What is the Foreign exchange market?
The foreign exchange market, also known as the forex (or even more simply, the FX market), is the largest financial market in the world. Every day, trillions of pounds of global currencies are traded in what are called “pairs”, i.e. the exchange of one currency for another, such as pounds for dollars, euros for Japanese yen, etc. These transactions are carried out five days a week, 24 hours a day around the globe and determine the value of every currency on the planet second by second, based on supply and demand. So, if the pound is in demand, its value against, for example, the dollar will rise and vice versa.
Given its scale and breadth, forex trading is easily accessible by individual investors, who can open an account with a few hundred pounds and begin trading immediately. But it is easy to lose money, especially if you are a beginner. Trading successfully requires effort, discipline and a determination to learn as much as you can about the market before you start. You also need to understand the regulations governing the market, the costs of trading and which brokers to use. Most importantly, you should understand the risks and disadvantages before deciding whether forex trading is for you.
Why does the forex market exist?
There are many reasons why people trade currencies. Filipino companies may need to buy dollars to pay for American imports, or they may need euros to pay for the acquisition of a company based in Europe. Central banks, such as the Bank of England, can intervene in FX markets, buying and selling currency to manipulate its value for reasons of economic policy. Speculators also drive a very large part of the market, trading with the aim of generating a profit.
Large financial institutions, multinational corporations and hedge funds dominate the forex market, which reached a value of US$6.6 trillion per day in April 2019, according to the latest statistics.[i] That size means it is a hugely liquid market, i.e. it is very easy to buy and sell currencies because there are so many buyers and sellers in the market for most currencies.
Market drivers
The Philippine peso is a free-floating currency. In other words, the value of the peso in the FX markets is determined by supply and demand. This is the case for the currencies of most advanced economies. By contrast, some currencies, such as the Chinese renminbi (RMB), have a fixed exchange rate. The Chinese authorities determine the value of the RMB against the dollar and keep the link until they decide to alter the exchange rate. Clearly, there is no potential for individual traders to profit from trading currencies with a fixed exchange rate.
However, the value of a floating currency, such as the peso, constantly moves up and down against other currencies. Often these movements are relatively small, so the peso may begin the trading day at 58.50 pesos to the dollar and end a little higher or lower, or even back at its opening level. But dramatic economic or political news can spark much greater volatility. For example, the peso fell by around 30% at the start of the Covid pandemic, back in March 2020. Fearing a prolonged period of economic uncertainty, traders sold the peso as quickly as possible.
Why is forex trading popular in the Philippines?
Forex trading is the largest and most easily accessible market in the world. The costs involved are relatively low compared with other markets, there are lots of brokers to choose from, and it is relatively easy to understand how you can trade the market. There are many freely floating currencies, and since they can all be traded against each other, there are a huge number of currency pairs to trade in. A vast amount of information is available to would-be traders, ranging from how to get started to outlining potentially profitable trading strategies.
Economic developments are also a key influence. New data suggesting the Filipino economy is growing slower than anticipated might spark concerns that Bangko Sentral ng Pilipinas (BSP) could lower interest rates to stimulate growth. Lower interest rates reduce the appeal of holding a currency since you are getting less return on your money. That outlook consequently dampens demand for the peso, and its value falls. Similarly, if the Filipino economic outlook brightens and traders anticipate SBP will raise interest rates, they will buy the peso, increasing its value against other currencies.
That is why FX traders follow economic, financial, and political news so closely, looking for any hint of information that could sway the value of currencies. They are hoping to react before other traders spot the development. Or they may take bets on a likely development, believing they have some insight that other traders lack.
Is Forex Trading Legal in the Philippines
Philippines is an interesting case for retail Forex traders as there are several laws relating to Forex trading that make it difficult to trade in the country.
If you’re based in the Philippines, you should know that the Philippines’ Securities and Exchange Commission (SEC) has taken a rather firm stance against forex trading due to reports of fraud and heavy losses by retail traders. In fact, the SEC has issued 2 advisories in recent years stating forex trading is illegal to discourage private individuals from trading currencies and local brokers from engaging in the forex business.
