Forex Trading in Tanzania
If you’ve looked into trading forex as Tanzanian and feel there can be an opportunity to make money, you may wonder what is the best way to get started.
Well, your search ends here!
In this guide, we’ll mention all the nitty-gritty of forex trading in Tanzania and how you can hop on the forex train.
So, let’s get started!
Table of contents
- Getting started
- What do you need to know as a beginner Tanzanian trader?
- 1. Learn the basics first
- Forex lot sizes
- 2. How does the forex market work?
- 3. Security
- 4. Payment options
- Forex trading example in Tanzania
- How to open a forex trading account in Tanzania?
- Tanzanian forex regulations
- How much capital do you need to start trading in Tanzania?
- Best forex trading platforms for Tanzanian traders
- What is the best time to trade forex as Tanzanian?
- Is forex trading legal in Tanzania?
- Forex trading strategies for Tanzanian traders
- Day trading
- Trend trading
- News trading
- Momentum trading
- Swing trading
- Pros of forex trading in Tanzania
- Bottom line
Tanzania’s economy is based on agriculture and has a lower-middle-income level. Since 1985, Tanzania’s economy has been moving from a command economy to a market economy.
Tanzania’s central bank, the Bank of Tanzania, was founded in 1966. Its primary role is to carry out monetary policies and strengthen the national economy. The BOT manages the foreign exchange fund, ensuring that sufficient capital is protected, liquidity needs are met, and improved citizens’ welfare.
Forex trading is a relatively recent trend in Tanzania. It may take some time for the industry to fully develop as more people will themselves in forex.
There are many scammers trying to lure Tanzanians on the internet, so you must take caution when trading online in Tanzania.
Although many brokers accept Tanzanians, there are not registered forex brokers in Tanzania.
Don’t worry, as many brokers will allow you to open an account with them.
Tanzania is one of the fastest developing African countries and is likely to grow in the upcoming years.
The number of people searching for forex trading in Tanzania is rising by the hour. This indicates that people want to know and learn everything there is to know about forex trading.
To get started in forex, all you need is:
- Get a device and reliable internet service: The first thing you’ll need to trade is a reliable internet service provider. To trade forex, you can use a desktop computer, a laptop, a tablet, or a smartphone. The value of currency pairs listed on forex brokers fluctuates frequently. Having a personal computer to monitor these changes continuously is critical to efficient forex trading.
- Select a broker: There are various forex brokers available on the internet. Evaluate their websites to find a broker who allows you to exchange currency pairs with TZS. Do your homework before opening an account with a broker that offers forex trading to Tanzanians. We’ll go through the account opening process in more depth later.
- Fund your account: After you’ve signed up for an account, you’ll need to transfer funds to begin trading forex. Depending on the broker you choose, you can choose your currency and finance your account in various ways. Wire transfers, debit cards, and electronic payment services such as Paypal and Skrill are some of these funding options.
- Make your first trade: Once your forex broker has received and verified your funds, you can start trading currency pairs.
What do you need to know as a beginner Tanzanian trader?
1. Learn the basics first
The buying or selling of one currency in exchange for another is referred to as forex. It is the world’s most highly traded market because individuals, companies, and countries all participate in it, and it is a simple market to enter without a lot of money.
When you travel and exchange your Tanzanian Shillings for Euros, you participate in the global foreign exchange market.
Currencies are traded in pairs in the forex market. Since there are two currencies involved when exchanging Tanzanian Shillings for Euros, the exchange often indicates the value of one currency compared to the other. The EUR/TZS rate, for example, indicates how many Tanzanian Shillings are required to buy one Euro.
As a forex trader, you’ll come across many forex terminologies, so let’s define them:
The term pip stands for percentage in point or price interest point. A pip is the smallest price change that a currency exchange rate can bring in the forex market.
The use of borrowed money to invest in a currency is referred to as leverage. Leverage is a concept that is commonly used in forex trading. Borrowing money from a broker allows you to trade greater positions in a currency. As a result, leverage boosts the returns from fluctuations in a currency pair’s exchange rate.
