Sweden Forex Trading Brokers

forex_vs_binary_optionsLocated in Northern Europe, Sweden is a wealthy Scandinavian nation with a developed open-market economy aided by the exports of resources like iron ore, hydro-power, and forestry whose value accounts for one-third of the country’s gross domestic product (GDP).

Swedes enjoy a high standard of living, with a GDP per capita of US$57,232 as of 2018, which is among the highest in the European Union. The Nordic country has also established itself as a global leader in technological innovations. It has birthed many tech giants over the years, including Skype Technologies, Spotify, and the fintech platform Klarna.

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The country became a member state of the EU in 1995 but continues to use the Swedish krona (SEK) as its official currency. The krona boasts a strong presence on the global foreign exchange markets and accounted for 2.2% of the overall Forex turnover as of 2016. SEK has been floating freely against other currencies since 1992, with the central bank Sveriges Riksbank intervening at times to stabilize its rates.

Sweden’s market-oriented economy, national wealth, well-educated workforce, and love for innovations have transformed it into an attractive destination for international investors and brokers alike. The high standard of living has given rise to a thriving foreign exchange market an increasing number of Swedes are willing to participate in.

As a result, many international brokerage firms are looking to grab a slice of the local Forex market. Although the country has one of the most active trading scenes in the industry, very few brokers actually hail from Sweden. Most of the Forex companies with a presence in Sweden are actually based in other jurisdictions but operate locally with the authorization of Sweden’s financial watchdog.

Sweden Forex Legislation

Forex brokers can legally accept trades from Swedish residents as long as they obtain licenses from the local financial watchdog Finansinspektionen, i.e. the Financial Supervisory Authority of Sweden. As part of the European Union, Sweden has aligned its regulatory framework with the Markets in Financial Instruments Directive (MiFID), which harmonizes the regulations of financial services across all member states of the EU.

Under this piece of legislation, brokerage firms licensed in an EU country can legally service clients from all other member states. Because of this, some of the companies operating on the Swedish market are actually licensed and registered in other countries like Cyprus or the UK.

Residents of the Nordic country can legally trade spot Forex but purchasing contracts for difference (CFDs) from authorized brokerages is possible. In July 2019, Sweden adopted the guidelines proposed by the EU financial regulatory agency ESMAunder the MiFID. There are several conditions licensed derivative providers must meet according to the new set of rules.

Licensed brokers on the Swedish market can sell leveraged CFDs for Forex currency pairs, equity indices, shares, and hard commodities like gold. Under the new measures, retail customers must pay initial margin protection upon entering a contract for difference.

Clients are also entitled to negative balance protection on a per-account basis. This ensures they do not lose more than the balance they have available in their live accounts when the markets move unexpectedly in an adverse direction. Under this policy, when a trader’s balance goes in the red, the licensed brokerages must restore it to zero at no extra cost. However, professional traders are exempt from negative balance protection.

Another measure entitles retail customers to a margin close-out protection. Thus, if the customer’s account drops below 50% of the minimum initial required margin, the broker must close their open positions to prevent the margin from falling to zero. Respectively, the customer has the option to top up their balance if they want to do so.

Licensed brokers that operate on the Swedish market must also display standardized risk disclaimers on their websites. This is to warn retail customers about the risks involved in leveraged products like the CFD. The brokers must regularly calculate what percentage of their retail customers lose money when trading with leveraged products and publish the updated results on their websites.

There are also caps on the maximum leverage retail customers can use which coincide with those proposed by the EU regulator. The restrictions depend on the volatility of the underlying assets as follows: 30:1 for major Forex pairs (the ones that contain USD, EUR, JPY, GBP, CHF, and CAD), 20:1 for minor/exotic pairs, major indices, and gold, 10:1 for other commodities and non-major indices, 5:1 for individual equities, and 2:1 for cryptocurrencies.

Similarly to other EU countries that fall under the scope of ESMA, Sweden restricts the promotional incentives brokers can offer to local retail CFD traders.

