Forex‌ ‌Trading‌ ‌in‌ ‌Poland‌

Poland is among the higher income-generating countries in the world based on gross national income (GNI) per capita data expressed in U.S. dollars after being converted from local currency at prevailing exchange rates. As a decent place to conduct business in Europe, the Polish zloty has become a popular foreign exchange (forex) currency that is being traded globally. Read on to find out how you can trade this currency and others in the online forex market. 

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Getting Started with Forex in Poland

By the beginning of the 1900s, the Polish mark was the official currency of the country. However, due to hyperinflation, the value of the Polish mark was diminished. In 1919, the Bank of Poland announced the introduction of a brand new currency called the zloty to the financial market.

After the Narodowy Bank Polski started its operations in 1945, it replaced the Bank of Poland as the primary financial authority. Narodowy Bank Polski has the sole right to issue the Polish currency. The Polish zloty (PLN) can be divided into 100 grosz. Banknotes of Polish zloty in circulation have denominations of 10, 20, 50, 100 and 200. 

Banknotes of Polish Zloty

Poland has the 6^th largest economy in the European Union (EU). A large internal market (6th within the EU in terms of population) and a political climate friendly to businesses seem to have helped Poland avoid the global 2007-08 recession with minimal disruptions in business activity. Before joining the EU in 2004, Poland fostered trade relations through the Central European Free Trade Agreement (CEFTA), which included Hungary, the Czech Republic, Slovakia and Slovenia.  

Trading on the foreign exchange market is legal in Poland. International forex markets are managed by the Polish Financial Supervision Authority (PFSA). The regulatory frameworks issued by the PFSA have helped maintain the value of the Polish zloty and protect the interests of local forex traders in Poland. The PFSA also supervises the capital markets, banking institutions, pension schemes and insurance companies.

Here’s a step-by-step guide to help individual investors get started with forex trading in Poland and interact with active currency prices.

Step 1: Get a Digital Device With Fast Internet Connectivity 

You can use your desktop, laptop, tablet or smartphone to trade forex. The value of the currency pairs listed frequently fluctuate. Having a personal device to constantly track these changes is essential to successful forex trading. 

Step 2: Find an Online Forex Broker

There are several forex brokers available online. Go through their websites and choose a broker that lets you trade the currency pairs you want to speculate on.

Be sure to check the footer of their website for information on the regulatory bodies. If you can’t find any such information from the U.S. Securities and Exchange Commission (SEC), the UK Financial Conduct Authority or another reputable regulatory body, the broker can’t be trusted. 

Step 3: Sign Up for an Account 

You can open a new account with the forex broker on their website. Some forex brokers require a minimum deposit amount to open an account. These brokers also offer different kinds of accounts based on your financial goals. Choose the one that’s right for you. 

Step 4: Transfer Funds to Your Account

Once you’ve signed up for an account, you need to transfer funds to start trading forex. Depending on the broker you’ve chosen, you can choose your accounting currency and fund your account using several options. Generally, these funding options include bank wire transfers, ewallet transfers and debit cards. 

Step 5: Download a Forex Trading Platform

You may need to download a forex trading platform supported by your broker on your computer or smartphone. Take the time to customize the look and feel of the platform to help you better identify forex trading opportunities. 

Step 6: Begin Your Forex Trading Journey

Before you start trading forex, you might want to trade in a demo account using virtual money. These practice accounts can help you get used to the interface of the forex broker without running the risk of taking actual losses. After you feel confident using the platform, you can start trading forex using real money. Remember, market conditions can change at any time, meaning that the market price you will pay could change without warning. Foreign exchange trading carries a certain amount of risk, and each forex pair in which you invest could rise or fall rather quickly.

Polish Forex Trading Strategies

Forex traders from all over the world rely on a few simple strategies to profit from exchange rate movements. You can consider using one or more of these forex trading strategies to trade on the currency market.

News Trading

Global economic news and events can have a strong impact on the forex market. Many traders stay on top of influential financial information to anticipate short-term exchange rate movements of affected forex currency pairs and related forex prices. 

You can research when information about inflation rates, trade policies and multinational deals made between countries will be released. News trading needs fast reflexes, a good broker with minimal order slippage and an understanding of how event outcomes might affect the currency pair traded. You also run the risk of missing the window of opportunity if you’re not fast enough with your trade executions. 

