How to Start Forex Trading in Sweden

As a highly developed country with a strong economy and advanced technological infrastructure, Sweden offers a supportive environment for forex traders. With the rise of accessible online trading platforms and a regulatory framework that prioritizes consumer protection, it's easier than ever for Swedes to venture into forex trading.

Forex trading in Sweden is overseen by the Finansinspektionen (FI), the Swedish Financial Supervisory Authority. This regulatory body ensures that brokers adhere to high standards of transparency, security, and ethical trading practices. In addition, Swedish traders benefit from the European Union's comprehensive regulatory framework, which provides safeguards such as negative balance protection and limits on leverage for retail traders under the guidance of the European Securities and Markets Authority (ESMA).

Sweden's thriving digital landscape, high internet penetration, and increasing financial literacy have created a fertile ground for forex trading.

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Get Started with Forex in Sweden

As a trader, you cannot buy and sell forex currencies directly. Instead, you’ll need to open a special account with a forex broker that offers services to clients in Sweden. No matter which broker you choose, you’ll go through a very similar process when you open your account. Here’s how to begin:

Step 1: Find a Stable Internet Connection

Before you begin comparing brokers, be sure that your internet connection is stable, secure and private. You may want to run a speed test on your device before you begin to ensure consistency.

Step 2: Open a Brokerage Account

The forex broker you choose will determine what you pay in fees, which currencies you have access to and the tools you’ll use when trading. Don’t be afraid to “shop around” for a trading platform that fits your individual needs before you open an account.

Step 3: Download a Trading Platform

Depending on the broker you choose, you might need to download a 3rd-party trading platform like MetaTrader 4 or 5. Find out which platforms are compatible with your broker before you download a platform.

Step 4: Fund Your Account

As soon as your account is fully open, you’ll need to deposit funds before you can trade. Most Swedish traders accomplish this by directly linking their bank account and transferring money between their bank and brokerage accounts as needed. Many Swedish brokers also accept deposits made via debit card or electronic wallet.

Step 5: Place Your First Order

Once your deposit clears, you can officially begin placing forex trades. 

Step 6: Monitor Your Portfolio

Monitor your portfolio to ensure that it is performing well. Without careful monitoring, your portfolio may not give you the profits you’re looking for.

Best Forex Brokers in Sweden

Sweden Forex Trading Strategies

Most Swedish traders use a strategy called technical analysis to determine which currencies to buy and sell. Technical analysis involves the use of charts and patterns to predict how currencies will change in value. Most traders who use technical analysis buy and sell currencies within a matter of hours or days, which allows you to take profits more quickly.

Let’s take a look at a few common trading strategies you can use to earn money while trading forex. Though these strategies aren’t guaranteed to earn money, they can provide an excellent basis for formulating your own unique trading strategy.   

Breakout Strategy 

The breakout trading strategy is an excellent strategy for beginners because it doesn’t involve complex math or formulas. Traders who use the breakout strategy trade during periods of low volatility, when their base currency is moving in a sideways pattern. These traders look for candlesticks that break out of the standard sideways range, which may indicate a change in the direction that the currency moves and triggers a buy or sell signal.    

Head and Shoulders Trading Pattern

The head and shoulders trading pattern is a charting pattern characterized by a baseline and 3 subsequent peaks. The charting pattern gets its name from its visual similarity to a neck and a pair of shoulders, with the highest peak located in the middle.

Traders who trade the head and shoulders pattern often wait for the pattern to begin forming, then use the formation of the head and final shoulder as a bearish indicator. You may want to execute 2 or more trades in a short period of time and sell your lot before the pattern is completely formed. 

Reversal Candlesticks

A reversal candlestick is a charting formation that indicates that a currency is likely to reverse directions. Reversal candlesticks may be bullish or bearish depending on their placement and form. Traders who search for reversal candlesticks often wait for a confirmation candlestick after the reversal signal is triggered to ensure that the direction will really change. The length of the candlestick’s tail is often considered to be an indicator of how strong the reversal signal is.  

Forex Trading Example in Sweden

Forex trading is completely legal in Sweden and Swedish traders have very few limitations on the amount of profit that you can earn exchanging currencies. But how exactly does forex trading work? Let’s take a look at a practical example of how you might earn money exchanging currencies at strategic times.

Imagine that you believe that the value of the Swedish krona will fall in relation to the euro. Because of this, you decide to deposit 10,000 kronor into your forex broker account. Your broker also offers you 10:1 leverage, which allows you to invest 100,000 kronor despite only having 10,000 kronor in your account. You convert your entire lot of krona to EUR, which is currently trading at a rate of 1:0.095. This leaves you with a total balance of 9,500 euros.

Soon, you see that the value of the EUR is rising, and 1 SEK is now equal to only 0.092 EUR. You decide that now is the time to sell, so you convert your entire lot of 9,500 euros back to Kronor. This leaves you with a total of about 103,261 kronor. After accounting for the leverage you used and your initial investment, you profited about 3,261 kronor on this trade. 

Tips for Trading Forex in Sweden

It’s legal and safe to earn money when forex trading in Sweden. Though Sweden doesn’t use the euro as its base currency, the country is still a member of the European Union. This means that traders enjoy protections from the EU’s Markets in Financial Instruments Directive.

The forex market in Sweden is also regulated by the “Finansinspektionen,” or the Financial Supervisory Authority of Sweden. The Financial Supervisory Authority of Sweden is a watchdog group that ensures that brokers offer margin and negative-balance protections to forex traders as required by law. Though both domestic and internationally based brokerages may operate in Sweden, all brokers must be licensed by the Financial Supervisory Authority of Sweden. This means that forex trading in Sweden is exceptionally safe compared to unregulated markets.

Though the Swedish currency market enjoys a high level of oversight, forex scams still exist. Be sure to ask about licensure status and thoroughly understand each broker’s fees and margin rates before opening an account. 

Forex Terminology

The forex market has its own language, which forex traders use to talk about trades and execute orders. Familiarize yourself with a few of the most common international terms below before you make your first trade.

• Pip: A pip is the smallest calculatable unit of currency. For most currencies, a single pip is valued at 0.0001 of that currency’s denomination.
• Lot Size: Your lot size is the total number of units of currency you’re buying or selling. For example, if you decide to sell 10,000 kronor, your lot size is 10,000.
• Orders: An order is a set of directions you provide to your broker that lays out which currency you want to buy or sell, your lot size, the price that the order should be executed at and more. There are multiple types of orders, and you can combine more than 1 order type to limit your losses when trading.
• Calls: A call is a risk of buying and selling currencies on margin. If your broker subjects you to a margin call, it’s usually because the value of your portfolio has dropped below a certain percentage of your original balance. If this occurs, you’ll be required to close out of your position or deposit more money into your brokerage account to compensate for the difference. Margin calls are one of the reasons why EU trading regulations limit the amount of leverage you can use when you trade. 

Master the Swedish Forex Market

Though the Swedish forex market is well regulated, this doesn’t mean that trading currency pairs comes without risk. It’s your responsibility as a trader to educate yourself and develop your trading strategy before you place your first order to buy or sell currency. Limit your amount of leverage and always perfect your trading strategy on a demo account before you begin trading in a live account with your brokerage of choice.  

Frequently Asked Questions