Since 1994, Rwanda has been trying to emerge from economic turmoil and social upheaval. This developing country has experienced steady gross domestic product (GDP) growth of 5% year-on-year over the past decade. Although the Rwandan Franc (RWF) has made remarkable progress during this period, it is often an “overlooked” currency among traders. Traders interested in operating in the RWF should weigh the trading opportunities available from Rwanda against the high level of risks associated with trading exotic currencies from a developing country.
Rwanda promotes a liberal foreign exchange market where commercial banks are allowed to purchase foreign currency at administered floating rates. This is due, among other things, to Rwanda’s dependence on foreign investment and export trade. To trade RWF, a broker must be licensed by the National Bank of Rwanda and register with the Rwanda Forex Bureau Association (RFBAIS) information system. Given Rwanda’s business-friendly forex attitude, you can easily find a well-regulated international online forex broker to trade currencies from Rwanda.
Start with Forex in Rwanda
With the right technology and a bit of venture capital, there’s no reason why anyone can’t get involved in forex trading. Participating in the global foreign exchange market requires having the right infrastructure and following the simple steps outlined below.
- Connect to the Internet. Having a strong and reliable internet connection is a must to connect with your online forex broker. If you want to do your business in Rwanda, you are in luck. Rwanda ranked 1st among African countries in terms of internet connection and download speed, so finding a stable connection shouldn’t be a problem.
- Get a fully regulated broker. Make sure any broker you choose has the appropriate license from a reputable regulator and check for compliance.
- Opening an account. Visit your favorite broker’s website and follow the account opening process. Choose an account type that suits you considering your venture capital and trading needs.
- Deposit your account. Reputable brokers should accept funding via your bank account, debit card or e-wallets.
- Choose your trading tool. Your trading platform must provide access to the forex market through multiple devices, including your computer and smartphone.
- Start shopping. With the right infrastructure now in place, you can start trading forex right away.
Rwanda Forex Trading Strategies
Understanding what type of trader you are is the key to successful forex trading. By matching your trading style to your personality, you can further improve your trading results.
Day trading includes a wide range of trading strategies where positions are closed on the same day they are initiated. The frequency of trades is usually much higher than for an average swing trader or trend trader, but the profit on each winning trade is usually lower.
Swing traders, sometimes referred to as momentum traders, typically watch technical momentum indicators for signs that a market’s direction is either supported or poised to reverse, so they can take advantage of both trends and corrections. Swing trades can take place overnight and can take as long as a few weeks or as little as a few hours to close. Swing trading generally does not have the highest frequency of day trading, but traders can take multiple positions at once. Identifying support and resistance points that often trigger a market reversal is another technique that swing traders can use.
Trend traders, sometimes referred to as position traders, typically do not pay as much attention to chart patterns and price action as they do to fundamental geopolitical and economic trends. For example, if a country decides to export 30% less of its No. 1 product compared to the previous year, there is likely to be a significant effect on the demand for that country’s currency. The trend trader usually aims for more than just a quick small profit from day trading. They seek to quickly identify market trends in order to realize the greatest profit potential that comes from capturing a large part of the entire movement of the currency pair in question. It is not uncommon for trend traders to wait months or even years before entering or closing a position.
Example of Forex trading in Rwanda
Although most forex traders in Rwanda are likely to trade much more liquid currency pairs like EUR/USD, let’s consider an example involving RWF instead. Suppose your forex broker’s quote for USD/RWF is 967.00/25 and you want to enter a buy order of $100,000 against RWF at 967.25. To buy $100,000, you need at least $2,000 in your trading account to use as margin if your broker allows you to use a leverage ratio of 50:1.
After 2 hours, the USD/RWF rate rises to 968.00/25, so you sell your $100,000 position at 968.00. This gives you a gain of 75 pips, which translates to a profit of ($100,000 x 0.75) = 75,000 RWF. If the market had instead fallen to 966.50/75, your position would have lost 75 pips or 75,000 RWF in value.
Make money with Forex in Rwanda
Now that you know the basics of forex trading, you can start learning more complex techniques:
- Become a trade: This generally longer-term strategy involves taking advantage of the interest rate differential between two different currencies by holding the higher interest currency, as well as ideally taking advantage of the general direction in which the exchange rate of the pair is currently moving.
- CFDs: Short for Contracts for Difference, CFDs are financial derivatives that allow traders to profit or lose from movements in the underlying asset without actually holding a position in that asset.
- Binary options: These exotic options involve the payment of a premium by the buyer, which then results in a fixed reward to the buyer if a specific market condition is met.
Best online forex brokers in Rwanda
Rwanda allows residents to participate in the global foreign exchange market. Choose from the set of reputable and well-regulated online forex brokers listed in the table below that are currently accepting clients from Rwanda.
Get exclusive offers
CedarFX is not regulated by any major financial agency. The brokerage is owned by Cedar LLC and is based in St. Vincent and the Grenadines.
AUD$200 or equivalent
If you plan to trade Forex, you probably need to understand this language.
- Frog: An acronym for “point percentage”, which is usually equal to $0.0001, although it is $0.01 for USD/RWF, and represents the smallest movement of a particular exchange rate.
- Lot size: A standardized transaction amount. The standard lot size of most online brokers is 100,000 base currency units.
- Order: % s: Instructions you give your broker to execute trades on your behalf.
- Call: Contracts that give you the right to buy one currency for another at a specified price on or before a specified future date in exchange for an initial premium.
Forex trading is legal in Rwanda
Although the country aims to become less dependent on external sources of finance, Rwanda remains a developing country. The country has also created an economy that cooperates with the global forex market and a regulatory environment that allows online currency trading. Rwanda will most likely continue its liberal foreign exchange trading policy, which means an opportunity may exist for an aspiring retail forex trader. Always make sure to do your due diligence when choosing a broker to trade forex before giving them a margin deposit.
Bookmark this page and website as your primary source of information on forex trading in Rwanda. Benzinga experts operate at the forefront of the forex market, gathering information and delivering it to you in an easily accessible format.
Is currency trading in Rwanda legal?
Yes, currency trading in Rwanda is legal.
Is currency trading in Rwanda safe?
Rwanda is still a developing country, but as long as you use a licensed forex broker, currency trading in Rwanda is safe.
How can I find a licensed forex broker in Rwanda?
You can find a licensed forex broker in Rwanda from the list above.
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