Forex Trading in Ecuador

More and more forex brokers have expanded their services to traders in Ecuador. There’s never been an easier time to explore the world of forex trading. Trading forex has limitless potential for traders from all walks of life, with over $6 trillion in currency movements every day.

If you’d like to learn more about getting started trading forex in Ecuador, this guide will teach you what you need to know about brokers, terminology, strategies and more. 

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Disclosure: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 74% to 76% 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. The products and services available to you at FOREX.com will depend on your location and on which of its regulated entities holds your account

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Getting Started with Forex in Ecuador 

Before you can trade forex, you’ll need to open an account with a brokerage firm offering services in Ecuador. No matter where you choose to open an account, you’ll go through these 5 basic steps when you begin trading.

• Get a Stable Internet Connection: A stable, consistent connection to the internet is required to trade forex, as most trades are now done completely online. Whether you’re using a mobile device or a desktop computer, make sure that your connection is secure and private before you proceed.
• Choose a Broker and Open an Account: There are a number of international and local forex brokers offering accounts to traders in Ecuador. Research fees, licensing status, account minimums and other requirements to open an account before you choose where to trade. When you’ve found an option that works with your needs, open an account following your broker’s instructions.
• Download a Trading Platform: Though many brokers offer their own trading platform free of charge, you might also want to trade with a 3rd-party charting software like MetaTrader 4 or 5. Check and make sure your platform of choice is supported by your broker before you download.
• Fund Your Account: After your account is fully opened, you’ll need to add trading funds. Most traders in Ecuador accomplish this by linking their bank account and transferring money directly to their brokerage account. It may take a few days for your funds to clear.
• Place Your First tTade: Once your account is open, you can officially place your first order with your broker. 

Ecuador Forex Trading Strategies

Many traders in Ecuador trade the USD-EUR currency pair. As 2 of the most liquid and stable currencies in the world, the USD-EUR pair is an ideal choice for beginner forex traders. We recommend using this pair if you’re a beginner to practice and perfect your trading strategy. Let’s take a look at a few technical analysis strategies that are commonly used when trading the USD-EUR. 

Triple Moving Average Crossover Strategy

The triple cross moving average strategy is a mid-term to long-term trading strategy that takes a moving average over a set period of days and creates a buy signal when the price moves outside of the average. A moving average takes the average price over a set period of days and recalculates the average for each successive bar created. Then, the trader takes 2 more moving averages, 1 with a longer period than the original and 1 with a shorter period.

A popular combination is the 55-day moving average, the 13-day moving average and the original moving average of 21 days. As the 13-day moving average cross above the 21-day and 55-day moving average, it creates a buy signal. 

Breakout Strategy

The breakout strategy is a short-term trading strategy popular with beginner traders. When you use the breakout strategy, you’ll begin by identifying periods where the currency you’re holding doesn’t fluctuate in value. When a candlestick “breaks out” of the limitations of the period, a buy or sell signal is triggered. The signal is confirmed if the proceeding candlestick matches the predicted movement, which is often a signal of a stronger trend. 

Forex Trading Example in Ecuador

Making money while trading forex relies on purchasing currencies that will increase in value in relation to your base currency and selling them off when your base currency falls in value. Let’s take a look at a basic example of how forex traders earn money.

Imagine that you fund your brokerage account with $1,000. Your broker offers you 100:1 leverage, which means that you can make trades worth $100,000 despite only having $1,000 in your account. You believe that the value of the USD will fall in comparison to the EUR, so you decide to convert your entire lot of dollars into euros. After the trade is complete, you’re left with 88,000 EUR, as 1 euro is currently equal to $0.88.

Soon, you see that your analysis was correct — 1 euro is now worth $0.85, and you decide to transfer your funds back. After converting your 88,000 EUR back to dollars, you’re left with about $103,529. After accounting for the money you borrowed in leverage, you made a total profit of about $3,529 on this trade. 

Trading Forex in Ecuador

Forex trading in Ecuador is completely legal, with almost no restrictions on the amount of profit you can take and leverage you can use. While this can be a dream for profitable traders and traders with a solid brokerage strategy, it can also be exceptionally dangerous for new traders. If you decide to trade forex, be sure to follow these safety precautions to protect your investments.

• Only Work with Registered Brokers: Local forex brokers in Ecuador aren’t required to be licensed, which can lead to an increased number of forex scams. Research each broker’s licensure and international oversight before you open an account.
• Be Mindful of How Much You Use Leverage: Many forex traders love using leverage because it allows them to compound their profits. However, leverage can also quickly compound losses as well. Use as little leverage as possible when trading, especially as a novice currency trader.
• Keep Track of Your Profits: Traders in Ecuador are required to pay taxes on the money they earn from trading forex. Be sure to keep detailed records of any trades you execute in order to pay your taxes on time. 

Compare Online Forex Brokers in Ecuador

Choosing the right forex broker is incredibly important. The broker that you choose will determine which currencies you can buy and sell, the fees you’ll pay when you trade and the platform you can use to trade.

It’s worth the effort to take plenty of time to compare brokers before deciding where you’d like to open an account. Not sure where to begin? Find a few top forex brokers in Ecuador below.

Forex Terminology

One of the first parts of learning how to be a profitable forex trader is understanding how to “speak” forex trading. Currency traders use their own set of terminology to discuss trades and place orders. Familiarize yourself with a few of the most common terms below before you begin:

• Pip: A pip is the smallest unit of a currency’s value. In most cases, a single pip is equal to 0.0001 of that currency. For example, if the value of the USD moves from 1.0001 to 1.0002, you could say that the price increased by a single pip.
• Lot size: Your lot size is equal to the number of units of currency you’re trading on a single order. For example, if you want to convert $100,000 into EUR, your lot size is equal to 100,000. Most forex traders consider 100,000 units of currency to be the standard lot size.
• Orders: When you want to execute a trade, you’ll do so by placing an order with your broker. Your order tells your broker which currency you want to trade, your lot size, price and more. There are a variety of order types, each of which has its own benefits and drawbacks.
• Calls: If you trade currencies on margin, be prepared to handle margin calls. If you use leverage to trade and the value of your portfolio decreases by a certain percentage, your broker will put out a margin call requiring you to deposit more trading funds into your account. Too many margin calls can quickly wipe out any profit you earn trading — or even put you into debt. 

Trading Safely

Ecuadorian traders can easily get involved in the forex market because they’ve got a strong base currency and growing access to high-speed internet. However, the currency trading sphere of Ecuador is relatively new and has fewer regulations than other countries that require every broker to be fully licensed. If you do decide to trade forex, be sure to thoroughly research your broker before you open an account. We recommend only working with international brokers that are required to meet strict licensing standards to protect your money. 

Frequently Asked Questions