This island country is known for many things – rugby, music, beer, food, and it’s amazing green nature, for which it got a nickname of the Emerald Isle. Ireland has a population of 4.9 million people, with a GDP of almost $400 billion, which is definitely impressive for a small country like Ireland. Ireland managed to achieve this thanks to its very balanced and mixed economy. We say this because Ireland isn’t particularly known for excelling greatly at one single thing. Rather, its economy is based on multiple different sectors, which is always great, as this diversity allows for economic safety and fast growth.
The above is even more impressive when you consider the fact that not too long ago, Ireland was definitely in a very dire spot, economically speaking. This was a result of the 2008 economic crisis, which was very devastating for Ireland. It even got to a point where they had to be bailed out by the EU. Now, fast forward to today, Ireland is not only back on its feet but is now a country with one of the fastest-growing economies in the world.
In this guide, we will be discussing the ins and outs of the Irish Forex market, how it works, what is the legal landscape like, what are the things to take into account as a beginner, what to avoid, and more. The guide is written with beginners in mind but will be useful to any trader who is interested in getting started with Forex in Ireland.
Ireland’s top Forex brokers
Choosing a Forex broker is, without a doubt, no easy task. After all, you have to consider tons of different things, such as your safety and security, opportunities that the broker offers, and compare them to hundreds of other possible brokers you can go with. With so many things to consider, it can definitely be quite a cumbersome task, especially for beginners. This is exactly why this list will be useful to you, as it contains the very best Forex brokers that Ireland has to offer. They were chosen based on the very factors we mentioned just now. Give all of them a look below, and you will be able to find just your ideal broker in Ireland today!
FCA, CySEC, IFSC, ASIC, DFSA
MT4, MT5, WebTrader
Desktop, WebTrader, Mobile
FCA, ASIC, CySEC, FSCA, FMA, MAS
WebTrader, Windows 10 Trader
Irish Forex regulations
Ireland has a fairly strong and effective regulatory environment. Just like its economy, however, it wasn’t all sunshine and rainbows in the beginning. There was definitely a lot of hard work, trials, and tribulations that were needed to get where it is today. The issue was not the scams or fraud, as was the case with many other Forex environments around the globe, but the lack of proper education, as well as restrictions on certain market instruments. These issues were the cause for a lot of people losing their money, and damaging the reputation of Forex trading in the country. There was definitely a lot of work that needed to be done, and for that, a proper regulatory environment was a must-have. Who is the legal entity that would satisfy this requirement for Ireland?
The Central Bank Of Ireland
Ireland’s official regulatory body in charge of Forex trading is the Central Bank Of Ireland (CBI). CBI was established back in 1943, and back then, its main responsibility and function was the issuance of IEP and the country’s coinage, but this changed when Ireland officially moved to EUR back in 2002. As of today, CBI’s spectrum of responsibilities is quite broad and diverse. As it relates to Forex trading specifically, CBI’s responsibilities include maintaining the financial stability of the country, protecting the consumers/traders, providing guidance and education to them, and much more. Let’s take a quick look at the exact specific ways that CBI regulates the market, meaning what its demands are, what are the restrictions it imposed on the market and the brokers, and more.
CBI’s licensing of the brokers
When it comes to licensing practices, everything is pretty simple in Ireland. The brokers that want to locally operate from within the country need to be licensed by CBI. The requirements for the qualification of the license are fairly demanding and strict. This is to ensure that only the brokers that are qualified to be offering the services are allowed to operate, with the goal of increasing the quality of the service and ascertaining the well-being and security of the traders.
CBI, on his website, hosts a detailed and extensive list where you can actually check whether or not a particular broker has a local license issued by CBI. In general, it’s always a good idea to give it a quick look and see if the broker you’re considering has the license by CBI. Going with a locally-licensed broker is always preferable, as it puts you in a much better position to brace for any possible disputes you may have with them. Additionally, them being locally-licensed means that they have gone through the set of requirements that your very government believes to be best suited for providing you with much-needed safety and standard of service.
For the brokers wanting to offer services to the Irish traders, but do not want to be physically based in Ireland or obtain the license directly from CBI, they need to be licensed by any other country in the Eurozone. This means, that if a broker is licensed by any other major regulator such as FCA, BaFIN, or FSA, they can also legally operate in Ireland as well. This should be of no security concerns though, as these regulators are also very strict on their own. If a broker is trustworthy enough to be licensed by a regulator such as FCA, then you can trust them without any concerns.
