Forex trading explained

Much like in many other parts of the world, forex trading in permitted in Mexico under certain regulations and guidelines. Forex trading, the buying and selling of global currencies, is said to be the largest and most liquid financial market in the world, which explains the growing interest in it in recent years. The interest has also be accelerated by people's desire to explore alternative investment options, particularly those that allow them to trade from the comfort of their own home or while on the move as a digital nomad. Traders across the globe are always interested in the forex exchange rate for the USD, as it is the one currency that forms part of the major currency pairs and is regarded as a safe haven currency. This is mostly attributed to how active the US economy is in global trade, as well as how it acts as the base currency for most global activity.

When it comes to forex trading, a currency pair can be defined as the quotation of two different currencies, with the value of one currency being quoted against the other. The profit-making opportunity for a trader then arises from any currency fluctuations and exchange rate differences between the two. Traders often opt for the USD and other major forex currencies, such as the EUR, GBP and JPY, in order to truly capitalise on market activity.

Legalities of forex trading in Mexico

Although there is still much scepticism and questions surrounding forex trading in some countries, it is indeed legal in Mexico. The Central Bank of Mexico, the Global Foreign Exchange Committee and the National Banking and Securities Commission all provide regulatory guidance for forex trading in Mexico, however, none of them are fully responsible for the emerging industry and practice in the country. In light of this, industry insiders have advised that the country's retail investors opt for offshore brokers. While Mexico's forex industry is not as regulated as some other countries, it is still reportedly one of the most promising and vibrant emerging markets in Latin America. Writings on the matter attribute the activity to the country's policies, which are said to be investor-friendly and do much to boost investor confidence. Moreover, the country's currency - the Mexican Peso - is said to be quite stable and liquid.

Liquidity is often preferred by traders because it allows for ease of trade and makes the currency less volatile. Less volatility and stability of a certain currency encourages traders to invest in it because it is generally less prone to unexpected fluctuations and high chances of loss for the investor. As further proof of this, while many other currencies weakened in 2020, the Mexican Peso showed resilience and is ranked amongst the top 15 most-traded currencies in the world. Additionally, it reportedly reached its all-time high in April 2020, amid the global financial turbulences and instability.      

There are several options available for trading Forex in Mexico, which are said to offer competitive spreads, research and analyses tools, as well as educational material. Platforms such as AvaTrade, OctaFX and eToro, amongst many others, are said to be just some of the best forex brokers that can be accessed by Mexican traders.