Day Trading

Day trading often involves closely monitoring the intraday exchange rate movements of forex currency pairs and generally only holding positions within a single trading session. These trades can take place anytime during the day, although all positions are typically exited on the same day. Some traders have adopted this method to reduce losses from overnight market volatility when they cannot watch the market. 

Day traders might adjust their positions several times during a trading session depending on how the market moves, so you will need to have sufficient free time available to operate the day trading strategy you select. 

Scalping

Scalping is a very short-term trading strategy that involves quickly entering and exiting the market aiming for small profits. The goal is to make many of those small profits add up to a sizable income. 

Rapid price movements during intraday trading sessions can cause slippage on your stop-loss trade executions. These losses can significantly erode any profits you might make scalping.  This method of trading requires a lot of time and focus to track exchange rate movements and high-risk events. Scalping will probably not be suitable for traders with a full-time job. 

Momentum Trading

Momentum trading or swing trading generally involves engaging in short to medium-term trading activities directed by reversals in market momentum signaled by technical indicators. 

This method of trading can be less stressful than day trading or scalping, although swing traders often do take overnight positions. You can adjust your long and short positions throughout the week to cut losses and take profits as your preferred indicator signals and/or your trading plan dictates. 

Forex Trading Example in Poland

The Polish zloty (PLN) is 1 of the various national currencies still in use within Europe in addition to the EU’s euro. Although Poland committed to adopting the euro in 2004 when joining the EU, many Poles still oppose that, and a firm date has yet to be set when that will happen. 

The EUR/PLN forex currency pair is currently trading at 4.4079. It will cost you 4.4079 zlotys to buy a euro. You could go long  €100,000 against the PLN based on the margin in your trading account. After 3 months, the EUR/PLN exchange rate might have risen to 4.6000. You can immediately sell your long €100,000 EUR/PLN position and show a profit of 19,210 zlotys in that time frame. Alternatively, if the market fell to 4.2500 instead, you would lose 15,790 PLN. 

Exchange rates of EUR/PLN over the last 5 years.

Making Money with Forex in Poland

The prospects of Poland’s economic future could be impacted by the other hard-hit markets in Europe. 

Last year, the average monthly forex trade volume for the zloty was $76 billion. Also, 44,000 active forex trading accounts were active in the first quarter of 2019 in Poland, which showed a decline from the 51,000 accounts open in Q1 2018. A record 48% of the forex traders holding these accounts either traded profitably or at least did not lose money in the market in Q1 2019.  

Polish forex traders typically do not focus on their own national currency and instead trade the major currency pairs like EUR/USD and GBP/USD, although the USD/PLN pair was the 10th most popular trading instrument, according to Poland-based broker XTB. 

Best Online Forex Brokers in Poland

Online forex brokers let you trade a variety of currency pairs in the market. You can easily manage your trading positions on the trading platforms the brokers support. Most of these forex brokers allow you the luxury of 24-hour trading commission-free, although you will typically need to pay away the dealing spread whenever you trade. You also generally trade currency pairs on margin using these online platforms. 

Take a look at these top forex brokers available online.  

Forex Terminology

You should be familiar with a few basic forex terms before you start trading. Many forex traders use these terms regularly during intraday trading sessions. 

Pip: The smallest unit of movement in a currency pair’s exchange rate. Most forex currency pairs are quoted to the 4^th decimal point or 0.0001. 

Lot size: A standardized trading amount, which is usually 100,000 base currency units at most online forex brokers. You can trade smaller lot sizes as well at many brokers.

Orders: An order is a command made to your broker to execute a trade. When you want to go long on a forex currency pair, you enter an order to buy the base currency and sell the counter currency. When you want to go short on the pair, you enter an order to sell the base currency and buy the counter currency. 

Margin calls: A notification from a broker to deposit additional funds in your trading account. Most online forex brokers will automatically close out all trading positions if the available margin in your account is insufficient instead of issuing a margin call. 

Trading Polish Zloty Can Be Profitable

Despite being a small country, Poland has stood its ground as a thriving European economy. If you’re a trader from Poland looking to get involved in the forex market, trading currency pairs can be an opportunity to make some extra money. 

Thousands of traders in Poland are already operating in the forex market without losing money, although many Poles fail to make a profit from forex trading, so you should develop a good strategy before putting real money at risk.