Sweden Financial Regulators

The financial regulator of Sweden is called Finansinspektionen (FI), or the Swedish Financial Supervisory Authority in English. Founded in 1991, the FI has its headquarters in the Swedish capital of Stockholm and accounts to the Ministry of Finance.

The FI was established to create a single unified regulator across all financial sectors, including banking, securities, and insurance. It resulted from the merger of two former supervisory entities, the Insurance Supervision Authority and the Swedish Bank Inspectorate. The FI has a board of eight members who are appointed by the country’s government.

The agency is tasked with the oversight of all organizations that offer financial services in the country and that includes foreign exchange brokerages. The regulator also has the responsibility of ensuring the stability of the local financial markets and the compliance of all market participants with its guidelines.

It works to ensure sufficient levels of protection to consumers who trade with financial products like Forex. The FI also issues licenses to brokers looking to provide their services on Swedish territory. The agency is known to have launched crackdowns on companies servicing Swedish customers without any authorization.

Since Sweden is a member of the EU, it allows foreign brokers with licenses from other EU-based regulators to offer their products to the local public. Companies authorized by the FI can, in turn, do the same.

Sweden Forex Payment Methods

All good Sweden-friendly brokers cater to local customers by offering them a diverse choice of trading account types, including mini, micro, standard, and professional accounts. Most account types can be given a test drive in a demo format where virtual credits are used for trading instead of actual cash. Swedes who feel ready to commit with real money will have to consider a suitable payment method to fund their live accounts with.

The best brokers on the Swedish market are known to provide customers with a comprehensive range of banking solutions. According to data compiled by the statistics portal Statista, credit and debit cards top the list of Sweden’s most preferred online payment methods in 2019, accounting for approximately 33% of all web purchases during the year.

In line with these figures, most brokers on the local market support deposits with Visa, Visa Electron, Maestro, American Express, Diners Club International, and Mastercard. Swedish traders are keen on cards because using this method is safe, easy, and quick.

Bank transfers are also broadly available across brokerages to the advantage of Swedish traders who do not own a credit or a debit card. While the transfer can be initiated in person at the bank, the more convenient and time-efficient alternative would be to use your online banking account.

Many Sweden-friendly brokers work with third-party payment services companies that act as mediators between their banks and the banks of traders. One prime example is the Swedish fintech company Trustly whose services are also available across other Scandinavian countries like Finland, Denmark, and Norway.

To process a payment with this platform, traders must provide their banking credentials to Trustly, which, in turn, would carry out the money transfer on their behalf. Registration for the service is unnecessary.

Trustly is an incredibly secure way to conduct online transactions and is also regulated by the Swedish Finansinspektionen. A trader can use it as long as they have an account at a supported Swedish bank.

One advantage from the perspective of brokerage firms is that it is impossible to reverse Trustly transactions. This minimizes the risks of the brokerages not getting paid.

Many Sweden-friendly Forex trading providers also allow for payments with Klarna. This method is similar to Trustly in that it enables traders to deposit directly from their bank accounts.

Klarna is extremely popular in the Scandinavian region although its services are also available outside Europe, including in countries like the United States and Australia. E-wallets like PayPal, Skrill, Neteller, and WebMoney are also broadly offered to Forex traders from Sweden.

Popular Trading Software in Sweden

The majority of brokers that accept trades from Swedish customers prefer to utilize MetaTrader 4 (MT4). This third-party trading platform was created by MetaQuotes Software, a Russian company whose main offices are registered in the Republic of Cyprus.

The MT4 software is by and large considered a standard in the trading industry. It manages to retain its user-friendliness while at the same time offering additional functionalities and tools for charting and market analysis.

Also featured on the platform are special programs called Expert Advisors. Users can implement them to explore new trading opportunities based on individual market parameters of their choice. Once an Expert Advisor finds a financial market that corresponds to the stipulated parameters, it either notifies the trader or automatically opens a trading position for them, a practice called automated trading.

MT4 is compatible with all major mobile and desktop operating systems, including Android, iOS, Microsoft Window, and Mac. The platform is available in thirty or so languages, including Swedish. Many brokers offer it concurrently with the more advanced MetaTrader 5 (MT5).