The bid price represents the maximum price you are willing to pay for a currency pair. The ask price signifies the minimum price that you are willing to take for that same currency pair.
Both bid and ask prices are given in real-time and are updated regularly. For example, the bid price for the Euro against the U.S. dollar is 1.2020, which is the price at which a seller wishes to sell the EUR/USD.
The difference between the buying and the selling prices is called the spread. Your forex broker will determine this spread. Each broker defines its specific spread on currency pair, and it varies from broker to broker.
Forex lot sizes
A lot is a unit of measurement for a transaction number.
When you place orders on your trading platform, orders are placed in sizes quoted in lots.
There are three lot sizes in forex:
- Standard Lot – 100,000 units
- Mini Lot – 10,000 units
- Micro Lot – 1,000 units
Understanding the above terms will help you understand what is going on when you see a forex pair rising or declining on a chart. If you calculate the difference in pips between two price points, you will see the profit potential available from certain moves.
Trade Forex in Tanzania with our Top 3 Brokers. Try their Risk-Free Demo Account!
2. How does the forex market work?
Currency pairs are traded on the forex market. A market price is assigned to each forex pair. The price denotes how much of the second currency is needed to buy one unit of the first currency.
If the EUR/USD currency pair price is 1.3600, it costs 1.3600 U.S. dollars to buy one Euro.
The forex market is open 24 hours a day, five and a half days a week (yes, in some parts of the world, you can trade five and a half days), and currencies are traded globally in forex sessions such as London, New York, Tokyo, and Sydney—across almost every time zone.
Since the forex market has become more open to the general public, you want to ensure that everything goes as planned so that you can trade without any doubt. You must understand that one of your top priorities should be security.
So, before you open a trading account, make sure to check out the broker’s website. If you see something fishy, don’t open an account with that broker.
4. Payment options
The Capital Market and Securities Act of 1994 was enacted to facilitate the development of an orderly, fair, and efficient capital and securities market in Tanzania.
Due to the limited number of forex bureaus in Tanzania, traders have turned to commercial banks for trading shillings.
So, you can use a bank account as your payment option. Besides this, you can also use PayPal, Skrill, and Neteller.
Forex trading example in Tanzania
Let’s look at an example of how a Tanzanian trader could approach forex trading.
Assume that the USD/TZS pair is currently trading at 2000. According to this, it will cost you 2000 shillings to buy a U.S. Dollar. If you choose to buy $100,000 at the rate of 200,000,000 shillings.
After two months, consider the price of USD/TZS has risen from 2000 to 2010. If you decide to sell your $100,000 and earn a profit of 10,00,000 shillings in just 60 days.
How to open a forex trading account in Tanzania?
You can open an account by deciding on a licensed forex broker and signing up with that broker. We’ll talk about Tanzanian forex regulations later.
Because of technological advancements, opening a forex trading account is now relatively easy.
The following are the steps for opening a forex account in Tanzania.
- Look for the account types on the broker’s website. This can vary from small-scale accounts with low minimum deposits for new traders to advanced accounts for experienced traders.
- Fill out an application form after you’ve decided on your account type.
- After completing the application, you will be given a username and password to access your account.
- Log in to the brokerage’s client portal.
- Deposit funds through your bank account or by using credit or debit cards. Additionally, you can use payment services like PayPal, Skrill, Neteller, and many others. Remembered that if you use a credit card, for this reason, you will pay interest and fees.
After your account has been funded, you are now able to begin forex trading. Before you make your first trade, review any instructions or special information provided by your broker about the use of their trading platform.
Some brokerages can have a demo account that enables traders to practise before investing real money. This is useful if you are new to the forex market.
Tanzanian forex regulations
According to the Bank of Tanzania,
People who send or spend money abroad must do so only through Approved Dealers, such as banks where customers have accounts. These transactions must be reported to the Bank of Tanzania. Foreign currency transactions are subject to limitations.
Tanzania’s regulatory authorities have not permitted any forex brokers to provide online retail forex trading services in the country.
