How to Start Forex Trading in Venezuela

Starting forex trading in Venezuela presents a unique opportunity for individuals to earn income by trading currency pairs in a global market. Due to Venezuela's economic situation, many people are looking for alternative ways to stabilize and grow their finances, and forex trading can provide a viable option. However, understanding how to start trading effectively, especially in a complex economic environment, requires thorough preparation and a clear strategy.

This guide will walk you through the essentials of forex trading, from selecting a reliable broker to understanding the basics of currency pairs, and navigating the tools and resources you need to get started. Whether you're new to forex or looking to expand your financial knowledge, this guide will equip you with the foundation to begin trading forex in Venezuela responsibly and effectively.

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Get Started with Forex in Venezuela

Named after Simon Bolivar, the hero of Latin American independence, the bolívar soberano is the official national Bolivar currency of Venezuela.

Venezuela has experienced harsh economic climates since the 1980s. Due to hyperinflation, Venezuela has replaced its currency multiple times in less than 50 years. 

As of August 2018, the Venezuelan bolivar soberano (VES) has served as the currency in circulation. It was preceded by the bolivar fuerte. The bolivar soberano has denominations of 2, 5, 10, 20, 50, 100, 200, 500, 10,000, 20,000 and 50,000. These banknotes have images of Venezuela’s national parks and indigenous animals depicted on them. 

The Central Bank of Venezuela was established in 1939. It was enacted by law to ease social, political and economic tensions in Venezuela at the start of WWII. The Central Bank of Venezuela has the sole right to issue Venezuelan currency. 

Oil is Venezuela’s main export. It is the 6^th largest member of the Organization of the Petroleum Exporting Countries (OPEC) by oil production. Beyond oil, Venezuela also manufactures and exports industrial products such as steel, aluminum and cement. 

The Venezuelan government has instilled a currency control board to handle forex procedures. The board offers a limited sum of foreign currency to local merchants to help them pay for foreign goods. 

Since the government limits foreign currency to individuals, merchants in Venezuela resort to the black market to get more foreign currency. This has increased the printing of bolivar notes and has caused inflation over the years.    

Here’s a step-by-step guide to help you get started with forex trading in Venezuela.

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 fluctuates. Having a personal device to constantly track these changes is often essential to successful foreign exchange trading.

Step 2: Find an Online Forex Broker

There are various forex brokers available online. Go through each broker’s website, and choose a broker that lets you trade the currency pairs you are interested in.

Be sure to check the footer of each website for information on the broker’s overseeing regulatory bodies. If you can’t find any such information from the U.S. Securities and Exchange Commission (SEC), the UK’s Financial Conduct Authority (FCA) or other reputable regulatory bodies, then 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 initial deposits and trading strategies. 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 onto your computer or smartphone. Take the time to customize the look and feel of the platform to help you have the best chance of identifying forex trading opportunities. 

Step 6: Begin Your Forex Trading Journey

Before you start trading forex, you might want to open a demo account to trade using virtual money. These demo accounts can help you get used to the interface of the forex broker’s platform without risking your money. After you feel confident using the platform and have developed a decent strategy, you can start trading forex using real money.

Forex Trading Strategies from Venezuela

Experienced forex traders rely on several tried-and-true strategies to increase their chances of making a profit and limiting losses. 

These forex trading strategies can include the following:

Swing trading

Swing traders typically operate by using momentum indicators to identify likely market reversal points. This short- to mid-term forex trading strategy can help you also profit from corrections while following an overall trend. 

Range trading

Range trading is a strategy that involves identifying a set of similar highs and similar lows for a specific forex currency pair. You do this by looking at the past performance of a currency pair and then aiming to either buy on a dip to the lows and sell on a rally near the highs or sell on a rally and buy on a dip. 

Scalping

Scalping is a forex trading strategy that involves quickly entering and exiting the market aiming to profit from small exchange rate movements. This very short-term strategy is typically time-consuming and generally requires access to real-time market data to make it work. If you’re not fast enough with your scalping trades, you may miss opportunities or let profits turn into losses. 

Position trading

Position or trend traders generally have a long-term outlook on the overall direction of the exchange rate of a forex currency pair. This method of trading typically requires you to hold positions in forex currency pairs until there is a significant change in their exchange rate. With this strategy, you can look past minor market changes. It can take months or even years before you close out a profitable position, although the gains tend to be higher when you do compared to scalping, for instance. 

Day trading

Day trading is a forex trading strategy that generally requires you to exit all your positions by the end of the day’s trading session. This strategy is most suitable for short-term traders who have the time to regularly monitor the market. Day traders can trade once or twice per day or more, and they have the benefit of avoiding the major market volatility that occurs overnight. 

Forex Trading Example in Venezuela

Venezuelan merchants often need U.S. dollars to pay for imports and the country receives US dollars for its oil exports. That makes the USD/VES an especially interesting currency pair for some Venezuelans.  

Imagine that the USD/VES pair is currently trading at 241,365.85, that means it costs 241,365.85 bolivars to buy 1 U.S. dollar. If your broker allows you to trade VES, then you can take a long $100,000 position against the VES if you have sufficient margin in your trading account. 

If the USD/VES exchange rate has risen to 251,365.85 after 3 months, then you can sell your position for a profit of 1,000,000,000 VES. Of course, you could also lose money if the exchange rate declined instead. 

Make Money with Forex in Venezuela

To counter the collapse of the economy, the Central Bank of Venezuela has allowed local banks to open foreign currency trading platforms. Although the weakening of the series of Venezuelan bolivars has been the subject of many economic reforms in the country, it may have benefitted some lucky forex traders. 

It’s not the 1^st time that the national currency of Venezuela has faced hyperinflation. The U.S. dollar was worth 7,518.80 bolivars in June 2019. The price of USD skyrocketed to 292,167.00 by August 2020. You could have potentially earned $97,426.54 with a $100,000 long USD/VES trade using a 1-year buy-and-hold strategy if you could actually get an online broker to allow you to make that trade.

Compare Online Forex Brokers in Venezuela

Online brokers let you instantly track the exchange rate of and trade currency pairs in the forex market. You can sign-up for an account on their website and start trading forex within minutes. These brokers may even give you access to financial data such as 52-week highs and lows, exchange rate forecasts and historical levels on a single platform. 

Many forex brokers also help keep you up-to-date with current events and news that shape the world’s economies. They often provide a plethora of educational resources and expert analysis to help you gain an edge in your trading tactics. 

Forex Terminology

Before you begin trading forex, you should be familiar with certain terms and meanings. A grasp of this financial lingo will help you understand the forex market better. 

• Pip. The smallest unit of movement in an exchange rate. Generally, forex currency pairs are quoted out to the 4^th decimal point. 
• Lot Size. A standardized trading amount, usually 100,000 base currency units at online forex brokers. You can also buy and sell smaller lot sizes at many brokers, such as mini and micro lots.
• Orders. A command given to your broker to execute a transaction either at the market or based on other conditions you specify. To go long a currency pair, you enter an order to buy the base currency and sell the counter currency. To go short a currency pair, you enter an order to sell the base currency and buy the counter currency. 
• Margin Calls. If your account margin is insufficient to continue to hold your outstanding positions, your broker might issue a margin call. Most online forex brokers will instead automatically close out your positions. 

Trade Forex in Venezuela

Most of Venezuela’s income is generated by oil. The extreme hyperinflation rates in Venezuela have created numerous profitable entry and exit points in the USD/VES exchange rate over the last decade. 

You can trade forex in Venezuela to put your capital at risk speculating on exchange rate movements. Start with our recommended broker to start trading forex in Venezuela today.

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