As a financial regulator that is always looking out for the best interests of its local traders, CBI has imposed numerous requirements on the brokers, all with the goal of making sure that only the qualified brokers are able to provide the service to the traders. This is very important, because after all, that the broker performs well is important for the traders’ well-being as well. Let’s take a look at some of the specific examples of these demands that CBI has towards the brokers, as well as some of the restrictions that they have to work with.
What are some of the restrictions that CBI has imposed on the market?
Forex is definitely a risky endeavor. Even if you are the most experienced trader with the most conservative strategy, there is still always a risk that you can lose all your money. It’s just part of the game, which can not be avoided. However, there are definitely things that are riskier than the rest, such as the CFDs and usage of high leverage.
CFDs have always been a rather controversial subject. On the one hand, many people were able to make a lot of money with them, as it allows one to gain access to huge profit potentials without a lot of personal capital. However, due to their risky nature, they have been a reason for a lot of people to have lost a lot of money. Because of this, many international Forex regulators have been imposing heavy restrictions on them, with the intent of keeping the traders safe. This is important, because the beginner traders, most of the time, are definitely not in a position to be using such risky instruments without the proper guidance.
As of now, for a broker to be allowed to provide CFDs to the traders, they have to put forward very detailed and extensive disclaimers to the public, and alert them on exactly how much risk and danger is involved with them. They have to make sure, that the traders know exactly what they’re committing to. Additionally, the brokers themselves are required to set certain standards as to which particular traders are even allowed to trade with CFDs. If a trader does not meet certain criteria, such as experience, capital, etc, then the broker is not allowed to offer them CFDs.
Beyond that, CBI has also put restrictions on leverage itself. The issue was that inexperienced, beginner traders who didn’t have the necessary know-how were getting into leverages upwards to 400-500:1, which was absolutely ridiculous. After making detailed research, reviews, and surveys, they have determined that high leverage should simply not be accessible to the retail customers and needed to be heavily limited. As such, they imposed limitations on how much leverage brokers can offer.
As of now, licensed brokers in Ireland are allowed to offer leverage that is no higher than 30:1. And this is for the major currency pairs, such as USD/EUR and GBP/USD. For the “exotic” pairs which are obviously riskier, as well as for the products like gold and minerals, the limit is even lower, resting at 20:1. For other commodities, leverage can be no higher than 10:1, and for cryptocurrencies 2:1.
These limits are very much within the range of what is considered international by the ESMA standards. While the limits are seen as a hindrance by many who have the ability to benefit from these products, the limits are for the traders’ safety and show that the regulator in place is doing its job of making sure to increase the safety as much as possible.
Investor compensation scheme
Another safety mechanism that CBI has adopted is a widely-implemented strategy that is common with many Forex markets is the Investor Compensation Scheme (ICS), which is Ireland’s variation of the investor compensation fund, a mechanism of investor protection that is popular all around the world. In case your broker goes bankrupt or becomes insolvent in any other form, ICS will compensate you in the broker’s place. It should be noted though, that this compensation has a limit, which is €20,000.
Additionally, brokers operating in Ireland are subjected to mandatory account segregation. What this means is that the broker is legally required to keep the investors’ funds in a bank account that is separated from the account where they keep their own operating capital. This gives you a lot of safety because the broker would not be allowed to misuse your funds in any way, and also makes sure that your money will not be in danger in case the broker loses their capital.
Negative balance protection
It is mandatory for Forex brokers in Ireland to provide negative balance protection, which is one of the best features for the traders who are looking for safety. It is one of the features that has become an industry standard at this point, and many Forex regulators around the world have adopted it and made it mandatory for the brokers. What is negative balance protection, how does it work, and for whom is it going to be helpful? What was the reason Negative balance protection was “invented” in the first place?
Negative balance protection was introduced because of the fact that a lot of people were losing more money than they had even initially deposited in the first place. This was a common occurrence, mostly with the cases where people were losing leverage. Because of how leverage works, if you open a position and lose money, it is possible for you to lose more than you even have in your trading account. When using very high leverage, you can probably imagine how high the losses can go. Many people were under the danger of going into thousands upon thousands of dollars. This is exactly why this protection rule was introduced, which makes it so that the trader can not lose more than they actually have on their account.
The introduction of this rule was also helpful in other ways, as the brokers would now be much more cautious with offering these outrageously high leverage themselves, as there would be less of an incentive to do so now. All in all, this is a great practice that gives you, the trader, a very big boost in safety.
