Forex Trading in Tanzania

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Written By
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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
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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.
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Fact Checked By
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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.
Updated

Forex trading in Tanzania is gaining popularity as younger – it has one of the lowest median ages in Africa at 18 – ambitious individuals, search for opportunities to invest in financial markets and potentially generate income.

This rise in interest comes when the East African nation’s economy is considered relatively stable, with GDP growth reaching 5.2%, and Tanzania ranking around 166 in terms of GDP PPP.

This guide to forex trading in Tanzania for beginners will kickstart your journey.

Quick Introduction

  • The Tanzanian shilling has been fairly stable and the USD/TZS is the leading shilling currency pair traded as businesses exchange dollars for shillings. However, liquidity and availability issues mean Tanzanians may focus on more actively traded pairs like EUR/USD and USD/JPY.
  • The Capital Markets and Securities Authority (CMSA) supervises Tanzania’s financial markets, but it’s yet to develop a comprehensive framework to regulate FX trading. The Bank of Tanzania (BoT) maintains foreign exchange reserves to support the stability of the TZS.
  • The best time to trade forex in Tanzania is normally during the overlap of the London and New York sessions, from 3 PM to 7 PM EAT. This timing aligns well with local evening hours, providing opportunities to capitalize on price movements with increased liquidity.

Top 4 Forex Brokers in Tanzania

Following our latest in-depth tests, these 4 platforms stand out as the top choices for forex traders in Tanzania:

Click a broker for details
  1. 1
    XM
    $30 No Deposit Bonus When You Register A Real Account

    Ratings
    4.3 / 5
    4.5 / 5
    4.3 / 5
    4.3 / 5
    4 / 5
    4.5 / 5
    4.5 / 5
    4.5 / 5
    4.7 / 5
    3.9 / 5

    $5
    0.01 Lots
    1:1000
    ASIC, CySEC, DFSA, FSC, FSCA, CNMV, AMF, KNF
    Forex, Stock CFDs, Turbo Stocks, Indices, Commodities, Precious Metals, Energies, Shares, Crypto, Futures
    MT4, MT5
    Credit Card, Debit Card, Skrill, Neteller, Wire Transfer, Perfect Money, Apple Pay, Google Wallet, TransferWise, Visa, M-Pesa
    USD, EUR, GBP, AUD, JPY, ZAR, CHF, SGD, PLN, HUF
  2. 2
    Vantage
    50% Welcome Deposit Bonus, earn redeemable rewards in the Vantage Rewards scheme

    Ratings
    4.6 / 5
    4.5 / 5
    4.5 / 5
    4.4 / 5
    4.3 / 5
    4.4 / 5
    4 / 5
    4 / 5
    3.6 / 5
    3.9 / 5

    $50
    0.01 Lots
    1:500
    FCA, ASIC, FSCA, VFSC
    CFDs, Forex, Stocks, Indices, Commodities, ETFs, Bonds
    ProTrader, MT4, MT5, TradingView, DupliTrade
    Skrill, BPAY, JCB Card, AstroPay, Visa, Swift, Neteller, Wire Transfer, Credit Card, Debit Card, UnionPay, FasaPay
    USD, EUR, GBP, CAD, AUD, NZD, JPY, HKD, SGD, PLN
  3. 3
    IC Markets

    Ratings
    4.6 / 5
    4 / 5
    3.5 / 5
    4.6 / 5
    4 / 5
    4.5 / 5
    4 / 5
    3.5 / 5
    3.1 / 5
    4.2 / 5

    $200
    0.01 Lots
    1:30 (ASIC & CySEC), 1:500 (FSA), 1:1000 (Global)
    ASIC, CySEC, FSA, CMA
    CFDs, Forex, Stocks, Indices, Commodities, Bonds, Futures, Crypto
    MT4, MT5, cTrader, TradingView, TradingCentral, DupliTrade
    PayPal, Skrill, Neteller, Visa, UnionPay, Wire Transfer, Rapid Transfer, Mastercard, POLi, BPAY, Credit Card, Klarna, Swift, SafeCharge
    USD, EUR, GBP, CAD, AUD, NZD, JPY, CHF, HKD, SGD
  4. 4
    AvaTrade
    20% Welcome Bonus up to $10,000

    Ratings
    4.8 / 5
    4.3 / 5
    4.5 / 5
    3.8 / 5
    4.3 / 5
    4.3 / 5
    4.3 / 5
    4.5 / 5
    4.3 / 5
    4 / 5

    $100
    0.01 Lots
    1:30 (Retail) 1:400 (Pro)
    ASIC, CySEC, FSCA, ISA, CBI, FSA, FSRA, BVI, ADGM, CIRO, AFM
    CFDs, Forex, Stocks, Indices, Commodities, ETFs, Bonds, Crypto, Spread Betting, Futures
    WebTrader, AvaTradeGO, AvaOptions, AvaFutures, MT4, MT5, AlgoTrader, TradingCentral, DupliTrade
    Skrill, Wire Transfer, FasaPay, Mastercard, Perfect Money, Swift, MoneyGram, Credit Card, WebMoney, JCB Card, Debit Card, Neteller, Boleto
    USD, EUR, GBP, CAD, AUD

Forex Brokers in Tanzania

How Does Forex Trading Work?

Forex trading is a high-risk activity that involves buying and selling currencies in a pair to try and profit from fluctuations in exchange rates.

When you purchase a currency pair, you anticipate that the base currency (the first one listed) will increase in value. Conversely, you sell a currency pair when you expect the base currency to decrease in value.

Let’s say I buy USD/TZS at an exchange rate of 2,700, anticipating that the Tanzanian shilling will depreciate against the US dollar.

Imagine that after some time, the exchange rate rises to 2,750. If I sell my position at this higher rate, I could make a profit (minus any fees), as the value of the US dollar has increased relative to the shilling.