Forex trading is a high-risk venture, and institutional traders can lose money on their trades, and the BSP could stand to lose a significant amount of PHP through this process. To counteract this outflow of pesos, the BSP would be forced to purchase USD by overselling the PHP, leading to a devaluation of the PHP.
In effect, the BSP prohibits Forex trading to protect the PHP from unintended weakness against global currencies.
Although online Forex trading is effectively outlawed, traders from the Philippines can trade with offshore brokers, such as those listed above.
The disadvantages of forex trading
Forex trading requires a considerable commitment. It takes time to learn how to trade profitably, and when you start to trade you may have to spend many hours per day on your computer screen following and researching what is happening in the market – and why – in preparation for your trading day. When that day is finished, you will need to analyse what happened and why your trading activities succeeded or failed, so that you can apply the lessons learnt to the next day’s trading. There could be days when you lose money and it is easy to become disheartened. There is certainly no guarantee of success. FX trading can be risky and you can lose money or you may find that it is simply not something you like or have the temperament for. You have to be patient, for example, waiting for opportunities to arise, and the market can experience bouts of extreme volatility that you may find highly stressful.
FX trading scams
Filipino consumers are increasingly being targeted “by unauthorised forex trading and brokerage firms offering the chance to trade in foreign exchange” and other financial instruments. These firms promise “very high returns and guaranteed profits, either through a managed account where the firm makes trades on the investor’s behalf or by trading using the firm’s trading platform.”
Many scam firms claim to be authorised by reputable international regulators, like the FCA from the UK. They may even clone the details of firms that are registered with the FCA but give their own phone number, address and website details, “sometimes claiming that a firm’s contact details on the Register are out of date,” according to the FCA.
That is why it is so important to check that a firm really is authorised, scrutinising all their details carefully with the register. If you have any doubts about a firm, contact the regulator directly
What you will need to open a Forex trading account in the Philippines
As strange as it may seem, Forex CFD trading is growing incredibly fast across the Philippines, despite being effectively outlawed.
If you are considering starting to trade Forex from the Philippines, there are two precautions that you may want to take to avoid any possible repercussions from your bank or the government.
- Use an e-Wallet such as Skrill: With an e-wallet, you can avoid the Filipino banking sector entirely.
- Use a VPN for Trading: If you are concerned that your Forex trading activity may be monitored, then use a Virtual Private Network (VPN) provider to route your activity through an anonymous portal.
While the Filipino government frowns on Forex CFD trading, the laws are not enforced strictly, and with these methods, you should avoid any issues.
In addition to taking these precautions, Forex brokers will also require your proof of identity and proof of residence before allowing you to open an account. Some brokers may also want to verify your financial literacy before allowing you to trade Forex – this may take the form of a simple questionnaire and it’s important to pay attention to the outcome of this test. If your financial literacy is weak, you should not be trading Forex – it is a high-risk venture even for those with many years of experience.
It is also important to remember that Forex brokers will only let you withdraw via the same method as your original deposit, so make sure that you are willing to pay the withdrawal fees associated with your deposit method.
Comparing forex brokers in the Philippines
A forex broker provides traders with a platform that gives them access to the FX market and allows them to buy and sell currencies. Opening an account is simple and can be done online. You will be asked to provide proof of identity and a deposit.
Using an offshore broker – the pros and cons
You can open an account with an offshore broker, i.e. a company based outside the Philippines or Asia.
There are advantages and disadvantages to using an offshore broker. The disadvantages include the fact that if you use a broker registered in another country, it will be subject to the regulations of that country and it may not be as well supervised as a well-regulated firm. If things go wrong and your broker is registered in a country thousands of miles from Philippines, it might be difficult to gain legal redress.
There are things you should consider whether you use a broker based offshore. These include:
- The trading experience – is the trading platform easy to use, what kind of support do they offer, and are there tools that can help with research, etc.?