The Bank of Tanzania strengthened its power over forex last year by issuing new regulations. These new rules were put in place in response to the government revoking the licenses of 100 bureaus and forcing the closure of a newspaper for using unofficial exchange rate data.
There is no formal regulatory authority for the forex industry in Tanzania.
How much capital do you need to start trading in Tanzania?
Many brokers offer plenty of account options. So, you need to select the one which suits your trading personality.
Many brokers have a $5 minimum, but we recommend opening a trading account with at least $500. This means that you can take bigger positions and can make a lucrative sum. You should never lose more than 1% of your forex portfolio on a single trade. In other words, if you have $500 in your account, you should not risk more than $5 per trade.
The lot size has an effect on trading positions as well. As previously mentioned, you can trade in Standard lots (100,000 units), Mini lots (10,000 units), or Micro lots (1000 units).
A keynote to add here is that a position is determined by the balance held and the leverage offered by your broker.
Best forex trading platforms for Tanzanian traders
The best forex trading platforms for Tanzanian traders are those provided through forex brokers. The MT4 platform is available at every broker, while some brokers also provide the MetaTrader 5 and cTrader platforms. You can download these platforms through brokerage websites on your desktop, or you can install their apps from Google Play and Apple store.
What is the best time to trade forex as Tanzanian?
The best time to trade forex in Tanzania is between 12 p.m. and 6 p.m. when both the London and New York sessions are active, and they overlap. During these trading hours, volatility is at its peak.
While you can trade at any time, the London/New York overlap works best if you don’t want to devote full-time to trading.
The best time for trading forex in Tanzania according to four major forex sessions is:
- 12 a.m. – Sydney session
- 4 a.m. – Tokyo session
- 12 p.m. – London session
- 4 p.m. – New York session
If you can trade during the overlapping sessions between Tokyo and London or London and New York, you can take advantage of the most liquid and volatile sessions.
Is forex trading legal in Tanzania?
As we mentioned earlier, Tanzania’s central bank, the Bank of Tanzania, is the country’s primary governing body (BoT). The Central Bank is in charge of developing policies and enforcing regulations in the financial sector.
Forex trading in Tanzania is currently unregulated, and there are no locally licensed brokers.
This means you are investing in forex at your own risk as you can’t file a dispute if anything shady happens.
There a common misconception that forex trading isn’t allowed in Tanzania. While BoT doesn’t allow brokers to work in Tanzania, you can choose brokers from other jurisdictions like South Africa.
The Bank of Tanzania does not prohibit online forex trading.
So, forex trading is legal in Tanzania.
Forex trading strategies for Tanzanian traders
Forex traders all over the world use a few simple strategies to increase their gains and minimize their losses. The key to forex trading success is developing a strong trading strategy, which will be part and parcel of your trading plan.
Here are some of the common forex trading strategies you can utilize:
Day trading strategies, in general, restrict all trades to a single trading session.
Day traders buy and sell during one of the forex trading sessions, but they close all their positions by the end of the trading day to avoid the risk of overnight positions.
Trend trading is another common forex trading strategy.
It’s also easy for beginners to learn.
The essence of trend trading is detecting an upward or downward trend in a currency price movement and then selecting entry and exit points as their trading positions.
These points are based on the currency’s market positioning within the trend as well as the trend’s relative strength.
This approach involves capitalizing on short-term market fluctuations. Scalpers enter and exit the market quickly in order to gain a few pips at a time.
If you want to keep up with economic and geopolitical news, news trading might be for you. Following a major economic news release, the approach involves taking advantage of rapid swings in the exchange rates of major currency pairs such as EUR/USD or GBP/USD.
Momentum strategies take into account both price and volume, and they often use visual instruments such as oscillators and candlestick charts.
Swing trading is a method of entering and exiting the market using momentum indicators. Swing traders are more concerned with buying low and selling high when long, and selling high and buying low when short. Swing traders will trade overnight because the strategy has no time constraints.
Is forex trading illegal in Tanzania?
