Forex Trading in Bermuda

The forex market is exceptionally accessible from Bermuda, and Bermudian traders enjoy a number of benefits when trading currencies. With a strong regulatory system and a currency pegged to the United States dollar, there’s little question why more and more forex brokers extend their services to Bermuda. If you’re curious about trading forex in Bermuda, use our guide to forex trading strategies and brokers to get started. 

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Disclosure: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

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Get Started with Forex in Bermuda

As an investor in Bermuda, you have your choice of forex brokers, funding methods and tradable currencies. Let’s take a look at some of the basic steps you’ll go through when you open your first account to trade forex.

• Step 1: Connect to the internet. A stable, consistent connection to the internet is a must-have when trading any asset or currency. Run a speed test on your device of choice and make sure that your connection is private before proceeding.
• Step 2: Choose a broker and open an account. Bermuda law allows both local and internationally licensed brokers to offer services to investors located in Bermuda. All legitimate domestic brokers must be licensed by the Bermuda Monetary Authority but international brokers may still operate legally within the country with oversight by a recognized international body like the Australian Securities and Investment Commission. Be sure to ask about licensure status and oversight compliance before you open your brokerage account.
• Step 3: Download your trading platform. Many forex brokers don’t offer their own proprietary trading platform. However, these brokers typically support popular 3rd-party platforms like MetaTrader 4 or 5. Check and see which platforms are compatible with your broker and download your software.
• Step 4: Add trading funds. After your account has been opened, deposit funds into your new brokerage account before you begin trading. Most brokers in Bermuda support a range of transfer methods, including direct bank transfers, credit and debit card transfers and deposits from an electronic wallet.
• Step 5: Make your first trade. It might take a few days for your transfer to be fully deposited into your account. After it clears, you can officially begin forex trading. 

Bermuda Forex Trading Strategies

Thanks to a strong base currency, there are a wide range of trading strategies that you can use to profitably trade forex in Bermuda. Most trading strategies are divided into 2 categories: fundamental analysis and technical analysis. Let’s take a look at how these strategies differ and which might be right for your needs as an investor.  

Fundamental Analysis

Fundamental analysis is a method of examining the forex market by identifying and studying underlying market forces that move the value of a currency. Some primary sources of information that a trader who uses a fundamental analysis strategy might use include:

• GDP reports
• Reports on unemployment rates
• Inflation and federal interest rate data
• Election results
• Consumer confidence and business sentiment indexes

Traders who use fundamental analysis look at economic indicators to predict how currency values will change. 

Fundamental analysis is best used by traders who take a long-term approach to forex investing. To begin with fundamental analysis, you’ll need a consistently updated, unbiased source for international news. 

Technical Analysis

Technical analysis is a type of currency examination that looks at charting patterns, price movements and discrepancies in volume to determine how the currency’s price will move in the future. Unlike fundamental analysis, traders who use technical analysis typically don’t spend much time researching economic situations or political movements. Instead, they identify patterns and formations that have led to buy and sell signals in the past.

Traders who use technical analysis search for charting patterns that predict future currency movements. 

Traders who use technical analysis as their primary trading strategy usually hold onto their currencies for much less time than traders who use fundamental analysis. Some technical analysis strategies can be complemented with automatic trading software programs that buy or sell currencies on your platform as soon as a preset indicator is triggered.  

Forex Trading Example in Bermuda

How can you earn money trading forex? Forex traders rely on discrepancies between the value of different currencies. They sell their dollars when the Bermudian dollar is strong, and they buy back their dollars when the value falls in comparison with their converted currency. Let’s take a look at an example.

Imagine that you believe that the Bermudian dollar will soon fall in value in comparison to the Japanese yen. You fund your trading account with $10,000, and your broker offers you 10:1 leverage on your trade. $1 BMD is currently equal to ¥106.47 JPY, so converting your entire lot plus leverage leaves you with ¥10,647,000.

A few days later, you see that the value of the yen is rising. When $1 BMD is equal to ¥105.30 JPY, you decide to cash out and convert your money back to your base currency. After the order is filled in full, you’re left with about $101,111.11. This means that you’ve profited about $1,111.11 on this trade. 

Making Money with Forex in Bermuda

The Bermudian dollar is pegged to the United States dollar at a rate of 1:1. This means that $1 USD will always be equal to $1 BMD, regardless of changing economic conditions. The United States dollar is the strongest reserve currency in the world, which means that Bermudian traders own a very valuable base currency.

It’s completely legal to earn money for forex trading in Bermuda. The forex market of Bermuda is well-regulated, with oversight from the Bermuda Monetary Authority. There are no limitations on the amount of money that you can deposit into your brokerage account, and you don’t need any special permissions or license to begin.

While forex trading is possible, this doesn’t mean that it’s a guaranteed source of income. Before you risk any of your money, be sure to practice your trading strategy with a demo account. You should also only work with brokers that are licensed by the Bermuda Monetary Authority or a comparable international authority. 

Best Online Forex Brokers in Bermuda

There are many reliable, safe and reputable forex brokers offering services to investors in Bermuda. You can choose to work with either a local broker or an international broker extending its services to residents and travelers in Bermuda. If you don’t already know where you’d like to open your account, consider a few of our top picks below. 

Forex Terminology

Understanding some of the most common forex terms before you enter the market will enhance your trading and help you explore more educational resources. Below, you’ll find definitions for a few terms you’ll see over and over again when you learn to trade forex.

• Pip: A pip is the smallest calculatable unit of any currency. In most cases, a single pip is equal to 0.0001 of a currency. The only exception is the Japanese yen, which is rounded to only 2 decimal places.
• Lot size: Your lot size is the number of units of currency you’re moving on a single transaction. For example, if you’re converting $100,000 BMD into its EUR equivalent, your lot size is equal to 100,000.
• Orders: An order is a set of instructions that tell your broker which currency you’d like to buy or sell, your lot size and the price that the trade needs to be executed at. There are multiple types of orders and you can combine order types to limit loss and automatically take profits.
• Calls: If you use leverage to trade and your portfolio value falls, your broker might subject you to a margin call. If you receive a margin call, you must deposit more money into your account or close out of your position. Even a single margin call can wipe out large amounts of profit, so be very careful before you trade on margin. 

Trading from Bermuda

Trading forex in Bermuda is safe and easy to begin with. However, this doesn’t mean that you’re guaranteed to earn money exchanging currencies. Taking steps to protect yourself by thoroughly researching any brokers you work with and practicing with a demo account can save you from getting involved with a forex scam. Though these scams are less present in Bermuda than they are in other countries, they still exist.