Best Forex Brokers in Slovakia

• Some banking methods are exclusive to certain markets
• Could add more currency pairs to its products
• Limited educational materials

Is forex trading legal in Slovakia?

Slovakian traders can rest assured that forex trading is perfectly legal in Slovakia. Under Slovak law, brokers are allowed to target Slovakia-based traders so long as they are licensed to do so. An eligible broker is one whose operations are overseen by either the Slovak National Bank (NBS) or another European regulator. The NBS has also stressed that only licensed companies are permitted to offer financial services and forex trading, in particular. Therefore, unauthorized brokers cannot advertise forex trading to Slovaks, nor can they allow individuals who reside in Slovakia to create an account on their respective websites.

Further details on how Forex Brokers Are Regulated in Slovakia

Financial services providers, including forex brokers, fall under the regulatory remit of the NBS, which oversees their activities under the provisions laid out in Act No 747/2004 on Financial Market Supervision. However, a broker is not necessarily required to obtain a license from the Slovak regulator to legally onboard customers from the country. As we mentioned, Slovakia is a member of the European Union. This means that its forex market is characterized by the rules outlined in the Markets in Financial Instruments Directive II (MiFID II), in addition to the regulations of the Slovak National Bank.

MiFID II has created a unified framework that enables companies licensed in any EU or EEA member state to provide cross-border services through passporting. A broker with a Cyprus license, for example, can legally distribute its products in Slovakia provided it has notified the NBS of its intentions of doing so. EU licensees must comply with a range of requirements in order to be eligible to offer their services to Slovakia-based traders. The said requirements include the provision of negative balance protection, offering investor compensation, automated margin closeouts on rapidly losing positions, the segregation of client funds away from the broker’s own money, and more.

How can I verify that a Slovakia-friendly forex broker is licensed?

If your broker is reputable, this type of information will be provided on its homepage or somewhere else on the broker’s website. In many cases, a separate page will be designated for the listing of all of the broker’s licenses, but certain brokers have also opted to include this information on their frequently asked questions page. If you struggle to navigate a given broker’s website, you may also send a message to the customer support staff via your preferred method of communication and ask them to confirm if the broker is licensed and by which financial watchdogs.

Many supervisory authorities also have comprehensive registers that include each company that offers financial services in their jurisdictions, and this includes the National Bank of Slovakia (NBS). You can also refer to the said registers to confirm that a broker is truthful about its licensing. Be aware that some registers can be a bit harder to navigate than others. If you are lucky, however, your broker will be included in a list that is as simple to use as the one of the NBS. The NBS register enables you to find regulated entities by reference number or business name. Alternatively, you can check the comprehensive register on ESMA’s website which contains all brokers with authorization in EU and EEA member states.

Are my funds safe with forex brokers in Slovakia?

If you take care to not stray from regulated brokers, you will not need to be anxious about the safety of your money. NBS-licensed brokers, as well as those authorized by other trusted regulatory entities, need to adhere to strict security requirements and rules that aim to safeguard clients from fraud.

First and foremost, if a broker is to operate in the European Union, they must adhere to the rules of the European Securities and Market Authority (ESMA), and be licensed by either National Bank of Slovakia or another jurisdiction’s respective regulator. Thus, they will be mandated to segregate client funds in bank accounts not tied to the company’s own funds. Your broker is likely to reassure you of this in its terms and conditions.

As you will learn below, if you are a retail trader, you will also be eligible for negative balance protection. This will serve as reassurance that your balance will not fall below the money you had in your account.

Do brokers in Slovakia provide negative balance protection?

Seeing as Slovakia’s forex trading sector is governed by the rules of the European Union’s financial regulator, negative balance protection is something that all Slovakia-facing brokers must offer to retail clients.

If you are curious as to why, European financial authorities aim to protect clients with this rule. The forex market is among the most volatile in Europe, which means that the risk of negative balance is relatively high. One of the most widely known instances of this occurring happened in 2015 when the Swiss National Bank did away with the Swiss Franc’s peg to the Euro. As a result, the Swiss Franc’s value skyrocketed, and many traders lost far more money than they had had in their balances prior. The event served as a wake-up call of sorts, with regulators eventually deciding to implement negative balance protection as a measure to prevent future issues of the same nature.

However, as you may have noticed, we have not mentioned professional traders thus far. This is because the rules for negative balance protection only apply to retail clients. Basically, brokers do not need to offer negative balance protection to pros, which can be a potential downside for some forex traders.

Do you pay tax on forex trading in Slovakia?

The tax rate in Slovakia can go up to 25% and is dependent on just how much money one is successful in making through forex trading. Do keep in mind that the said gains must be reported to the relevant authorities on an annual basis, and the same applies to capital loss. You can report your taxes in your local tax office, by post, or remotely using the electronic tax form. Traders must register on the Financial Administration portal to file their tax returns remotely. A government-issued ID and an electronic signature are required for this purpose.

What is the available leverage at Slovakia-facing brokers?

Europe’s regulations are quite strict when it comes to the leverage that retail traders can utilize. In general, substantial leverage is tempting to retail clients, seeing as it massive profits.

High leverage is a high-risk, high-reward type of deal, however. When trading with leverage, a user is essentially using their own capital multiplied as dictated by the leverage, with the extra funds being borrowed from the broker. Thus, if the trade results in a loss, the individual stands to lose more money than their own initial investment and be indebted to their broker.

Due to the above-described risk, a limit of 1:30 is imposed on the trading of major forex pairs. If you wish to trade minor pairs, the limit is even stricter: 1:20. These are the limits that France, Italy, and even the UK adhere to. There are some jurisdictions where higher privilege is permitted, with the US (1:50) and Poland (1:100) being the prime examples.

If the limits in Slovakia sound too restricting, you could consider becoming a professional trader. This way, you would be able to trade both major and minor forex pairs with a leverage of up to 1:500 at most Slovak-facing forex brokers.

What do you need to qualify to be designated as a professional trader in Slovakia?

Becoming a professional trader comes with a number of perks, the main one being more freedom in terms of how large of a leverage one can choose to trade with. Thus, you might be eager to try to create a professional trading account or upgrade your existing one.

Becoming eligible is not exactly easy, but the good news is that you basically need to meet two out of three total requirements. The first one is to have a substantial financial instrument portfolio. The specific threshold given is €500,000, which means that your portfolio will need to be larger than €500,000 if you plan on becoming a professional.

If your portfolio does not quite meet the above requirement, you have two more potential options. Namely, if you have traded derivatives that were large, and you have done so ten times per quarter over the previous four quarters, you will be one step closer to becoming a professional trader. Finally, you may also be eligible for a professional account if you have worked in the financial sector for at least a year.

What trading platforms are available to Slovak traders?

There are plenty of factors that can practically make or break a forex broker, and its platform is certainly one such aspect. In fact, many would argue that the platform is the single most important feature of a broker, although, of course, things such as a broker’s security and its deposit methods are also crucial.

Thankfully, this is an area that most Slovakia-facing forex brokers tend to excel at, although brokers often go different routes in terms of which platform they pick exactly. MetaTrader 5 and its predecessor are the first platforms Slovak traders might encounter, and any experienced traders will be familiar with both. Other platforms that are popular in the trading scene include cTrader and NinjaTraver.

Some Slovak traders might also come across brokers that have decided to provide clients with proprietary software. Typically, most brokers have their own platforms that also offer industry staples as well, although there are also some that only provide their own platforms and no other options.

Which platform you will be able to utilize will be strictly reliant on the broker you have chosen to go with. This is why, when picking an online broker, you must take its selection of platforms into consideration before you settle.