What is the FOREX market and should you participate in this market in Vietnam?

The Biggest Questions of Vietnamese Investors About Forex

When it comes to the international financial markets, many Vietnamese people still have doubts about what is a forex platform and whether it is suitable for them. This is not an unreasonable question, because Forex is both a huge investment opportunity and carries significant risks. This article will comprehensively explain the nature of the foreign exchange market, legal issues in Vietnam, and whether you should step into this field.

What is a forex platform? The true nature of the global foreign exchange market

The foreign exchange market (Forex) is not a new concept, but for many Vietnamese investors, it remains something unfamiliar and mysterious. To understand what is a forex platform, we need to grasp its essence.

Forex is a global currency trading market, with no centralized exchange in a specific country. Unlike stock markets with official trading floors, Forex operates on an OTC (Over-The-Counter) model, meaning decentralized trading through brokerage firms. Investors must go through these international trading platforms to participate.

Why is there no centralized forex exchange? Because the foreign exchange market has always been inherently global. Financial institutions, central banks, import-export companies have long participated in it to hedge against exchange rate volatility, prevent inflation, or store value during political instability.

Massive scale and the highest liquidity in the world

This is what makes many investors attracted. According to statistics from 2020, the average daily trading volume on the Forex market reached $6.6 trillion. This figure proves that Forex cannot be manipulated due to the enormous number of participants and financial organizations involved.

Previously, Forex was mainly the playground of large financial institutions and banks. However, as the demand for diversification among individual investors increased, the foreign exchange market gradually became a more popular choice. Although individual trading volume is still low compared to organizations, the appeal of liquidity and price volatility is attracting more and more retail investors.

Trading Forex in Vietnam: Illegal or not?

This is a key question that every Vietnamese investor needs to understand before deciding to participate.

Current legal situation

In Vietnam, the government still strictly manages foreign exchange reserves, so only licensed banks are authorized to conduct official forex trading. No Forex trading platform is legalized in Vietnam, and the government does not issue licenses for such platforms.

However, lack of licensing does not mean forex trading is illegal. Individual investors are fully allowed to conduct forex transactions for investment purposes. The important difference lies in where you choose to trade.

Safe ways to participate

Trading Forex through internationally licensed platforms in countries that permit Forex is completely legal. However, if you trade through a brokerage “licensed by Vietnam,” it is illegal because the Vietnamese government does not license any Forex brokerage companies.

Therefore, if you want to participate in this market with peace of mind, choose reputable international brokers licensed by competent authorities such as securities commissions of developed countries.

Most popular currency pairs in the market

Not all currency pairs are traded equally. According to a survey by the Bank for International Settlements (BIS) in April 2019, there are 10 prominent currency pairs:

As you can see, most currency pairs involve major economies worldwide. EUR/USD leads with over 24% of daily trading volume, reflecting the importance of the Euro and US Dollar in international trade.

Economic news affecting the Forex market

Another important factor that helps investors understand what is a forex platform is recognizing which news can trigger market movements:

1. Central bank interest rate decisions

Interest rates are considered the “price” of a currency. Higher interest rates = higher currency value. This is the most critical information and has an immediate impact on currency pair prices.

2. Gross Domestic Product (GDP)

Higher-than-expected GDP usually leads to currency appreciation, and vice versa. It indicates the economic health of a country.

3. Consumer Price Index (CPI) and inflation

High CPI puts pressure on central banks to raise interest rates, indirectly affecting currency prices.

4. Unemployment rate

More employment can lead to higher interest rates. Important data like US ADP and NFP are released monthly and cause significant market volatility.

5. Information from the US Federal Open Market Committee (FOMC)

Monthly, the FOMC meets to set interest rates and provide economic outlooks. These meetings can cause major market fluctuations within minutes.

Trading hours: You can trade Forex 24/5

The Forex market operates continuously from Monday to Friday. Here are the trading hours for major platforms:

Each currency pair has different volatility depending on which market is open. For example, when Sydney opens, the AUD will fluctuate more. When London opens, European currency pairs become more active. Through an international platform, you can access almost all four markets and trade Forex 24 hours a day, 5 days a week.

Getting started: How to open a Forex trading account

To begin trading Forex, you need:

Step 1: Choose a reputable international platform licensed legally

The Vietnamese market is becoming an attractive destination for many forex brokers. However, there are over 100,000 online trading platforms, some reputable and some scams. Carefully select based on:

• Reputation and security
• Trading costs (spread, commissions)
• Deposit and withdrawal methods
• Trading platform quality
• Order execution speed
• Customer service

Step 2: Create an account (you can choose a demo account to test)

Step 3: Select currency pairs or markets you want to trade (e.g., EUR/USD, gold, oil,…)

Step 4: Set up your position (buy or sell), order size, take profit, stop loss

Step 5: Confirm and execute the trade

Tax issues: Do you have to pay taxes on Forex trading in Vietnam?

Currently, Vietnamese law does not officially recognize or permit Forex trading. Therefore, there are no clear tax policies for this field. However, this is also why Forex trading in Vietnam remains risky.

The Vietnamese government considers Forex trading as an activity not legally authorized. Transactions on Forex platforms opened within Vietnam are definitely illegal. However, as mentioned, personal trading through legal international platforms is a different matter.

Should you trade Forex or not? What you need to know

Finally, the key question is: Should I participate in the Forex market in Vietnam?

Advantages

Forex is the largest and most liquid financial market in the world. Any economic news can increase market liquidity, causing currency prices to fluctuate strongly. With this characteristic, Forex becomes an attractive profit-making market for investors who know how to manage risks.

Main risks

However, legal issues remain the biggest concern. Due to unclear regulations, you need to be more cautious than ever. Not everyone is suitable for Forex — you need knowledge, discipline, and good money management skills.

Final advice

If you decide to participate, please:

1. Choose reputable, legally licensed international brokers
2. Start with a demo account to understand the market
3. Learn technical analysis and risk management skills
4. Never trade with money you cannot afford to lose
5. Always stay updated on important economic events

Forex is not a quick way to get rich. It is a legitimate investment tool, used properly, with profit potential but also risks. Whether to participate or not depends on you — your knowledge, experience, and risk tolerance.