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Paul Holmes
Author

While Tanzania’s forex market is growing, it still has room for expansion on the global stage. Currency pairs like TZS/USD, TZS/EUR and TZS/AUD are not yet widely traded in significant volumes, nor are they readily available on forex apps in our experience.

As a result, Tanzanians may prefer majors like EUR/USD, USD/JPY, GBP/USD, USD/CHF, AUD/USD, and USD/CAD, which offer sufficient volume for active traders to capitalize on trading opportunities.

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Forex traders often use leverage, which involves borrowing funds to increase profits. However, this comes with risks, as it can lead to huge losses.

Forex trading is legal in Tanzania and regulated by the Capital Markets and Securities Authority (CMSA), which oversees the country’s financial and securities markets.

The CMSA sets the legal framework to regulate forex providers to ensure they stick to the rules to protect traders while maintaining market integrity.

However, it’s yet to match the maturity and active oversight of regulators in other financial jurisdictions, such as the Australian Securities and Investments Commission (ASIC), earning it only ‘orange tier’ status in DayTrading.com’s Regulation & Trust Rating.

The Bank of Tanzania (BoT) also plays a crucial role. The central bank sets exchange rates and monitors currency fluctuations in the shilling, which can significantly impact trading decisions.

💡
Staying informed about market regulations is a vital step for anyone looking to trade forex legally and safely in Tanzania. Follow the news and press releases from the CMSA for the latest updates.

Is Forex Trading Taxed In Tanzania?

Yes, profits from forex trading are generally considered taxable income and must be reported to the Tanzania Revenue Authority (TRA).

The tax rate varies depending on whether the trader is an individual or a business entity. For individuals, profits are typically subject to personal income tax rates, which are progressive based on total annual income. The top rate of personal tax is 30%.

If using international brokers, taxes might not be automatically withheld, so traders are responsible for declaring and paying the appropriate taxes to the TRA.

Keep detailed records of your forex trades, including profits and losses, and report these earnings when filing annual tax returns with the TRA.

Accurate documentation is essential, as the TRA may audit traders to ensure proper reporting and compliance. Non-compliance or failure to declare forex trading income can result in penalties, interest on unpaid taxes, or legal action by the TRA.

When Is The Best Time To Trade Forex In Tanzania?

The best time to trade forex generally depends on overlapping major global forex market sessions with the most volatility and liquidity, offering better trading opportunities.

Tanzania operates in the East Africa Time (EAT) zone, UTC+3.

A USD/TZS Trade

To show you how forex trading in Tanzania works in practice, I’m going to trade USD/TZS as an example.

Background

It’s worth highlighting that when I trade minors or exotics, I roll my risk back to only 0.5% of my account size, and I usually only trade off daily timeframes. Instead, I’m looking to hold over to ride a trend (if it’s there) or position trade.

I’m also mindful that pairs like USD/TZS don’t offer the same optimized trading conditions as major currency pairs like GBP/USD or EUR/USD. The spreads, fills, quotes, liquidity, and volatility are less predictable on minors and exotics, which can catch you unawares.

Suppose you’re shooting for a few pips. In that case, the cost of trading exotic/minor pairs can seriously hit your P&L, but if you’re looking for 30 or more pips, then getting a wider spread or fill away from your market order can be factored into your overall trading plan, it’s simply a cost of doing business in this business.

Analysis

My fundamental analysis for this trade relates to the previously mentioned economic readings or recently published economic bulletins featured on my economic calendar, like GDP, inflation, interest rates, government borrowing, unemployment, etc. The central bank hiked the interest rate earlier in the year to 6%, and inflation had cooled to 3%.

I also factor the strength of the US dollar into any equation when trading smaller economies’ currencies because, as the globe’s reserve currency, it takes significant events to reverse USD bullishness.

I favor using Heikin Ashi (HA) when trading off higher time frames because they smooth price action, help filter out noise and volatility, and allow me to identify candlestick formations.

Each day, the single OHLC (open-high-low-close) can deliver one affirmative reading.

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Paul Holmes
Author

I’m highly selective when choosing technical indicators to apply to my charts. You have to avoid replication; there’s little point in having two momentum or two oscillators on the same chart to deliver the same information.

So, I look for a selection that might indicate volatility, oversold and overbought conditions, momentum, and the possibility of a trend change. The MACD and RSI have proven reliable for me as an analyst.

USD/TZN price chart for a currency trade
Source: Investing.com

Looking at the above chart of USD/TZS, we can see the creation of a Doji indicating indecision and a balance between sellers and buyers.

But in my opinion, this doesn’t indicate a potential trend reversal. It might suggest some profit-taking or a pause while major institutional traders decide on the relative strength of the USD vs the shilling.

The MACD moving averages have converged but not crossed, the RSI is below the overbought zone of 70+, and none of the readings suggests a reversal.

Execution

I decided to take a long trade.

My entry order was filled at 2715.00, and my stop loss order is at the monthly low of 2700.

My profit limit order is 2730, representing a year-to-date high at the time.

This trade does not constitute trading advice – it’s for informational purposes only. Make trading decisions based on your own goals, strategy and risk tolerance.

Bottom Line

Forex trading in Tanzania offers opportunities, but success requires understanding market dynamics, compliance with CMSA’s regulations, and effective risk management.

By trading currencies during peak market hours, using licensed brokers, and staying informed, Tanzanian traders can confidently navigate the forex market.

Still, never risk more shillings than you can afford to lose.

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

Article Sources

The writing and editorial team at DayTrading.com use credible sources to support their work. These include government agencies, white papers, research institutes, and engagement with industry professionals. Content is written free from bias and is fact-checked where appropriate. Learn more about why you can trust DayTrading.com