Both MetaTrader 4 and MetaTrader 5 are available via a web-based interface to the benefit of Swedish traders who do not want to download and install additional software packages on their desktop computers.

The Sirix WebTrader, cTrader, and ZuluTrade are other broadly adopted trading platforms traders from Sweden are likely to encounter. Some brokerages prefer to develop proprietary trading platforms but their number pales in comparison to those who use the MetaQuotes software.

Mobile Trading in Sweden

As one of the most prosperous countries in Europe, Sweden boasts a very mature mobile market with a high percentage of mobile subscribers. The country is yet to launch a commercial 5G network. For the time being, Swedish mobile users rely on a rather decent 4G connection with an availability of over 87%. The average 4G speed in the country approximated to 27.64 Mbps in 2017.

Swedes use their smartphones for all kinds of activities, from restaurant-hunting and online shopping to emailing and browsing. Traders from the country are also part of this mobile frenzy. Luckily, most brokers on the local market offer sophisticated apps that enable Swedish customers to carry their trading portfolios in their pockets, so to speak.

The apps are commonly compatible with major operating systems like iOS and Android and offer tons of benefits to local traders. Smartphone users can check their open positions whenever they like and keep a close watch on all price developments. Yet, there is more to mobile Forex apps than trade execution.

The best brokers on the Swedish market provide mobile software that can challenge their desktop platforms in terms of functionalities. Traders have instant access to the latest economic trends and financial news releases.

This is very important because economic news are among the biggest catalysts for short-term market price fluctuations, especially where currency pairs are concerned. Keeping track of the latest news can help you effectively decide what positions to take.

Smartphone traders from Sweden also have access to a variety of helpful tools for market analysis and trend detection. They can customize their advanced charts on the fly and take advantage of different educational resources that can greatly improve their understanding of the Forex markets.

FAQ

1. Can I legally trade on the Forex markets from Sweden?

Yes, trading currencies against each other is perfectly legal in Sweden as long as the broker whose services you are using is authorized. It is recommended to join a broker that operates with a local license issued by the Finansinspektionen (FI). Another viable option is to choose a company licensed in another recognized EU jurisdiction that is bound by the Markets in Financial Instruments Directive (MiFID).

2. What happens if I trade with an unauthorized broker?

From a legal point of view, nothing. Swedes are not prosecuted by local authorities for trading with unregulated brokers so there is no chance of you ending up behind bars. However, you expose yourself and your money to a great risk. It is not uncommon for such companies to scam their customers, deny them payments, offer terrible spreads, and so on. Our advice for you is to stick to authorized firms. We assure you there are plenty of those on the Swedish market.

3. Are VIP accounts available to Swedish customers?

Yes, Sweden-friendly brokers cater to professional Forex traders from the country with the option to set up VIP accounts. Nevertheless, this account type is not available to all Swedish customers. A trader must fulfill specific requirements to be classified as a professional. The qualifying criteria often have to do with previous experience, skill level, and trading volume. VIP accounts usually require significantly higher minimum deposits and offer various privileges like a personal account manager, free trading signals, and improved execution speeds.

4. Which currencies should I focus on as a novice Forex trader?

Beginners are recommended to first master trading with major currencies such as USD, EUR, GBP, JPY, CHF, AUD, and CAD. Respectively, some of the most traded pairs based on these currencies are EUR/USD, USD/JPY, GBP/EUR, USD/CAD, and GBP/JPY, among others. We suggest these pairs because they offer the most liquidity and their movements are the most predictable. Also, there is tons of information and strategy advice about trading these currencies on the Internet. It would be a good idea to focus your attention on one or two pairs in the beginning until you gain enough understanding and experience.

5. I am a beginner with limited capital. How can I start trading on the Forex markets?

Fret not, all you have to do is find a Swedish broker that offers mini accounts, which are perfect for the purposes of building up your trading budget. This account type requires very small initial capital, with minimum deposits typically ranging from $100 to $500. The size of the lots is usually one-tenth of that for standard accounts.

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