Forex Trading in Uganda

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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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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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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.
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Powered by the latest technology, forex trading has become an investment opportunity in Uganda, especially among young people and those looking to diversify their income sources.

Around 80% of Uganda’s exports are agricultural products, and a similar percentage is employed in the sector. Therefore, a foreign exchange transaction infrastructure mainly driven by USD (US dollar) conversion to UGX (Uganda Shilling) has been established for decades.

Interested in forex trading in Uganda? This guide for beginners will kickstart your journey.

Quick Introduction

  • Forex trading in Uganda is regulated by the Capital Markets Authority (CMA) and Bank of Uganda (BoU), with the BoU responsible for managing the stability of the Ugandan Shilling.
  • Ugandans can trade local currency pairs like USD/UGX, plus global pairs like EUR/USD and USD/JPY, with internet penetration in the country making it easier to trade currencies online.
  • Uganda’s economic conditions, notably inflation rates, interest rates, and political stability, can significantly influence the value of the Ugandan Shilling. Equally, global economic events, like shifts in oil prices or central bank policies, can profoundly impact forex trading outcomes.

Top 4 Forex Brokers in Uganda

Following our extensive tests, these 4 platforms emerged as superior for forex traders in Uganda:

Click a broker for details
  1. 1
    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
  2. 2
    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
  3. 3
    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
  4. 4
    Pepperstone
    CFDs and FX are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading CFDs.

    Ratings
    4.6 / 5
    4 / 5
    3.8 / 5
    4.4 / 5
    4.4 / 5
    4.6 / 5
    4.3 / 5
    4 / 5
    4.4 / 5
    4.1 / 5

    $0
    0.01 Lots
    1:30 (Retail), 1:500 (Pro)
    FCA, ASIC, CySEC, DFSA, CMA, BaFin, SCB
    CFDs, Forex, Currency Indices, Stocks, Indices, Commodities, ETFs, Crypto, Spread Betting
    MT4, MT5, cTrader, TradingView, AutoChartist, DupliTrade
    Visa, Mastercard, Credit Card, Debit Card, PayPal, Wire Transfer, POLi, UnionPay, BPAY, Neteller, Skrill
    USD, EUR, GBP, CAD, AUD, NZD, JPY, CHF, HKD, SGD

Forex Brokers in Uganda

How Does Forex Trading Work?

Forex trading in Uganda works similarly to how it operates globally, with a few local specifics.

It involves trading currency pairs, such as USD/UGX (US Dollar/Ugandan Shilling) or EUR/USD (Euro/US Dollar). However, USD/UGX is not widely supported on international trading platforms based on our investigations.

When you trade a currency pair, you buy one currency while selling another. You buy a currency pair if you expect the base currency (the first currency in the pair) to appreciate and sell if you expect it to depreciate.

The exchange rate between the two currencies in a pair determines how much of one currency you can buy with another. For example, if the USD/UGX rate is 3,800, you can exchange 1 USD for 3,800 UGX.

Despite being regarded as one of the globe’s poorest (GDP per capita less than $1,000) and politically unstable countries, Uganda’s GDP has risen.

A growing GDP signals economic improvement, potentially leading to rising capital inflows and currency liquidity, possibly presenting trading opportunities.

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Paul Holmes
Author

Forex trading is legal and regulated in Uganda to ensure trading activities are conducted within a legal framework and that traders’ interests are protected. Nonetheless, it remains a high-risk activity and you could lose any money you invest.

💡
Forex trading with leverage is allowed in Uganda, enabling you to control larger positions with less capital. For example, with 1:10 leverage, you can trade $1,000 in currency with only $100. This amplifies profits and losses.

Is Forex Trading Taxed In Uganda?

Profits earned from trading currencies online are taxable income under Ugandan tax law. Here’s how it works:

Forex trading profits are generally treated as part of your income and are subject to up to 40% personal income tax. The specific tax rate depends on the profit and your yearly income.

If forex trading is conducted through a registered company, the profits are subject to corporate income tax, currently 30% in Uganda.

You must report your profits in annual tax returns to the Uganda Revenue Authority (URA) after calculating the net profit from forex trading activities and deducting allowable expenses.

To report your income accurately, keep accurate transaction records, including trade confirmations, profit and loss statements, and relevant documentation.

Compliance with tax laws is essential to avoid legal penalties that erode any returns you make from trading currencies online.

That’s why I recommend seeking professional advice from an accountant familiar with the latest tax regulations in Uganda.

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Paul Holmes
Author

When Is The Best Time To Trade Forex In Uganda?

The best times to trade forex in Uganda generally depend on the overlap of global forex market sessions. These periods typically offer the highest trading volume and liquidity, leading to more trading opportunities, especially for fast-paced strategies like forex day trading.

A USD/UGX Trade

To show you how trading currencies works in practice, let’s walk through an example trade…

When day trading exotic and minor currency pairs, I always scope out the long-term trend before engaging in fundamental and technical analysis. The line chart below shows the Ugandan shilling’s performance over the past year (at the time of trading).

Uganda shilling/US dollar historical chart

The USD had fallen sharply vs UGX, corresponding with the BoU lowering interest rates to 10% as the country’s inflation rate reduced from 7.20% two years earlier to 4%.

GDP, inflation, interest rate figures, and the overall economic commentary provided by the likes of the World Bank also give me a good handle on Uganda’s economic situation. However, such granular analysis can often be superseded by the relative strength of USD as the globe’s reserve currency.

Trade Set Up

When trading exotic and minor pairs, I’m always mindful of the lack of liquidity and the potential for increased volatility. The spreads can be wider, and the fills less precise.

That’s why, if I identify an opportunity, I often use a swing trading mindset rather than attempt to day trade such pairs. That way, I’m not as focused on the spread being as tight, and because I’m aiming for more pips, I can absorb a fill away from my target market price.

Charting analysis of Uganda shilling for a forex trade
Source: Investing.com

When analyzing daily time frames, I combine candlestick price action with indicators I trust. In my experience, the higher the time frame, the better the indicators work, considering their creators intended them to be traded on higher time frames.

In this example, I’ve chosen PSAR, MACD, and RSI, a combination of oscillators and momentum indicators that don’t replicate the same information.

Trade Execution

My combined signals to short USD/UGX involved the PSAR appearing above the price, indicating bearish sentiment, the MACD moving averages crossing, the histogram changing colour, and the RSI above the median 50 line, potentially indicating an overbought security.

To confirm my decision, I’ll also look for reversal candlestick patterns, such as dojis, hammers, and morning stars.

My deal ticket contained the following instructions: entry 3735, stop loss order 3750, and profit limit order 3690 (close to recent lows). I’ve also put a time limit on this trade; I’ll cancel if the momentum stalls.

Bottom Line

Forex trading in Uganda is legal and regulated by the (CMA) and (BoU).

Traders can use local and international brokers, with internet penetration across Uganda and faster, more powerful platforms enabling access to global currency markets.

Profits from forex trading may be taxable, and traders must comply with the latest rules from the Uganda Revenue Authority. Keep accurate records and stay informed about global economic events that can impact currency prices.

To get moving, see DayTrading.com’s pick of the top forex trading platforms in Uganda.

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