- Trading costs and transparency – can vary widely from broker to broker. Some charge a fixed commission regardless of how much you trade, while others charge a fee based on trading volume (the higher the volume, the greater the commission). Other brokers don’t charge a commission but instead charge a spread fee. The spread is the difference between the price the broker quotes you for buying a currency and its price for selling it. This is effectively the fee your broker charges you to trade. (For example, imagine the US dollar is trading at 1.40 to the pound, and you decide to buy some dollars. The broker may quote you a price of 1.4002, so you have been charged two pips – “percentage in point” or “price interest point” – for your trade. The pip is thus $0.0001 for US dollar-related currency pairs.) It is also important to be aware of the hidden fees some brokers charge, such as inactivity fees, monthly or quarterly minimums, and fees associated with calling a broker on the phone.
- Customer service – you can trade anytime over 24 hours five days a week, so do they offer 24 support during trading hours? Is help available instantaneously online or via the phone, or do you have to wait for long? You can check by calling the broker at different times of the day before signing up.
- The size of the minimum deposit. This can vary from just £1 to £300, although you can open an account with most brokers for around £100.
How to Compare Forex Brokers in the Philippines
Though Forex brokers might appear to be similar, they are quite different once you dig a little deeper, and account conditions will vary for Filipino residents. These are some of the most common questions traders will have when comparing Forex brokers.
Forex Brokers for Beginners
Forex Broker Fees and Trading Costs:
Other Trading Options
Forex Broker Regulation
Forex Broker Customer Support:
Forex Trading Platforms:
Do I Need a Broker to Trade Forex?
Yes, you will need a broker to trade Forex. Connecting traders to the Forex market is an expensive and technically complex business. Choosing a regulated Forex broker with low costs and a history of treating its clients fairly is important.
Which is the Best Broker in the Philippines?
The best broker in the Philippines is IG Markets. The world’s largest CFD broker by revenue, IG Markets is also publicly listed and a member of the FTSE 250. Forex trading at IG Markets is commission-free, and with spreads starting at 0.6 pips on the EUR/USD, IG has some of the cheapest trading costs in the industry. IG also has the most CFDs to trade worldwide, including commodities, indices, 16,000+ shares and ETFs, options, interest rates, and bonds. Negative balance protection is provided to all clients, and all funds are kept in segregated accounts.
Which is the Best Broker for Beginners?
IG Markets is also the best broker for beginners in the Philippines. IG Markets has some of the lowest fees in the industry, with spreads starting at 0.6 pips on the EUR/USD. IG Markets’ has no required minimum deposit for bank transfers, and traders can access 17,000+ CFDs, including Forex, indices, commodities, and shares. Beginners will also appreciate IG Markets’ world-class educational and market analysis section.
Other good options for a reliable, internationally regulated broker for beginners are:
Which Broker has the Best Demo Trading Account?
Capital.com is also the best broker for demo trading in the Philippines. Capital.com’s demo account never expires and is available on both MT4 and Capital.com’s own web-based trading platforms (also available on iOS and Android). Capital.com’s platform offers in-depth financial analysis with over 75 technical indicators, multiple trading chart types, and extensive drawing tools. It also allows traders to toggle in and out of up to six tabs while keeping an eye on all charts and instruments. All 4000+ of Capital.com’s CFDs are available through its demo account.
Other brokers with strong international regulation and great demo accounts include:
Are Forex brokers in the Philippines reliable?
Yes, Forex brokers in the Philippines are reliable and trustworthy. However, the most reliable brokers are regulated by tier 1 international regulators and have a history of treating traders fairly. If you are unsure about the reliability of your Forex broker, you can check our list of brokers to avoid.
How do I Choose a Forex Broker?
When choosing a Forex broker, there are three things to consider:
- Regulation: Make sure you choose a broker regulated by the FCA or one of the other major regulators like CySEC (Europe) or ASIC (Australia). Regulated brokers have better security and will treat their traders fairly
- Cost: Look for a broker with a low minimum deposit and low fees. Broker fees will include the spread, commission, deposit, and withdrawal fees.
- Education: If you’re a beginner, you want a good educational content broker. All of the brokers on our Best Brokers for Beginners page have high-quality education for beginners.
How do Forex Brokers Make Money?
Some brokers (called market makers) only make money from the spread – the difference between the buying and selling price of the currency pair. These brokers will be the counterparty to any trade, so they make money when clients lose trades.