CBI’s goal of informing the public
As we have already mentioned, one of the main issues that the Irish Forex market had for a very long time was the issue of traders being uninformed. Forex is definitely not a walk in the park. There are tons of things that you need to take into account, some of which are very complex, and can be difficult to conceptualize for the beginners, and can possibly lead to a lot of money loss. This was definitely the case in Ireland for a long time, as the statistics have shown, that a big bulk of money loss associated with Forex was coming from very risky instruments like CFDs (More on that later), and as such, it was necessary to get this information to the public and inform them about the risks.
Among many things, what CBI did was to demand from the brokers to inform their customers about the exact risks that are associated with particular instruments. As an example, brokers are required to put forward detailed disclaimers for the customers who are using CFDs. This can be in the form of disclosing exactly how much money people are losing, and what percentage of the people are losing.
This was definitely an effective approach, as the market, without a doubt, has moved towards a positive direction in Ireland. By delivering much-needed information to the public, the number of people who lost a lot of money dropped drastically. CBI continues to employ this strategy quite successfully to this day. Their website contains some really solid information about the ins and outs of Forex trading in Ireland, and all the info you may possibly need to stay safe. If you are planning to stay in this game for long, then getting used to seeking out information and guidance right from the get-go will prove to be one of the most important things that will pay off for you in a long run.
Irish Forex trading opportunities
Okay, so we have learned that Ireland has an effective regulatory authority at its helm, that is hard at work to make sure that the market performs at its best, and that its participants are adhering to all the necessary legal requirements that are in place. Now, let’s discuss the specifics of actual trading in Ireland, and what kind of opportunities are available for the Irish Forex traders for currency and commodity trading.
Currency trading and commodities in Ireland
Ireland has been using its own currency, the Irish Pound (IEP) until 2002, when it discontinued using it, and officially adopted the Euro. As such, there is probably not a huge amount that we can talk about currency trading in Ireland. Since it uses Euro, the same rules apply as do in the other countries in the Eurozone.
Commodity trading is much more of an interesting and fruitful discussion for the Irish Forex market, the reason being Ireland’s very diverse and versatile economy. As we have mentioned, Ireland doesn’t have anyone single thing that it excels greatly at, nor does it have huge amounts of natural resources like oil or minerals. However, with its balanced and unique approach to building its economy. it has managed to become one of the fastest-growing economies in the world. Part of the reason for this growth is Ireland’s strong trading partners such as Great Britain, the United States, Germany, Netherlands, Spain, and France.
Ireland’s economic diversity and strength are the results of Ireland’s great performance in fields like Pharmaceuticals, organic chemicals, and computers. Some of the biggest, world-renowned companies in this field are originated from Ireland. A great example is Ireland’s pharmaceutical industry, as it hosts major branches for some of the biggest pharmaceutical companies in the world, such as Pfizer, Roche, AbbVie, and more. It’s companies in the industries just mentioned that will likely bring you the greatest success when investing in the Irish market. Besides these industries, Ireland is also a great performer in agriculture, fishing, and tourism sector as well.
Now let’s talk about Ireland’s biggest exports as well. In 2019, Ireland has exported almost $170 billion’s worth of goods around the world, which is quite a solid number. The lion’s share of these exports goes towards pharmaceuticals, which, as we have already discussed, is one of Ireland’s top industries. The total export number for Ireland’s pharma industry is a staggering $53.5 billion. The second biggest export of Ireland would be organic chemicals, resting at $35.6 billion total, followed by optical-technical-medical apparatus with a total of $15.2 billion.
As you can see, there are definitely a lot of opportunities for trading in Ireland. Thanks to the country’s balanced and versatile economy, the Irish Forex market is able to cater to the needs of any trader, no matter their interests or preferences. This is great because having access to a lot of options is one of the most overlooked, yet one of the most important things at the same time. If you are planning to be in this for long, then the Irish Forex market definitely won’t disappoint you.
Pros and cons of going with Ireland based Forex brokers
As is the case with pretty much every market, trading in Ireland has its pros and cons. Here’s what we believe these pros and cons are:
- Ireland has fast economic growth
- Good regulatory environment
- No local currency to trade on
- Big limitations on CFDs and Leverage
Concluding thoughts on Ireland’s Forex market
Considering the rough recent past of the Irish economy, how it has managed to come back even stronger is massively impressive. As of today, Ireland boasts a thriving Forex market, with tons of local traders being extensively involved. Thanks to the very diverse and versatile economy of the country, the possibilities are really endless when it comes to trading in Ireland.
This, combined with the CBI’s amazing job as a Forex regulator, which itself offers the top level of security and reliability on the market, without a doubt put Ireland among the top Forex destinations in the world. If you are interested in getting started with trading in a market where you can not only make a profit, but grow your skills and develop as a high-level trader, then the Irish Forex market will definitely not disappoint you.