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Forex Trading in Jamaica

Written By

Tony Kent

Written By

Tony Kent

Tony is an active trader and property investor with 20 years experience working with some of the largest companies in financial services worldwide. Skilled at technical and fundamental analysis, alongside risk management, he has seen success dealing an array of tradable instruments, from currencies, equities and commodities to higher-risk vehicles like cryptocurrencies and CFDs.

» Tony Kent Profile Page

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

Oct 8, 2024

Despite decades of high debt, Jamaica has successfully reduced its public debt-to-GDP ratio, leading to a more stable economy and potentially stronger currency performance.

Forex trading in Jamaica is getting popular as people seek to profit from currency fluctuations driven by the Jamaican Dollar’s volatility, alongside increased access to global currency pairs and investment opportunities.

Quick Introduction

• The Jamaican Dollar (JMD) could be traded in pairs like USD/JMD and EUR/JMD, though limited availability at brokers and low trading volumes are hurdles for active traders.
• Jamaicans may also be interested in major pairs like EUR/USD, USD/JPY and GBP/USD, which offer the volume and volatility that are required for many short-term trading strategies.
• Forex trading is regulated by the Bank of Jamaica (BoJ), which is concerned with monetary policy and the Financial Services Commission (FSC), which oversees investment firms.
• The best time to trade forex is typically during the London-New York overlap (8:00 AM and 12:00 PM Jamaican time). You’ll find the best liquidity, volatility, and trading opportunities.

How Does Forex Trading Work?

Forex trading, or FX trading, involves the conversion of one currency into another, with around $7.5 trillion worth of over-the-counter forex transactions every single day according to the latest triennial survey from the Bank for International Settlements (BIS).

You buy, or go long, on a currency pair if you think the first currency quoted will rise in value and sell, or go short, if you think it will decline.

Jamaicans may be interested in trading a number of currency pairs, including:

• USD/JMD (US Dollar / Jamaican Dollar) – Important due to the US dollar’s role in commerce, imports, and remittances; fluctuations are closely tied to the Jamaican economy.
• EUR/JMD (Euro / Jamaican Dollar) – Useful for traders looking to capitalize on exchange rate fluctuations influenced by Jamaica’s trade with the European Union.
• GBP/JMD (British Pound / Jamaican Dollar) – Significant due to historical ties with the UK; relevant for trade, travel, and remittances.
• CAD/JMD (Canadian Dollar / Jamaican Dollar) – Relevant due to Canada’s significant remittances to Jamaica, reflecting the economic relationship between the two countries.
• USD/JPY (US Dollar / Japanese Yen) – Popular among Jamaican traders for its strong liquidity and volatility, despite not involving the Jamaican dollar.
• EUR/USD (Euro / US Dollar) – Most traded currency pair globally, offering excellent liquidity for fast-paced trading styles like forex day trading.
• GBP/USD (British Pound / US Dollar) – Popular for its liquidity and the ability to trade based on the economic performance of the US and UK.

Is Forex Trading Legal In Jamaica?

Forex trading in Jamaica is legal but tightly regulated by the Financial Services Commission (FSC) and the Bank of Jamaica (BoJ), whose role is to monitor, collect data, and, if necessary, intervene in the foreign exchange market.

While not as developed or well-respected as major regulators in the US, UK or some European countries, these organizations safeguard the interests of retail traders in Jamaica, maintaining standards of conduct in the forex market.

Like many countries worldwide, Jamaican forex brokers are required to keep traders’ funds segregated from their operating funds, and traders must be allowed to withdraw funds easily while maintaining minimum account balances.

Is Forex Trading Taxed In Jamaica?

Forex traders are obliged to pay tax on their profits to the Tax Administration of Jamaica.

While there is no capital gains tax in Jamaica, individuals are generally liable to income tax starting from 25%. Jamaican locals and domiciled individuals are taxed on their global income, while non-residents are taxed on Jamaican-sourced income.

The tax year runs from April 1 to March 31, and taxpayers must submit their income tax returns by March 15 of the following year.

Given the evolving tax regime and the rising popularity of forex trading in Jamaica, I recommend consulting a local tax professional who can help you optimize your trading activities for tax purposes and ensure compliance with your obligations.

Tony Kent

Author

When Is The Best Time To Trade Forex?

Assuming you want to trade forex when there is relatively high volatility and volume in the market, and you should, then consider these key trading sessions:

• London-New York Overlap: The best time to trade is between 8 AM and 12 PM Jamaican time, when both the London and New York sessions are active, leading to high volatility and liquidity.
• London Session: Trading is also favorable from 3 AM to 11 AM Jamaican time, as this is when the London session is open and active, providing numerous trading opportunities.
• Market Volatility: Focus on these times to capitalize on significant price movements in key currency pairs involving the Jamaican dollar (JMD) and other major currencies.

A JMD/USD Trade

To demonstrate how forex trading in Jamaica really works, below is a trade I executed with the JMD/USD currency pair.

As a technical trader, I use the momentum bounce strategy for forex trading on the daily timeframes or lower.

With price action clearly above the 200, 50, and 20-day moving averages and the daily candle closing on 19 September with bullish momentum, I looked for confirmation on lower timeframes and waited for the first 4-hour candle to close before entering the trade.

I never risk more than 1% of my balance on any one trade and always use a stop-loss order to manage any potential losses and a take-profit order to exit the trade as soon as my target is reached.

I executed the trade on the 4-hour timeframe, using confirmed support levels at 157.00 for my entry and setting my take-profit order at 157.65 an established resistance level.

The trade played out as planned, and I exited in profit.

Bottom Line

A well-regulated market with strict rules around segregating funds and allowing traders easy withdrawals means you can feel a degree of security trading forex in the Jamaican market, and with access to higher leverage ratios, it’s easy to see the attraction.

Keep in mind, though, that leverage can be a double-edged sword, amplifying your potential profits but also magnifying any losses. Never risk more Jamaican Dollars than you can afford to lose.

To get started, turn to DayTrading.com’s choice of the top forex trading platforms.

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