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Forex Trading in Botswana

Written By

Paul Holmes

Written By

Paul Holmes

Paul has over 14 years experience in the trading industry, both as a full-time trader and working with leading brokers. He’s traded indices and forex, developed proprietary day trading techniques, and built his own MetaTrader algorithms. He excels at delivering simple-to-follow guides for beginners to experienced traders.  

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Edited By

James Barra

Edited By

James Barra

James is an investment writer with a background in financial services. As a former management consultant, he has worked on major operational transformation programmes at prominent European banks. James authors, edits and fact-checks content for a series of investing websites.

» James Barra Profile Page

Fact Checked By

Michael MacKenzie

Fact Checked By

Michael MacKenzie

Michael is a writer and editor with over a decade in journalism and publishing. His niche lies in editing and fact-checking content in the financial services sector, with a focus on online brokers and trading platforms. Michael previously reported on politics and economics in the Middle East and edits books for established publishers.

» Michael MacKenzie Profile Page

Updated

Sep 19, 2024

Forex trading, the practice of buying and selling currencies to profit from changes in exchange rates, is gaining traction in Botswana.

This growing interest is mainly driven by the country’s young and ambitious demographic, with 58.2% of Botswana’s population aged between 18 and 65, and many now having smartphone access to trading platforms.

Want to start forex trading in Botswana? This guide for beginners will help you master the basics.

Quick Introduction

• The Botswana Pula (BWP) can be traded through currency pairs like USD/BWP, which is relevant because 80% of Botswana’s exports are diamonds. However, active traders may focus on more liquid and widely available pairs like EUR/USD and USD/ZAR.
• Forex trading is somewhat overseen by the Bank of Botswana (BoB), which manages currency flows, and the Non-Bank Financial Institutions Regulatory Authority (NBFIRA), which oversees trading providers, but there is no dedicated framework for FX trading.
• The London and New York sessions, especially during their overlap from 3:00 PM to 6:00 PM (Botswana hours), are generally the best times to trade currency pairs, including USD/BWP, due to heightened liquidity and volatility.

Forex Brokers in Botswana

How Does Forex Trading Work?

Forex trading in Botswana operates similarly to other trading jurisdictions. You buy and sell currency pairs like USD/BWP (US Dollar/Botswana Pula) or EUR/USD (Euro/US Dollar) to try and profit from changes in exchange rates.

You buy a pair if you expect the base currency (the first currency in the pair) to strengthen, and sell it if you anticipate it will weaken.

The exchange rate determines how much of one currency you can buy with another. For example, if the USD/BWP rate is 13.25, it means you can exchange 1 USD for 13.25 BWP.

The USD/BWP pair may be particularly relevant for local traders due to the use of both the US dollar and the Botswana pula in cross-border transactions. However, it is not widely supported on platforms and low liquidity can make it less suitable for short-term trading strategies.

When Botswana achieved independence in 1966, it was one of the world’s poorest countries but quickly became one of the fastest-growing economies.

Diamond wealth, a dominant livestock economy, and a relatively small population of about 2.5 million have made Botswana an upper-middle-income country, leading residents to the foreign exchange market to try and profit from its growing economy.

Paul Holmes

Author

Is Forex Trading Legal In Botswana?

Forex trading is legal in Botswana but not directly regulated by the Bank of Botswana (BoB) or the Non-Bank Financial Institutions Regulatory Authority (NBFIRA).

Although individuals in Botswana are allowed to trade currencies online, our research reveals there isn’t a local regulatory framework to oversee forex providers.

As a result, Botswana residents must sign up with international brokers. We recommend choosing a provider authorized by a ‘green tier’ body in line with DayTrading.com’s Regulation & Trust Rating, such as the FCA in the UK.

Is Forex Trading Taxed In Botswana?

Forex trading profits may be subject to taxation by Botswana Unified Revenue Service (BURS).

If you trade as an individual, these profits should be included in your income and will get taxed according to Botswana’s progressive income tax rates, which generally range from 0% to 25%.