Other brokers (called ECNs) have tight spreads but make money from commissions, which are charged every time a trade is opened or closed. This type of broker makes money whether a client wins or loses.
Which Broker has the Lowest Fees?
Tickmill is the broker with the lowest fees, with the total trading cost on its Pro Account equalling 0.4 pips on the EUR/USD; this includes a 0 pip minimum spread and a round turn commission of 4 USD per 100,000 traded.
Other brokers with low trading costs are:
Broker fees are split into trading costs, which are the total of the spread and commission, and non-trading fees, such as deposit and withdrawal fees.
The spread is the difference between the buy and sell price of a Forex pair and is measured in pips; the smaller or “tighter” the spread, the less money you spend when you make a trade. The commission is charged by some brokers every time a trade is opened or closed.
How do I make a Deposit with a Broker?
Making a deposit with a broker is a simple process. Once you have signed up and opened a live account, you will be given a few options. Most brokers in the Philippines will accept local bank transfers, credit cards, online payment solutions like Paypal, and eWallets like Neteller and Skrill. Bank transfers usually take 1-2 days to process and may have a fee attached, but all other deposit methods are usually instant and free.
How do I make a Withdrawal from a Broker?
To make a withdrawal from a broker, you must have enough money in your trading account after deducting the margin needed to keep any trades open. Once you know how much you can withdraw, you can request a withdrawal via your account dashboard. To prevent money laundering, brokers in the Philippines will only allow you to withdraw the same amount as your initial deposit back to your credit card or eWallet. Anything more than this will have to be withdrawn to a bank account in your name.
Which Broker has the Lowest Minimum Deposit?
Pepperstone is the leading regulated broker with the lowest minimum deposit. While Pepperstone recommends opening an account with at least £200, it recently waived deposit requirements entirely. In addition, Pepperstone charges no inactivity fees for dormant accounts, charges low withdrawal fees, and has some of the lowest trading fees in the industry.
Other regulated brokers in the Philippines with low minimum deposits are:
With most brokers, larger deposits usually unlock lower trading costs and other perks. What level of minimum deposit you are comfortable with depends on your financial situation.
How do I Calculate Trading Costs?
When trading Forex, the total trading cost is the spread on the currency pair you are trading, plus any commission your broker may charge. If you keep a trade open overnight, you will also be charged a rollover (or “swap”) fee, which will be deducted automatically from your account. Major pairs, such as the EUR/USD or USD/JPY have tighter spreads and are cheaper to trade.
Which Broker Has the Most CFDs?
IG Markets is the broker with the most CFDs to trade. IG Markets offers trading on over 17,000 instruments, including Forex, indices, share CFDs, commodities, cryptocurrencies, digital 100s, options, ETFs, bonds, and interest rates.
Brokers with the widest range of instruments to trade are:
Which Broker has the Most Currency Pairs?
Swissquote is the Broker with the most currency pairs, with over 130 currency crosses to trade. As part of a larger banking group, Swissquote is very well-regulated and one of the world’s most secure brokers. Swissquote targets professional traders, and minimum deposits are high, starting at 1000 USD on its entry-level account.
Other Forex brokers with a larger than usual selection of currency pairs to trade are:
Which Broker is the Best for Professional Traders?
Pepperstone is the best broker for professional traders. An ECN broker with extensive liquidity streams, Pepperstone supports all three major trading platforms (MT4, MT5 and cTrader) and has some of the tightest spreads in the industry (0.09 pips EUR/USD spread on its Razor Account).
Commissions are low and there are no minimum deposit requirements. Commissions can be further reduced by becoming a member of Pepperstone’s Active Trader Program. The Active Trader Program has a number of other advantages for high-volume traders, including a free VPS service and priority customer support.
What are Managed Forex Trading Accounts?
Some brokers will operate a managed account for you, but this is rare. There are independent money managers who can manage your account while they are trading for themselves. It is vital that you read our article on managed accounts and understand the minimum deposit requirements and additional risks involved when trading CFDs.
How do I Know if a Forex Broker is Regulated?
