Forex Trading in Serbia

The Decision on Conditions for Trading with Financial Derivatives, the Law on Capital Markets and the Law on Foreign Currency Transactions all regulate forex trading in Serbia. Between these 3 legislative entities, forex brokers looking to operate within Serbia face a high level of scrutiny relative to the country’s financial standing in Europe. The EUR 125,000 minimum capital requirement, however, is considered low and has been criticized as inviting unscrupulous business.

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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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Attribution: World Banknotes & Coins

If you’re looking to trade in the retail forex market from Serbia, this situation can constrict your opportunities. There are offshore brokers that you can access from the country, and many investors choose to move their accounts outside of Serbia’s borders.

Get Started with Forex in Serbia

The Republic of Serbia Securities Commission is taking great pains to warn Serbians of forex fraud, posting a detailed warning of what to look out for. They’re right. If you want to trade forex safely, follow these steps:

1. You need a strong internet connection. No matter how good your investment strategy is, you will have trouble getting a profit from the forex market without a consistent, latency-free internet connection. You will connect to your broker, trading interface and bank through the internet.
2. Connect with a reputable broker. The right broker will protect your personal and financial information and facilitate trade. As the Securities Commission advises, be wary of get-rich-quick schemes or brokers that claim to trade profitably for you. Only work with brokers that are regulated by strong financial authorities.
3. Connect your outside account. Once you have chosen a reputable broker, that broker will process your identification and connect your outside bank account to your investment account. Reputable brokers are transparent.
4. Fund yourself. Once you have tested the connection between your investment account and your outside account, you can begin to fund it. Most brokers will also allow you to use a credit card or a debit card.
5. Choose an intuitive trading software. The user interface that allows you to trade forex makes a huge difference. You need an intuitive setup to minimize input errors. You may have to test a number of solutions before deciding on the one that is right for you.
6. Begin investing. After properly vetting each connection, you will be ready to trade.

Serbia Forex Trading Strategies

There are certain strategies that will allow you to trade forex more successfully no matter where you are in the world. These strategies are especially important in Serbia. Use the strategic themes below to inform your investment strategy.

Attribution: SC Ventures

Trading Short Term

Short-term investing can fall under many categories: scalping, day trading, momentum trading and many other subsets. This type of trading is usually very high-frequency, with many trades lasting no more than a few seconds. Advanced high-frequency traders may employ automated trading solutions in tandem with their trading platform to execute trades faster than they could manually. If you are considering this type of trading, your internet connection is of the utmost importance. You will also need a strong knowledge of trading indicators. 

Trading Mid Term

If you don’t have the technology to trade in the short term, you may consider mid-term investing. This kind of trading occurs over the time frame of a few hours to a few weeks. You don’t have to use automated trading, but you still need good timing in order to maximize profits. Proper use of trading indicators will also help you understand the difference between a repeated range and a directional trend. You will need to understand how news affects currency pricing, but you should not be overly concerned with the hourly or daily movements that news may cause.

Trading Long Term

Long-term investing takes advantage of large value inefficiencies in currency. You can identify these inefficiencies through knowledge of the underlying macroeconomic conditions that cause them. If you have an interest in global business or politics and how movements among countries affect their finances, then long-term forex trading may be for you. Investors in this space sometimes hold trades for years before they become profitable.

Forex Trading Example in Serbia

Imagine that the RSD/USD is trading at 0.00950/0.00970 with a margin rate of 7.88%, and you want to buy РСД350,000. To control a РСД350,000 investment, you will need a total of $264.77 cash in your account. Trading on margin means that you will get the remainder of the money from your broker.

The RSD/USD price is trading at 0.00990/0.01000 after moving up by 2 points in 7 hours. Your total profit is (РСД350,000 x 0.00990) – (РСД350,000 x 0.00970), or $70 on the investment.

Making Money with Forex in Serbia

Attribution: Financial Times

There are a number of financial vehicles that you can use to make money in the forex market. Here are some of the most important.

• Short selling: Borrowing money to sell a currency before buying it back later is known as short selling. You can profit from a downward move in a price using this technique.
• CFDs: Brokers use contracts for differences (CFDs) as a way to trade currencies without owning them. Be especially careful of CFDs in Serbia, especially if you are using margin. Many CFD brokers allow higher leverage than traditional forex brokers. This is not illegal, but it can be a dangerous tool in the hands of a new investor.
• Binary options: If you want a simple yes and no decision in your investments, binary options may be a good investment choice for you. You do not have to worry about the smaller movements in currency — you can profit from the right answer to a transparent “question” that the option poses.

Best Online Forex Brokers in Serbia

The forex brokers you have available to you in Serbia should be thoroughly vetted. Here are some of the most reputable brokers to help you with your search.

Forex Terminology

Forex has a vocabulary that you need to be familiar with:

• Pip: The forex market allows smaller divisions between currencies, known as pips, to allow trading between currencies with large differences in the exchange rate. A pip is equivalent to $0.0001.
• Lot size: The normal lot size you will trade in forex is equal to 100,000 currency units. You can trade smaller unit sets.
• Orders: Your trading platform takes orders from you and provides the type and lot size of the currency you ask for.
• Calls: A call option is a contract for a certain amount of currency. You can write (sell) or buy call options. These derivative contracts do not directly track the price of currencies, but they generally move in the same direction.

Stabilizing Your Personal Economy

Even as the Serbian government warns its citizens of the dangers of blindly trading forex, it does not denounce the practice. Officials seem to understand that the foreign exchange market is an essential component of stabilizing the local economy. Individuals who use the forex market properly can take advantage of more stable currencies to provide a more secure financial future for their families and businesses.

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