No, trading forex is legal in Tanzania. Although there isn’t any regulatory body for forex trading, the Bank of Tanzania deals with the capital markets.
How do you get started with forex trading in Tanzania?
You can start trading forex in Tanzania by looking for a broker who meets your trading needs, opening an account, and depositing funds. You can open a demo account before opening a live trading account.
How much money do I need to start trading forex?
Some forex brokers will let you begin trading with as little as $1. Others require you to start with $100 and work your way up to $1000. It all depends on how much money you want to invest.
Pros of forex trading in Tanzania
- Global market: When it comes to the pros of trading forex, the sheer size and volume of the forex market have no competition. According to one estimate, over $5 trillion worth of transactions happens every day on the forex market. T is truly a global marketplace where traders from around the world buy and sell currency pairs throughout day and night.
- Low investment: Since brokers now have very low minimum deposits and very high leverage, you can start trading in the forex market with as little as TZS 11590. However, you should start trading with at least $1000 in capital and never lose more than two to three percent of your capital in a single trade.
- Accessibility: One of the most significant benefits of forex trading is its accessibility. It is relatively easy to join and does not require a hefty initial investment like in the stock or commodity markets. This is why it is popular among beginners.
- Low transactions cost: Not only does the forex market need little capital to get started, but it also has low transaction costs. Brokers usually benefit from the spread, which is measured in pips and is added to the price of a currency pair.
- Buy/sell: One of the advantages of forex trading is the ability to buy or sell a currency pair depending on the market’s position.
- Volatility: Currency exchange rates and currency pairs are essential to forex. The forex market, like other financial markets, can be volatile. Differences in exchange rates can be triggered by a variety of economic, geopolitical, social, and other factors. You never know a currency profitable today may give you losses tomorrow.
- Unregulated brokers: Regulated brokers assure that your money will be used solely for trading purposes. This keeps your investments secure. Unregulated brokers, on the other hand, can take investor funds and mislead traders with fraud activities. To protect your investment and to guard yourself against fraudulent activities, you should always trade with regulated brokers.
If you are new to forex, you should spend as much time as possible learning about the basics of forex trading and the risks and strategies involved.
Before you begin trading forex, you can open a demo account and trade with virtual currency. These demos will assist you in becoming familiar with the forex broker’s platform without suffering unnecessary losses. After you’ve gained confidence in using the platform, you can begin trading forex with real money.
Open a real account until you’re comfortable with your trading strategy. Begin with a small amount, such as $500, and trade with the smallest available lot size.
Don’t risk more money than you can spare. A strong risk management strategy is to never risk more than 1% or 2% of your trading portfolio.
If you are a beginner looking to get started in the forex market, this guide can help you a lot. If you don’t understand anything, reread the guide; you’ll find all the answers here.
Give Me Access to a Free Demo Account!
Hein is a Forex and CFD enthusiast with a passion for writing good informative quality content. He strives to showcase the best Forex Brokers in South Africa. Join him on his Journey!
Content Writer | Market Analyst
cTrader- A Good Trading Platform?
After its initial release with FxPro, cTrader has been the platform of choice for a…
Forex Trading in Rwanda
You probably have heard about forex trading. You read and watch videos where people are…
How to design a Forex Trading System?
After becoming familiar with the forex market, a thought that probably pops in your head…
How to Become a Successful Forex Trader?
We all wish there was a tree in our backyard from which we can pluck…
How to Choose a Forex Broker
The Forex market is so large that the prospect of having to scroll through all…
What is Forex?
You've probably heard the term forex but have no clue what it's all about. Read…
What is Technical Analysis in Forex – Explained
The most common question that pops up in a new trader head is, "what is…
Forex Trading in Namibia
The majority of beginner traders are charmed by stories of successful forex traders in Namibia.…
What is CFD Trading in South Africa?
There's been an increase in popularity with CFD trading in South Africa. With an increase…
How to Trade Forex for Beginners?
If you are not familiar with Forex trading and want an opportunity to make money,…