Trade Forex With Your SIPP Or SSAS

Trade Forex With Your SIPP Or SSAS

Forex (or FX), the foreign exchange market, is the world’s largest financial market, and you can trade forex from within your SIPP or SSAS

As A Number Of SIPPclub Members Trade Forex With Their SIPP And SSAS Money, Watch The Video For An Introduction To The Forex Market

A Definition Of Forex

Forex is a market in which participants are able to buy, sell, exchange and speculate on currencies. Forex markets are made up of banks, commercial companies, central banks, investment management firms, hedge funds, and retail forex brokers and investors. The forex market is considered to be the largest financial market in the world.

As currency markets are large and liquid, they are believed to be the most efficient financial markets. The forex market is not a single exchange. It’s constructed of a global network of computers connecting participants from all parts of the world.

The Forex Market Allows You To Buy And Sell Money

Although it doesn't get as much media attention as the stockmarket, the forex market is the largest financial market in the world, with over $4 trillion worth of transactions occurring every day.

Trade is conducted through a lot of individual dealers or financial centres. The forex market is open 24 hours a day, five days a week, and currencies are traded worldwide among the major financial centres of London, New York, Tokyo, Zurich, Frankfurt, Hong Kong, Singapore, Paris and Sydney.

With the constantly improving technology for trading, dealing in currencies is now more accessible than ever. In the past, the forex market was the domain of government, or companies with a lot of money. However, with the wide spread access to the internet, firms now offer the ability for anyone to open accounts to trade currencies. All you need is access to the internet.

In the UK, firms that offer forex trading accounts have to be regulated by the Financial Conduct Authority.  As far as SIPPs are concerned, it’s up to your SIPP operator to decide whether it will permit you to trade forex with your SIPP money. 

How You Make or Lose Money Trading Forex

By converting your money into a different currency, you are hoping that the new currency increases in value. When you convert back to your initial currency, ideally you will have more money than you started with.

You have $900 US Dollars (USD) and you exchange it for $1,000 Canadian Dollars (CAD). One week later, the CAD/USD exchange rate goes up from 0.90 to 1.0.  Your Canadian Dollars have increased in value compared to US Dollars.  If you exchange your $1,000 CAD back into USD, you would receive $1,000 USD.  You started with $900 USD, you now have $1,000 USD, producing a profit of $100 USD.

Of course, if the price of Canadian Dollars falls, you lose money.  It’s no different from buying stockmarket assets that rise and fall with market movements.  The example does not include the broker’s fee.

Five Reasons Why The Forex Market Is Different From Other Markets

1. Fewer Rules

Unlike the trading of stocks, futures or options, currency trading does not take place on an exchange with rules, like the New York Stock Exchange. It is not controlled by any central governing body, and there are no clearing houses to make sure the party you are buying the currency from actually pays up. In fact, if you had exclusive information, and used it to make a lot of money, legal issues would not arise, like they would it in the stock market.

2. No Commissions

There are no exchange, brokerage or clearing fees in the forex market. Instead, brokers make money on the difference in the price you pay to buy, or the amount you receive when you sell currencies.

3. Trade Whenever You Want

Forex markets are open 24 hours a day, five days a week, so if you are a night owl or early riser you can set your own trading schedule.

4. No Limit To How Much Currency You Can Buy

If you had £1 billion you wanted to sell, you could do it.

5. Easy to Get In and Out

You can buy and sell currencies with the click of a button, instantaneously. The market is so large that you will never be stuck if you wanted to sell or buy a stockpile of currency.

Trade Forex With Your SIPP Or SSAS

Very few SIPP operators will allow you trade forex with your SIPP money because of the high level risks involved.  However, several SIPPclub Members do exactly that using a full SIPP.

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AJ Bell Is Often The Best Value SIPP For Stockmarket Assets

That's our opinion.  Not just because AJ Bell was the first company to offer an online SIPP.  Nor that it's received many prestigious awards.  And not even because the wife of SIPPclub's Founder has an AJ Bell SIPP.  It's because it's one of the most competitive stockmarket SIPPs on the market. 

Over time, charges can wipe out a huge part of your fund.  We like AJ Bell because there are no set-up costs.  If you hold passive funds, which is our preference, or shares, investment trusts, EFTs, gilts or bonds, you pay one small fixed fee no matter how large your fund.  And when you come to draw your benefits either as occasional drawdown or UFPLS payments, there's a small charge for the whole year no matter how many times you access your money (many SIPP and SSAS providers charge more than this for each payment).  However, you should always compare charges in detail, because AJ Bell could be more expensive than other providers, depending on the type of stockmarket assets you hold.

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As SIPPclub neither advises on, nor arranges, nor recommends specific investments or strategies, we're unable to say whether a SIPP or SSAS or any investment within it is right for you. Ultimately, it’s your money and your decision, and you should only proceed once you're satisfied you've undertaken sufficient due diligence. If you need advice, you should speak to your trusted adviser, or you could find a local adviser from Unbiased.co.uk.  Alternatively, we'd be pleased to introduce to a suitably qualified independent financial adviser.

Please read our full Terms which includes criteria for SIPPclub membership.

Trading derivatives including Contracts for Differences (CFDs), Futures and spread betting carries a high level of risk to your capital, and is not suitable for all investors. Only speculate with money you can afford to lose. Trading or placing any bets can result in you incurring liabilities in excess of your initial stake. However, in the case of investment made from your SIPP, you are guaranteed not to lose more than the amount you invest.  Please ensure you fully understand the risks, and seek independent advice if necessary. Past performance of a managed service is not a guide to future performance.