Profits are subject to business or corporate tax rates if you trade currencies as a business or through a registered entity; this may apply if you trade professionally or as part of a larger investment strategy.

Keep accurate records of all transactions, including profits, losses, and expenses related to forex trading. Proper documentation will help you report income accurately and claim any allowable deductions.

Because tax laws in Botswana are complex and subject to change, I also recommend consulting with a tax professional to ensure compliance with the country’s regulations.

Paul Holmes

Author

When Is The Best Time To Trade Forex In Botswana?

The best times to trade forex in Botswana typically depend on when the major global markets are most active. Trading is affected by the overlapping hours of the leading financial hubs: London, New York, Tokyo, and Sydney. Botswana operates on Central Africa Time (CAT).

• London Session (10:00 AM – 7:00 PM CAT): A highly active period, especially for pairs like USD/BWP, EUR/USD, and GBP/USD. This session is crucial for Botswana-based traders as it overlaps with the New York session, providing high liquidity and volatility, ideal for spotting opportunities.
• New York Session (3:00 PM – 11:00 PM CAT): Another peak period, especially during its overlap with the London session (3:00 PM – 7:00 PM CAT). This is the most active time for Botswana traders, with significant volume and price movement, particularly in USD pairs.
• Tokyo Session (1:00 AM—10:00 AM CAT): While less active than London and New York, this session offers opportunities in pairs like USD/JPY or AUD/USD. Its lower volatility may suit traders in Botswana seeking more stability.
• Sydney Session (11:00 PM – 8:00 AM CAT): The session starts the trading week and is relatively quieter, offering slower market conditions. It’s ideal for trading AUD or NZD pairs for those who prefer a more relaxed pace.

Trading currencies during these peak times can help you take advantage of higher market liquidity, tighter spreads, and more substantial price action, maximizing short-term trading opportunities.

A USD/BWP Trade

I’m using USD/BWP to show you an example trade.

My suggestions for trading minor and exotic pairs remain steadfast: Risk a small percentage of your account per trade, and be mindful that the spreads, fills, volatility, and liquidity will be significantly different from the optimized trading conditions compared to majors such as USD/JPY.

For that reason, with such currency pairs, I tend to search for slightly longer swing trading or position trading opportunities rather than scalps or day trades.

I’ll always use a two-timeframe strategy matched with trusted and well-proven technical indicators. I analyze a lower time frame, such as the 1 hour, and a higher time frame, such as the daily time frame, to look for continuity; I’m looking for my decision to go long or short, to be validated on both time frames, not just the one.

I look for indicators that offer additionality, not duplication. I’m using the MACD, stochastic, and RSI in this example. I’ll get feedback regarding momentum, volatility, oversold and overbought conditions, and potential reversals.

1 Hour Timeframe

Looking at the one-hour timeframe above, we can see that the recent hourly bars are bullish in the Heikin Ashi bar pattern (a bar style I prefer because it smooths out price information).

The MACD moving average lines have crossed, indicating a change in direction from bearish to bullish, and the RSI indicates volatility. The stochastic suggests that the change in trend that’s developing has momentum.

Daily Timeframe

As I focus on the daily timeframe, I see a trend develop, and a pattern begins to emerge, linking the one-hour and daily time frames. The interpretation and analysis I conducted on the one-hour have continued on the daily time frame, confirming my decision to take a long trade.

The stochastic indicates momentum, the MACD supports the trend change, and the RSI is approaching the median 50 reading, indicating increased volatility.

My deal ticket looks like this:

• Market order long at 13.3000
• Stop loss order 13.2275
• Take profit limit order 14.0000

The stop is placed at the recent low, and the profit limit order is at a round number close to (but below) the year-to-date high.

Bottom Line

Forex trading in Botswana offers exciting opportunities. It’s legal and accessible, but success requires choosing reputable providers, understanding market dynamics, and sound risk management.

Trading during peak times, such as the London and New York session overlaps, can enhance trading outcomes.

Forex trading can be profitable in Botswana but you could lose any Pulas you invest.

To get started, use DayTrading.com’s pick of the top forex trading platforms in Botswana.

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