Comprehensive Guide: Exploring the Foreign Exchange Market and Investment Opportunities for Vietnamese Investors

1. What Is the Forex Market? Things to Know Before Getting Started

Foreign exchange, or trading fx, has become an inseparable part of the global financial platform. However, in Vietnam, many investors still do not fully understand the essence of this market or the legal regulations surrounding forex trading activities.

Unlike stock markets or other centralized exchanges, the foreign exchange market operates on a decentralized (OTC) model, with no official exchange in each country. Investors participate through licensed intermediary companies in countries that support forex trading.

Market Size and Liquidity

The forex market is the most liquid market worldwide, with an average daily trading volume reaching 6.6 trillion USD (according to 2020 data). Due to its enormous scale and large number of participants, this market cannot be manipulated by any organization.

Who Are the Main Players in the Forex Arena?

Initially, the forex market was mainly a playground for large financial institutions, central banks, and import-export companies. They use this tool to hedge against exchange rate fluctuations, combat inflation, or store value when political situations become unstable.

As international trade activity grows strongly and the demand for diversification of investment portfolios increases, the forex market gradually becomes a choice for individual investors. Although the trading volume of individuals is still much smaller than that of organizations, the attraction from high liquidity and continuous price volatility is drawing more and more investors to participate.

2. Forex Trading in Vietnam: Current Legal Situation

In Vietnam, the government maintains strict control over foreign exchange reserves, so official trading rights are only granted to banking institutions. The establishment of forex exchanges in Vietnam has not been legally permitted, meaning you will not find any legally operating Vietnamese forex platforms.

However, the lack of licensing by the government does not mean forex trading is illegal. Individual investors are fully entitled to participate in fx trading for personal investment purposes.

How to Trade Legally Without Violating Laws?

Although there are no domestic exchanges, Vietnamese investors can still trade forex on reputable international platforms licensed by regulatory authorities in their respective countries. The key is to choose officially licensed intermediary companies, not organizations claiming to be “authorized to operate in Vietnam” (because the government does not license such entities).

To ensure safety, look for companies recognized by reputable foreign financial regulatory organizations.

3. Most Popular Currency Pairs on Forex Platforms

According to the Bank for International Settlements (BIS) survey in 2019, the following currency pairs dominate most of the trading volume:

These currency pairs have high liquidity and are widely traded on international platforms.

4. How to Open a Forex Trading Account

Vietnam’s market is becoming attractive to intermediary forex companies, with over 100,000 online trading platforms. However, not all are reputable; some pose high risks of scams.

Criteria for Choosing a Reputable Intermediary Company

When searching for a trading platform, evaluate the following factors:

• Licensing and regulation: Licensed by reputable international regulatory agencies
• Security and account protection: Encryption systems, safeguarding user funds
• Trading costs: Spreads, commissions, and other fees
• Deposit and withdrawal: Payment methods, processing speed
• Trading interface: Simple, user-friendly, mobile-compatible
• Order execution latency: Speed of order fulfillment
• Customer support: 24/7 support services, multiple languages

Basic Steps to Start Trading

Step 1: Register a demo or real account online

Step 2: Choose the currency pair or asset you want to trade

Step 3: Open a long (buy) or short (sell) position based on market prediction

Step 4: Set position size, profit target (take profit), and stop-loss (stop loss)

Step 5: Confirm and execute the trade

5. Tax Issues When Trading Forex in Vietnam

According to current Vietnamese law, forex business and the establishment of forex exchanges in the country are not permitted. Currently, Vietnam does not have specific policies regarding income tax from forex trading, as this activity is still considered unofficial.

Note: This field involves many legal risks and is not clearly regulated. Investors should take responsibility and conduct thorough research before participating.

6. Important Economic News Affecting Forex

Each currency is influenced by its own factors, but five key economic indicators impact the global market:

1. Central Bank Interest Rate Decisions

Interest rates are the “price” of money. Raising interest rates = currency appreciation; lowering interest rates = currency depreciation. This is the most influential information on currency pair fluctuations.

2. Gross Domestic Product (GDP)

Higher-than-expected GDP → currency appreciation. Lower-than-expected GDP → currency depreciation.

3. Consumer Price Index (CPI) and Inflation

High CPI and inflation → central bank may raise interest rates → indirectly affecting exchange rates.

4. Unemployment Rate

Each month, the US releases two key figures: ADP (private sector employment) and NFP (total employment). These figures indirectly influence interest rate decisions.

5. US Federal Open Market Committee (FOMC) Meeting

FOMC meets monthly to set interest rates. Post-meeting announcements can cause strong market volatility. For example, on 18/3/2015, the EUR/USD pair surged 400 pips within minutes after a negative outlook on the USD was announced.

To stay updated on major economic events, refer to official economic calendars from trading platforms.

7. Forex Market Trading Hours

The forex market operates continuously 24 hours a day, from 2 days ago until today (during weekdays):

Different currency pairs fluctuate at different times. For example, AUD tends to be more volatile when Sydney opens; European currencies are more active during London hours. With modern trading platforms, you can trade 24 hours/day, 5 days/week without needing separate accounts for each platform.

8. Should You Participate in Forex Trading? Important Notes

Deciding whether to trade fx depends mainly on your attitude towards risk and legal understanding.

Points to Consider

Legal aspect: Vietnam has not yet clarified regulations. Trading on domestic platforms is illegal; however, trading on reputable licensed international platforms is not illegal, provided you trade for personal investment.

Opportunities: Forex is the largest financial market with abundant liquidity. Currency prices fluctuate strongly due to various economic news, creating attractive profit opportunities for investors.

Risks: High volatility also means higher risk of losses. A strict risk management strategy is essential.

Conclusion

If you decide to participate, choose a reputable international intermediary company licensed by global regulatory agencies. This will help you trade with peace of mind, without worrying about legal issues or capital safety.

Thoroughly research the market, risks, and capital management strategies before starting real trading.