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The Impact of Location on Forex Trading

Forex Trading Locations

Something that a lot of traders do not consider is how location can affect their forex trading.  When you trade you need to consider the impact of location on your forex trading.  The points that your location can impact are the currency pairs you trade, the broker you use and the trading account you have.

What Your Location Is

The reason why most traders do not consider the impact of location on trading is the online nature of the forex market.  As foreign exchange trading can be complete from anywhere in the world it is assumed that location does not matter.  This should be true considering the decentralised market, but location does impact traders.

The Forex Trading Currency Pairs

The currency pairs that you choose to trade are impacted by your physical location.  While you can trade any pairs you want you have to consider when you should be trading them.  If you are trading the GBP/USD pair then the best time to trade would be the London and New York market session overlap.  However, if you are based in Australia this session will fall outside of your normal work day.  You will either have to rearrange your trading schedule to work during this session or change the currency pair you trade.

There are many traders who are not able to change their trading schedule to suit the currency pair.  These traders either need to find a new currency pair or trade in the periods when their currency pair does not do well.  The traders who cannot change their schedule are generally part-time traders or traders who have other daily engagements.

The Forex Broker

The forex broker you choose to use is also affected by your physical location.  While all forex brokers should take traders from any country some of them do not.  These brokers restrict who can use their platform based on their physical location.  With these brokers you may be able to trade on their demo accounts, but you will be unable to open a live trading account.  This is not something that happens very often, but you have to be aware that it could.

Your Trading Account

All new traders are told that they should not trade with money that they cannot afford to lose.  The problem comes when the amount you can afford to lose is converted to the currency your broker accepts.  Most forex brokers work with the US dollar as their base currency regardless of their location.  This is a problem for some people outside of the US as they have to convert their currency.  The capital that you can use may not be enough to open the trading account you want after you have converted it.  It is important that you check this before you try opening a trading account.

How Location Impacts Tax

The profits you make from your trading may be subject to tax depending on where you live.  The way that tax on forex profits is calculated varies in each country.  There are some countries where you do not pay tax if you are making below a certain income.  There are other countries where you are charged tax on any profit you make regardless of the amount.

 

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