Sweden, located in Northern Europe, is a wealthy Scandinavian country with a developed market economy that benefits from the export of resources such as iron ore, hydroelectric power and forestry, which are worth a third of the country's gross domestic product (GDP).

Sweden became a member of the European Union in 1995, but still uses the Swedish krona (SEK) as its official currency. The Swedish krona is a strong performer in the global foreign exchange market, accounting for 2.2% of total foreign exchange market trading volume as of 2016. Since 1992, the krona has floated freely against other currencies, with Sweden's central bank, Sveriges Riksbank, intervening when necessary to stabilize the exchange rate.

However, despite Sweden having one of the most active trading scenes in the industry, there are very few brokers that are actually from Sweden. Most of the foreign exchange companies that have operations in Sweden are actually registered in other jurisdictions, but operate within Sweden after obtaining authorization from the financial regulator.

Swedish foreign exchange legislation

Forex brokers can legally accept trades from Swedish residents as long as they are licensed by the Swedish financial regulator, the Swedish Financial Supervisory Authority (Finansinspektionen). As part of the European Union, Sweden aligns its regulatory framework with the Markets in Financial Instruments Directive (MiFID), which unifies financial services regulations across all EU member states.

Under this legislation, brokerage firms licensed in an EU country can legally serve clients from all other member states. Therefore, some companies operating in the Swedish market are actually licensed and registered in other countries such as Cyprus or the United Kingdom.

Swedish residents can legally trade spot forex, but it is also possible to buy contracts for difference (CFDs) from authorized brokers. In July 2019, Sweden adopted the guidelines proposed by the EU financial regulator ESMA under MiFID. Under the new rules, licensed derivatives providers must meet several conditions.

Brokers licensed in the Swedish market can sell leveraged CFDs on forex currency pairs, stock indices, stocks, and hard currencies such as gold. Under the new measures, retail clients must pay initial margin protection when entering into CFDs.

Clients can also enjoy negative balance protection for each account. When a trader's balance becomes negative, the licensed broker must restore it to zero without charging additional fees. Professional traders do not enjoy negative balance protection.

Another measure gives retail clients margin closeout protection. Thus, if a client’s account balance falls below 50% of the minimum initial margin, the broker must close its open positions to prevent the margin from falling to zero. Clients have the option to top up their balance if they wish.

Licensed brokers operating in the Swedish market must also display a standardized risk disclaimer on their website. This is to alert retail clients to the risks involved with leveraged products such as CFDs. Brokers must also regularly calculate the percentage of losses their retail clients have incurred when trading with leveraged products and publish updated results on their website.

The maximum leverage that retail clients can use is also capped, in line with the limits proposed by EU regulators. The limits depend on the volatility of the underlying asset and are as follows: 30:1 for major FX pairs (including USD, EUR, JPY, GBP, CHF and CAD), 20:1 for minor/exotic currency pairs, major indices and gold, 10:1 for other commodities and non-major indices, 5:1 for individual stocks, and 2:1 for криптовалюты.

Similar to other EU countries regulated by ESMA, Sweden limits the promotional incentives that brokers can offer to local retail CFD traders.

Swedish Financial Regulator

Sweden’s financial regulator is Finansinspektionen (FI), which stands for Swedish Financial Supervisory Authority in English. FI was established in 1991 and is headquartered in Stockholm, the capital of Sweden, and reports to the Ministry of Finance.

FI was established to create a unified financial regulator covering all financial sectors such as banking, securities and insurance. It was formed by the merger of two former regulatory entities, the Insurance Supervisory Authority and the Swedish Banking Inspection Authority. FI has a board of eight members appointed by the government.

The authority is responsible for supervising all organizations that provide financial services in Sweden, including forex brokers. FI is also responsible for ensuring the stability of local financial markets and that all market participants comply with its guidelines.

It works to ensure that there is adequate protection for consumers using financial products such as forex. FI also issues licenses to brokers who wish to provide services within Sweden. The agency has been known to crack down on companies that are not authorized to serve Swedish customers.

Since Sweden is a member of the European Union, it allows foreign brokers with licenses from other EU regulators to offer their products to the local public. The same can be said for FI-authorized companies.

Swedish Forex Payment Methods

All Sweden-friendly brokers offer a variety of trading account types for local clients, including Mini, Micro, Standard, and Professional accounts. Most account types can be tested with virtual credit, and Swedes who are ready to trade with real money will need to consider suitable payment methods to top up their actual accounts.

The best brokers on the Swedish market offer comprehensive banking solutions. According to statistics portal Statista, credit and debit cards ranked as the most popular online payment method in Sweden in 2019, accounting for about 33% of all web purchases.

In line with these data, most local brokers support deposits using Visa, Visa Electron, Maestro, American Express, Diners Club International, and Mastercard. Swedish traders prefer to use these cards because this method is safe, simple, and fast.