All regulated brokers must display their licence number and the authority they received it from on their website. These licence numbers can be easily verified on the regulatory authority’s website. Some scam brokers will use similar names to legitimate businesses, so make sure the name of the licence holder on the regulator’s website matches the broker’s details. More details here on how to verify broker regulation.
How Can I Report Scam brokers?
If you believe your broker has scammed you, the first thing to do is warn others and tell your story. This can be done by contacting the regulator directly, but we also have a report a scam broker form which we use to gather information to get the word out. If you have been scammed, please complete the form.
Which Broker has the Best Customer Support in the Philippines?
FP Markets is the regulated broker with the best customer service. FP Markets customer support has won 22 awards since the company was founded in Australia in 2005. Available 24/7 (0800-1600 on weekends) via live chat, email, telephone, and call-back service in over 12 languages, FP Markets’ customer support is knowledgable, responsive and can assist traders with all aspects of CFD trading, from setting up accounts to navigating its platforms, plus any other technical queries.
Which Forex Broker has the Best Platform?
Marketsx is a trading platform from Markets.com. Traders can use the Marketsx platform to trade over 2,200 financial instruments. The platform also offers advanced charting, making it easier to spot trends and identify new trading opportunities. Marketsx also allows traders to use five types of indicators once, overlay multiple assets, or compare up to eight instruments side-by-side. Marketsx is available on mobile devices and via the markets.com website.
Which is the Best Platform for Forex?
Currently, MetaTrader 4 (MT4) is the best platform for trading Forex. MT4 has been around since 2005 but is supported by most Forex brokers and used by millions of traders worldwide. MT4 is resource-efficient, fast, and can run on older hardware without any issue. It’s also fully customisable and can handle multiple trading accounts from different brokers with a single installation.
MT4 is particularly valued for its automated trading facilities. Traders can create or buy algorithmic trading robots and install them on their version of MT4 to automate trading or assist in decision-making. It’s also possible to copy other traders through the MT4 trading signals facility.
Forex Risk Disclaimer
Trading Forex and CFDs is not suitable for all investors as it carries a high degree of risk to your capital: 75-90% of retail investors lose money trading these products. Forex and CFD transactions involve high risk due to the following factors: Leverage, market volatility, slippage arising from a lack of liquidity, inadequate trading knowledge or experience, and a lack of regulatory protection. Traders should not deposit any money that is not considered disposable income. Regardless of how much research you have done or how confident you are in your trade, there is always a substantial risk of loss. (Learn more about these risks from the UK’s regulator, the FCA, or the Australian regulator, ASIC).
Our Rating & Review Methodology
Our State of the Market Report and Directory of CFD Brokers to Avoid are the result of extensive research on over 180 Forex brokers. These resources help traders find the best Forex brokers – and steer them away from the worst ones. These resources have been compiled using over 200 data points on each broker and over 3000 hours of research. Our team conducts all research independently: Testing brokers, gathering information from broker representatives and sifting through legal documents. Learn more about how we rank brokers.
Editorial Team
Chris Cammack
Head of Content
Chris joined the company in 2019 after ten years experience in research, editorial and design for political and financial publications. His background has given him a deep knowledge of international financial markets and the geopolitics that affects them. Chris has a keen eye for editing and a voracious appetite for financial and political current affairs. He ensures that our content across all sites meets the standards of quality and transparency that our readers expect.
Alison Heyerdahl
Senior Financial Writer
Alison joined the team as a writer in 2021. She has a medical degree with a focus on physiotherapy and a bachelor’s in psychology. However, her interest in forex trading and her love for writing led her to switch careers, and she now has over eight years experience in research and content development. She has tested and reviewed 100+ brokers and has a great understanding of the Forex trading world.
Ida Hermansen
Financial Writer
Ida joined our team as a financial writer in 2023. She has a degree in Digital Marketing and a background in content writing and SEO. In addition to her marketing and writing skills, Ida also has an interest in cryptocurrencies and blockchain networks. Her interest in crypto trading led to a wider fascination with Forex technical analysis and price movement. She continues to develop her skills and knowledge in Forex trading and keeps a close eye on which Forex brokers offer the best trading environments for new traders.