## Frequently Asked Questions About Forex Trading in Vietnam: From Fundamentals to Legal Aspects

Foreign exchange trading has long become an integral part of global international commerce. However, for Vietnamese investors, this market still raises many major questions: **What exactly is the foreign exchange market? Is participation permitted? What risks should be avoided?**

## Global Forex Market: Scale, Liquidity, and Participants

Unlike stock markets or other centralized exchanges, **the forex market is completely decentralized**. There is no official exchange in each country; instead, a global network of brokerage firms connects traders through an OTC (over-the-counter) trading model.

In terms of size, it is the largest market on the planet, with an average daily trading volume of 6.6 trillion USD (according to 2020 data). Its enormous scale makes the forex market **the most liquid market in the world**, which also prevents any manipulation attempts.

Forex trading history begins with major financial institutions—central banks, multinational import-export companies. They use forex to **hedge against exchange rate volatility, protect profits from international contracts, and store value during political instability**. Over time, as individual investment needs increased and international trade expanded, the forex market gradually became a choice for diversifying personal investment portfolios. Although retail traders' trading volume remains small compared to institutions, the high liquidity and strong volatility have **gradually attracted more and more individual traders** to participate.

## Major Currency Pairs: From EUR/USD to Local Characteristics

According to the 2019 Bank for International Settlements (BIS) survey, **EUR/USD is the most traded currency pair**, accounting for over 24% of daily transactions. This pair is considered the "king" of the forex market, with fluctuations mainly influenced by the European Central Bank (ECB) (ECB) and the US Federal Reserve (FED) (FED).

Next is **USD/JPY** (accounting for 13.2% of daily trading), influenced by monetary policy of the Bank of Japan (BoJ) (BoJ) and FED, along with **GBP/USD** (9.6% of trading), depending on economic growth rates in the UK, US, and decisions by the Bank of England (BoE) (BoE).

Besides these three major pairs, other pairs have their own characteristics. **AUD/USD** (5.4% trading) fluctuates according to Australia's mineral exports and the Reserve Bank of Australia's (RBA) (RBA) interest rates. **USD/CAD** (4.4%) is heavily affected by oil prices because Canada is a major oil exporter. **USD/CNY** (4.1%) reflects the economic competition between the US and China. **USD/CHF** (3.5%) tends to be more actively traded during global economic instability, as the Swiss franc is considered a "safe haven asset." **USD/HKD** (3.3%) remains stable because the Hong Kong dollar is pegged to the USD, fluctuating within HK$7.75-7.85 per USD. **EUR/GBP** (2.0%) reflects the close economic ties between the UK and the European Union. Finally, **USD/KRW** (1.9%) is increasingly traded thanks to South Korea's strong economic development.

## Legal and Tax Aspects: Clarifying Forex Trading Status in Vietnam

A key question many Vietnamese investors worry about: **Is forex trading illegal?**

The answer is more complex than people think. According to current Vietnamese regulations, the state maintains strict control over foreign exchange reserves, and only licensed banks are authorized to conduct official forex transactions. **Vietnam does not permit the establishment of domestic forex exchanges**, and efforts to open Forex trading platforms in Vietnam are considered illegal.

However, an important point to understand is: **Individual trading for investment purposes is not illegal**. Vietnamese investors can participate in the forex market through internationally licensed brokerage firms in countries that permit such transactions. What is prohibited is: trading with brokerage firms that **claim to be licensed by Vietnam**, because the Vietnamese government does not license any forex brokers.

**Regarding taxes**, Vietnam currently has no official policy for forex trading, so there is no specific tax on profits from such activities. This remains a legally ambiguous area with potential risks for participants.

## Key Economic Factors Driving Market Volatility

To trade effectively in the forex market, investors need to understand key **economic news** that influence currency price fluctuations.

**Central bank interest rate decisions** are the most important factor. The interest rate is the "price" of a currency—raising interest rates increases its value, lowering interest rates decreases it. Information about interest rate changes has an immediate impact on currency pair prices.

**Gross Domestic Product (GDP)** has a direct influence. When GDP exceeds expectations, the currency usually appreciates; when GDP falls below expectations, the currency weakens.

**CPI (Consumer Price Index)** measures inflation, indirectly reflecting currency value through purchasing power. High inflation often leads to higher interest rates, affecting exchange rate volatility.

**Unemployment rate** provides data that central banks use to decide monetary policy. In the US, the most watched indicators are ADP and NFP (Non-Farm Payrolls), released monthly.

**FOMC (Federal Open Market Committee) meetings** are events that cause significant volatility. Each month, FOMC meets to set interest rates and announce economic outlooks. For example, on March 18, 2015, the post-meeting statement caused EUR/USD to surge by 400 pips within minutes.

## Trading Hours: When Is the Forex Market "Active"?

The forex market operates 24 hours a day, 5 days a week, but volatility varies at different times:

**New York** (Winter: 20:00-5:00 next day; Summer: 19:00-4:00) - The largest trading session, where most forex activity concentrates.

**London** (Winter: 15:00-0:00; Summer: 14:00-23:00) - One of the main trading centers, heavily influencing European currency pairs.

**Sydney** (Winter: 4:00-13:00; Summer: 5:00-14:00) - The AUD experiences high volatility when this session opens.

**Tokyo** (6:00-15:00 year-round) - Mainly influences JPY and Asia-Pacific currency pairs.

Through these international exchanges, you **can trade forex 24/5** without needing to open separate accounts at each platform.

## Account Opening Process and Getting Started

To participate in forex trading, you need to open an account with a reputable international broker licensed by authorized regulatory agencies.

**Criteria for a reputable broker include:**
- Trustworthiness and security (license, operational history)
- Trading costs (fees, spreads)
- Flexibility in deposits/withdrawals
- User-friendly trading platform
- Fast order execution
- Professional customer service

**Basic account opening steps:**
1. Register online (choose demo account or real account)
2. Select the market you want to trade (e.g., gold, EUR/USD)
3. Open buy or sell positions based on your forecast
4. Set position size, take profit, stop loss
5. Confirm the trade

## Risks to Consider Before Starting

Although forex offers high liquidity and profit opportunities, **investors must understand the inherent risks**:

**Legal risks**: The legal status of forex trading in Vietnam remains ambiguous. While not illegal, it is not officially permitted. This creates long-term uncertainty.

**Financial risks**: The forex market is highly volatile. With high leverage (some platforms offer up to 1:200), you could lose your entire investment on a wrong trade.

**Broker risks**: With over 100,000 online trading platforms in Vietnam, some are reputable, but others are scams. Choosing the wrong broker can lead to losing money or being unable to withdraw funds.

Conclusion: **Forex is a significant investment opportunity with high profit potential, but it also involves many risks**. If you decide to participate, choose reputable international brokers licensed by top regulatory agencies, and always manage risks carefully.