Forex Trading in The Netherlands

As a part of the European Union, traders in the Netherlands have safeguards to protect them while trading forex. There are a number of forex brokers that offer trading capabilities in the Netherlands, so you’ll have your choice of platforms and trading options. 

In this article, we cover the basics of forex trading in the Netherlands, including regulations, market trends, and tips for success in this fast-paced and dynamic industry. Whether you're a beginner or an experienced trader seeking new opportunities, this guide will provide valuable insights to help you navigate the world of forex trading in The Netherlands.

Let’s take a look at how you can get started trading forex in the Netherlands. 

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How to Get Started with Forex in The Netherlands

If this is your first time buying and selling currencies, you may not be sure how to get started. Here are the basic steps to begin to trade forex.

• Get Connected to the Internet: Currency values can change with almost no notice, which means you’ll need to have a stable connection to the internet before you begin trading. No matter if you decide to trade from a desktop computer or a mobile device, be sure that your connection is stable before you begin.
• Open a Brokerage Account: There are a number of forex brokers that offer service to traders in the Netherlands. Because you can’t buy and sell currencies directly, be sure you do your research and choose a forex broker that’s regulated by the Netherlands Authority for the Financial Markets (AFM). Open an account and submit your personal documentation following your broker’s instructions.
• Fund Your Account: After you open your account and your broker has a chance to verify your identity, you’ll fund your account. Most traders do this by linking their bank account and electronically transferring trading funds into their forex account.
• Download Your Trading platform: Depending on where you choose to trade forex, you might need to download an independent brokerage platform before you start trading. Though many brokers have their own proprietary platform, you may also want to use an outside platform like the popular MetaTrader 4 or 5 to enhance your trading.
• Place Your First Trade: After you’ve opened your forex account and added funds, you can officially place your 1st trade. 

The Netherlands Forex Trading Strategies

If you’re just getting started in forex trading, you’ll usually want to stick with the EUR/USD currency pair. When you trade the EUR/USD, you’ll exchange your euros for dollars and sell off your dollars when they rise in comparison to the price you purchased them at. There are two major types of trading strategies you can use when forex trading:

• Fundamental Analysis: Fundamental analysis involves examining economic indicators that may signal a country’s currency will rise or fall in the coming days, weeks or months. Traders who use fundamental analysis to trade often compare interest rates, non-farm payrolls, inflation rates and GDP data between the Netherlands and other countries to decide which currencies to buy and sell.
• Technical Analysis: Traders who use technical analysis rely on charting software and movement patterns to tell them when to buy and sell. Most traders use candlestick charts to identify patterns that usually predict how a currency will change in value.

Most traders use technical analysis to capitalize on short-term price movements when trading the euro. Let’s take a look at a few technical indicators you might want to use when you begin trading. Though these indicators aren’t fool-proof guarantees you’ll make money trading forex, they can provide you with a great jumping-off point to develop your own trading strategy. 

Breakout Strategy

The breakout strategy of trading can be used on any timeframe but is typically most profitable on 30-minute and 1-hour intervals. When you use the breakout strategy, you’ll look for rectangular shaped formations that demonstrate very little change in volatility. When the charting pattern “breaks out” of the rectangle, a signal to buy or sell is created. You’ll see a candlestick show a sharp increase or decrease in price, which can often signal the beginning of an upward or downward trend. 

This strategy is commonly used during periods of lower movement between the USD and EUR — for example, in the late New York afternoon or during the Tokyo trading day.  

Triple Moving Average

The moving average strategy is a long-term strategy typically carried out in set periods. The most common period for using this strategy is 21 days. With each successive bar, you’ll take the averages from the next 21 days and calculate the average close price. As the average close prices rises or falls, a buy or sell signal can be triggered when a set price or profit is reached.   

The triple moving average trading strategy is often used during periods of high volatility and works best when markets don’t move sideways.    

Forex Trading Example in The Netherlands

Here’s an example of how you might earn money trading forex as a trader in the Netherlands.

Imagine that you fund your account with 10,000 euros. Your forex broker offers you 10:1 leverage, which means that you may trade with the power of 100,000 euros despite only having 10,000 euros in your account.

You decide that you want to invest in the USD and convert your USD back to euros when it's profitable. You decide to invest when 1 EUR is equal to 1.09 USD, including the spread that your broker takes in exchange for executing your trade. Using your entire leverage, you invest a total of 100,000 EUR and convert it to USD. By the time your order is filled, you’re left with $109,000 in USD.

Over time, the value of the dollar rises in comparison to the euro. Later in the day, you see that 1 euro is now worth 1.02 USD. You convert your entire lot of USD back to EUR and are left with 106,862 euros by the time your order is filled. When you return the leverage you used, you gained almost 7,000 euros on this trade.

Making Money with Forex in the Netherlands

It’s very possible to make money trading forex as a trader in the Netherlands. Because your base currency is the euro, you’ll have access to an exceptional amount of liquidity and more leverage. The euro is 1 of the most frequently traded currencies in the world, which means that you have more opportunities to capitalize on daily price movements and fluctuations.

Making money trading forex requires discipline and a solid trading strategy. Protect yourself by trading only the most popular currencies, practice your trading strategy before you use it and never invest more than you can afford to lose. Remember that using leverage is common in forex trading, but it can also amplify your losses if the market doesn’t shift the way you anticipate. Using a reasonable amount of leverage while you learn how to trade can prevent you from going into debt when trading forex. 

Compare Online Forex Brokers in The Netherlands

Traders in the Netherlands must rely on a forex broker to carry out trades on their behalf. Getting started in the world of forex means opening an account with a registered and reliable broker. If you don’t already know which forex broker you’d like to work with, consider a few of the top selections below.

For more information on forex brokers see our Best Online Forex Brokers in The Netherlands post.

Forex Terminology

Forex trades have their own unique set of vocabulary words they use to describe price movements and trades. It can be helpful to familiarize yourself with the forex market’s most common trading terms before you make your 1st trade. Some of the most common terms you’ll run into when you trade include:

• Pip: A pip is the smallest possible unit of any given currency. All major currencies (with the exclusion of the Japanese yen) are calculated to 4 decimal places. For example, you might see that 1 euro is currently worth 1.1023 USD. If the price of the USD in comparison to the EUR moves to 1.1022, we’d say that the price of the USD has moved by 1 pip.
• Lot Size: Currencies are traded in amounts called lots. Your lot size is the number of any particular currency that you’re buying or selling. For example, if you’re selling 100,000 units of EUR, you’d have a lot size of 100,000. Most forex brokers consider orders of 100,000 units of currency to be a “standard lot.”
• Orders: An order is a request to buy or sell a specific currency at a certain price point. There are many types of orders, and you can use varying order types to ensure that your trades are carried out within your budget.
• Calls: A call (sometimes referred to as a “margin call”) is a part of forex risk management if you’re using leverage to trade. When your current equity falls below a certain percentage of your margin used, your broker may subject you to a margin call requiring you to deposit more money into your account to maintain your position. Margin calls can quickly wipe out any profit you make if you don’t manage your leverage conservatively. 

Trading Forex World Wide

Just like when you trade stocks, bonds, commodities or any other asset, forex trading involves an inherent risk. While there are many successful trading strategies that you can use to earn money as a forex trader in the Netherlands, it’s important to keep your risk within your level of tolerance. Be mindful of any leverage you decide to use — and never invest more money than you can comfortably afford to lose.  

Frequently Asked Questions