Forex Trading in Lesotho • Forex Strategies • Benzinga - Benzinga

Posted: 15 Jul 2020 12:00 AM PDT

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With a budding economy and enhanced access to high-speed internet, it's becoming easier for traders in Lesotho to access the forex market. Before you trade forex in Lesotho, be sure to read our complete guide to beginning safely. You'll learn more about how to understand forex terminology, how forex trading works, how you can locate a reputable forex broker and more.

Get Started with Forex in Lesotho

Residents of Lesotho cannot buy and sell currencies directly. However, you can open a brokerage account with a licensed international broker to trade forex legally. Below, you can find the most common steps you'll go through when you open a brokerage account and begin trading forex.

Step 1: Find a stable internet connection. Forex trading often relies on minute-to-minute price changes. This means that having a consistent and reliable internet connection is crucial for every trader. Test your internet connection and make sure your connection is private before you proceed.
Step 2: Choose a broker. There is a wide range of international brokers offering service to clients in Lesotho. Research each broker's fees and available currencies before you decide where you want to open an account.
Step 3: Download your trading platform. Though many brokers offer their own proprietary platform, you may need to download a 3rd-party platform like MetaTrader 4 or 5 depending on the broker you choose. Be sure that your platform of choice is supported before you download it.
Step 4: Fund your account. After your account has been fully opened, you'll need to fund it. Most forex traders in Lesotho accomplish this with a Visa or Mastercard transfer, which is accepted by most brokers. Select Lesotho banks and e-wallets may also be accepted.
Step 5: Make your first trade. Once your funds have cleared, you can officially place your first forex trade through your brokerage account.

Lesotho Forex Trading Strategies

The best forex trading strategy for you will vary depending on your needs, your financial goals and how long you'd like to trade. Let's take a closer look at how investment timelines can influence your trading strategy.

Short-term

Traders who use a short-term trading strategy typically capitalize on multiple small price movements throughout the day. Short-term traders may scalp very small price movements, day trade or hold onto their currencies for a few days until prices change. Short-term traders almost always rely on technical analysis to decide which currencies to buy and sell, focusing on reversal candlesticks and signals. Some traders even use automatic trading software to execute trades when buy and sell signals are triggered.

Mid-term

Traders who use a mid-term investing strategy usually hold onto their currencies for hours or days at a time to allow the trade to develop further. Though they don't make as many trades in a day as short-term traders, they make up for this by waiting for larger differences in price before selling. Most traders who use a mid-term trading strategy use technical analysis to identify longer-term patterns that indicate buy or sell signals.

Long-term

Investors who use a long-term forex trading strategy typically rely on fundamental analysis to determine how a currency will change in value. Fundamental analysis involves examining reports and statistics that give traders insight into the true economic conditions of the country issuing the currency. The stronger a country's economy, the more likely it is that the country's currency increases in value. Select long-term traders may also use technical analysis charted using daily or weekly candlesticks.

Forex Trading Example in Lesotho

How exactly does forex trading work? Let's take a look at an example of how you might be able to use the changing value of the Lesotho loti (LSL) to your advantage when trading forex.

Imagine that you open a forex brokerage account and fund your account with L$10,000. Your broker offers you 10:1 leverage, which allows you to execute trades worth L$100,000 despite only having L$10,000 in your account.

You believe that the USD will soon rise in value in relation to the LSL, so you use the entirety of your leverage and initial deposit to invest in the USD. If 1 USD is currently equal to 16.94 LSL, when your trade is complete, you're left with about $5,903 USD.

Soon, you see that the value of the USD is rising in comparison to the LSL. When 1 USD is equal to 17.04 LSL, you decide to cash out. You convert your entire lot of USD back to LSL and are left with about L$100,587. After accounting for the money you borrowed in leverage and your initial deposit, you've taken away a profit of about L$587 on this trade.

Making Money with Forex in Lesotho

Forex trading isn't against the law in Lesotho, and there are no limitations on the amount of money you can deposit into a foreign brokerage account. However, this market infancy also means that there are very few regulations and laws that protect traders from predatory brokers. Though the country is part of international organizations like the United Nations and the Southern African Development Community, leaders in Lesotho have not made an effort to reform regulations to meet the changing needs of the forex market. There is no regulatory body that oversees the forex market in Lesotho, which means that forex scams are common.

If you decide to trade in Lesotho, only work with licensed international brokerage firms. These brokers must meet international standards set by organizations like the Cyprus Securities and Exchange Commission as well as directives like the European Union's Markets in Financial Instruments Directive. You should also be especially mindful when using leverage to trade, as there are no countrywide restrictions on leverage availability.

Best Online Forex Brokers in Lesotho

It can be very difficult to find a legitimate forex broker in Lesotho because the country's currency exchange market is still in its infancy. If you decide to trade forex in Lesotho, we strongly recommend that you work with an international broker offering service in your country instead of a local broker. If you aren't sure where to begin, consider a few of our top picks below.