Bank transfers are also widely available among brokers, making it convenient for Swedish traders who don't have credit or debit cards. While it is possible to initiate a transfer in person at a bank, a more convenient and efficient alternative is to use an online bank account.

Many Sweden-friendly brokers work with third-party payment services that act as intermediaries between their bank and the trader's bank. A prime example is Trustly, a Swedish fintech company that also covers other Scandinavian countries such as Finland, Denmark and Norway.

When processing payments through the platform, traders must provide their banking credentials to Trustly, which will then make the funds transfer on their behalf. Signing up for the service is not necessary. Trustly is an extremely secure way to trade online and is regulated by the Swedish Finansinspektionen. It can be used as long as the trader has an account at a supported Swedish bank. From a broker's perspective, Trustly transactions cannot be reversed, which reduces the risk of the broker not receiving the payment.

Many Sweden-friendly forex trading providers also allow payments using Klarna. This method is similar to Trustly, allowing traders to deposit directly from their bank accounts.

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

Popular Trading Software in Sweden

Most brokers that accept Swedish clients tend to use MetaTrader 4 (MT4). This third-party trading platform was developed by MetaQuotes Software, a Russian company whose main office is registered in the Republic of Cyprus.

MT4 software is widely considered the standard in the trading industry. It remains user-friendly while offering additional features and tools for charting and market analysis.

Special programs called expert advisors are also available on the platform. Users can explore new trading opportunities based on market parameters of their choice. Once an expert advisor finds a financial market that meets the specified parameters, it notifies the trader or automatically opens a trading position for it, a practice known as auto-trading.

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

Both MetaTrader 4 and MetaTrader 5 are accessible via a web-based interface, which is a great benefit for Swedish traders who do not wish to download and install additional software packages on their desktop computers.

Sirix WebTrader, cTrader, and ZuluTrade are other widely adopted trading platforms that Swedish traders may come across. Some brokerages tend to develop proprietary trading platforms, but their number is nowhere near as high as that of brokers that use MetaQuotes software.

Mobile Trading in Sweden

Most brokers in the local Swedish market offer sophisticated apps that allow Swedish clients to take their trading portfolios with them on the go, often compatible with major operating systems such as iOS and Android, and offer a number of benefits to local traders. Smartphone users can check their positions at any time and keep a close eye on all price developments. However, the functionality of mobile forex apps is not limited to trade execution.

The best brokers in the Swedish market offer mobile software that is comparable in functionality to their desktop platforms. Traders have instant access to the latest economic trends and financial news releases.

This is very important because economic news is a major catalyst for short-term market price movements, especially when it comes to currency pairs. Keeping track of the latest news can help make effective decisions about what positions to take.

Smartphone traders from Sweden can also access a wide range of tools that aid in market analysis and trend detection. They can instantly customize advanced charts and take advantage of a wide range of educational resources that can greatly enhance their understanding of the forex market.

FAQ

Is it legal to trade forex in Sweden?

Yes, it is completely legal to trade currency pairs in Sweden, as long as the broker you use is authorized. It is recommended to choose a broker that operates under a local license issued by the Swedish Financial Supervisory Authority (Finansinspektionen, FI). Another viable option is to choose a company licensed in other recognized EU jurisdictions that are subject to the Markets in Financial Instruments Directive (MiFID).

What happens if you trade with an unauthorized broker?

From a legal perspective, there is no problem. Swedes cannot be prosecuted by local authorities for trading with unregulated brokers, so you don't have to worry about being sentenced. However, doing so puts you and your funds at great risk. Such companies often defraud customers, refuse to pay, offer poor spreads, and more.

Can Swedish customers have VIP accounts?

Yes, Sweden-friendly brokers offer VIP account options for professional forex traders from the country. However, this account type is not available to all Swedish clients. Traders must meet specific requirements to be classified as professional traders. Qualification criteria are usually related to previous experience, skill level, and trading volume. VIP accounts usually require significantly higher minimum deposits and offer various perks such as personal account managers, free trading signals, and improved execution speeds.

Which currencies should new forex traders focus on?

It is recommended that beginners first master trading in major currencies such as the US dollar (USD), euro (EUR), British pound (GBP), Japanese yen (JPY), Swiss franc (CHF), Australian dollar (AUD), and Canadian dollar (CAD).

Accordingly, the most popular trading pairs based on these currencies include EUR/USD, USD/JPY, GBP/EUR, USD/CAD, and GBP/JPY. These currency pairs offer the best liquidity and their price movements are the most predictable.

How can beginners start forex trading with limited funds?

Don't worry, just find a Swedish broker that offers a mini account, which is perfect for building up a trading budget. This account type requires very little initial capital, with the minimum deposit typically between $100 and $500. The trading unit size is typically one-tenth that of a standard account.