, using leverage with restraint, and diversifying your portfolio.
How to start trading the Singaporean dollar
To get started trading the SGD, you must have a forex account.
Select a broker
To open one, you should do your research and find the forex broker that is most suitable for you. You can consider factors such as your trading needs, preferences, and approach. You should also make sure the forex broker is MAS-licensed, so that you can ensure your funds and personal information will be protected.
Selecting a broker also requires you to examine whether they offer the products and asset classes you want to trade. The Singaporean dollar may not be a major currency, but it is a popular currency. Therefore, you should, for the most part, not have any issues finding a broker that offers SGD currency pairs, especially when partnered with major currency pairs such as the USD, GBP, EUR, and AUD.
Choose an account type
When you have chosen a broker, you can create a forex trading account. Depending on the broker you choose, there may be different types of accounts on offer. The most common type is the standard individual account, which means you can trade as an individual retail trader. You will have access to a trading platform, and you will have to adhere to certain commissions rates and fee structures. When you have chosen an account type and verified your identity, you should fund it.
Select a currency pair with SGD
Forex traders trade currencies in pairs. This means you must select a currency you want to trade SGD with. Popular pairs include partnering the SGD with any major currency, such as the USD, GBP, EUR, and AUD. These are all relatively safe choices, as they are highly liquid, which makes it easier for you to enter and exit the market due to high levels of supply and demand.
You should ensure you conduct thorough research into the factors that drive these currency pairs, beyond the fact that they are ‘liquid’. This can help you keep an eye out for and anticipate changes in the market and make informed decisions when trading.
Place your order
When you place your order, you should remember to set up any risk management tools. For example, you may want to set stop-loss orders to help you limit your losses should the market experience a downturn. When the markets reach a certain price level, it will trigger the stop-loss and your order will automatically be closed.
Monitor the markets continually
Once you have opened a position, you should make sure you monitor the markets and adjust your strategy and positions as needed. The forex market is unpredictable, and you should ensure you always have an exit strategy, before you even enter the market.