Account Minimum

100 of your selected base currency

Pairs Offered

80+

Account Minimum

100 of your selected base currency

Pairs Offered

80+

1 Minute Review

FOREX.com is a one-stop-shop for forex traders. With a massive range of tradable currencies, low account minimums and an impressive trading platform, FOREX.com is an excellent choice for brokers searching for a home base for their currency trading. New traders and seasoned veterans alike will love FOREX.com's extensive education and research center that provides free, informative forex trading courses at multiple skill levels. While FOREX.com is impressive, remember that it isn't a standard broker. You can't invest in the stock or bond market through your FOREX.com and you cannot open an account with tax advantages. The confusing pricing and margin structures may also be overwhelming for new forex traders.

Best For

MetaTrader 4 users
Beginner forex traders
Active forex traders

Pros

Impressive, easy-to-navigate platform
Wide range of education and research tools
Access to over 80 currencies to buy and sell
Leverage available up to 50:1

Cons

Cannot buy and sell other securities (like stocks and bonds)
Confusing margin requirements that vary by currency
Limited customer support options
Cannot open an IRA or other retirement account

Account Minimum

$50 USD

Pairs Offered

Account Minimum

$50 USD

Pairs Offered

1 Minute Review

Though Australian and British traders might know eToro for its easy stock and mobile trading, the broker is now expanding into the United States with cryptocurrency trading. U.S. traders can begin buying and selling both major cryptocurrencies (like Bitcoin and Ethereum) as well as smaller names (like Tron Coin and Stellar Lumens).

eToro offers traders the opportunity to invest their assets into premade portfolios or cryptocurrencies, similar to services offered by robo-advisors through traditional brokers. Though eToro isn't a one-stop-shop for everything an investor needs, its easy-to-use platform and low spreads is a great way to enter the cryptocurrency market.

Best For

International Forex/CFD Traders
New cryptocurrency traders looking for an easy-to-use platform
Traders who want to buy and sell cryptocurrencies on-the-go

Pros

Simple platform that is easy to master
CopyTrader feature that allows new traders to copy the same strategies used by professionals
Virtual dummy account that gives you $100,000 to practice trades

Cons

U.S. traders currently limited to cryptocurrencies
Only 15 major coins available to trade

Account Minimum

100 EURO

Pairs Offered

50+

Account Minimum

100 EURO

Pairs Offered

50+

1 Minute Review

A fully regulated broker with a presence in Europe, South Africa, the Middle East, British Virgin Islands, Australia and Japan, Avatrade deals with mainly forex and CFDs on stocks, commodities, indexes, forex, cryptocurrencies, etc. This brokerage is headquartered in Dublin, Ireland and began offering its services in 2006. It offers multiple trading platforms and earns mainly through spreads.

Best For

Beginners
Advanced traders
Traders looking for a well-diversified portfolio

Pros

Controlled by regulatory agencies of multiple countries
Choice offered in terms of trading platforms
Support available in 14 languages and trading platforms in 20 languages
Practice/demo account available for trying out
Breadth of trading assets

Cons

Does not accept customers from the U.S. as it isn't regulated in the U.S.
Transferring funds to the account may take up to five days; withdrawals could take up to 10 days

Forex Terminology

When you first begin researching forex, you'll notice that forex traders seem to have their own "language" they use when discussing currencies and trading. Familiarizing yourself with a few of the most common terms you'll see can help you enhance your trades. Below, you'll find a list of common forex terms and their definitions.

Pip: A pip is the smallest measurable value that a currency can move by. In most circumstances, 1 pip is equal to 0.0001 of any currency's value. For example, if the value of the USD moves from $1.020 to $1.030 in relation to a certain currency, the value has moved by 10 pips.

Lot size: Your lot size is the number of units of currency that you want to buy or sell. For example, if you sell L$100,000, your lot size is equal to 100,000. Most forex traders consider 100,000 to be a standard lot when trading currencies.

Orders: When you want to buy or sell a currency, you'll do so by placing an order through your broker. Your order tells your broker how many units of currency you want to buy or sell, the price that the order should be executed at and which currencies you're exchanging. There are multiple types of orders, and you can mix and match order types to fit your changing needs.

Calls: A call is a major risk of trading on margin. If you use leverage to trade and the value of your portfolio falls below a certain percentage, your broker might subject you to a margin call. If you receive a call, you'll need to either add more trading funds to your account or exit your positions.

Unlocking the Forex Market

Forex trading in Lesotho is still unheard of in many parts of the country and finding a reliable broker can be difficult. Be sure to do your homework when researching your brokerage options and keep your finger on the pulse of legal changes and shifting government regulations. Though the tax code of Lesotho is currently unequipped to manage the new realm of forex trading, the market's growing popularity will present challenges to lawmakers in the future.