Traders in South Africa have plenty of opportunities for profit. Forex use in the region is growing fast. Here is what the local system offers.
Opportunities for Trading Forex in South Africa
Recently, the African continent has seen a rapid spread of forex. International brokers are tailoring their services to the local needs. The army of retail traders is estimated to include roughly 200 thousand people. The industry is only growing thanks to rapid internet penetration. Here is an overview of the core services offered by forex brokerages.
Fruits of Technical Progress
Today, it seems every aspect of human reality has been digitized. We are used to ordering goods and services online. Remote employment schemes mean earning from the comfort of one’s home is just as feasible as spending. Investing and trading instruments have also undergone a makeover.
Any individual may access global financial markets through the internet. All they need is a platform, a brokerage account and minimum deposit. This convenience does not render Forex trading devoid of risk, but modern software has quite a few tools that limit it.
In the fall of 2019, Bloomberg reported on an incredible surge in foreign currency operations. The market had surpassed the 6-trillion-dollar volume. Daily transactions on the global exchange were estimated to reach 6.6 trillion. In comparison, the stock market looks pale with its 84-billion figure.
The Logic of Currency Trades
There are major, minor and exotic pairs available. Usually, the first category includes valuations against the US dollar — for example, EUR/USD. Minor pairs include combos like AUD/CAD (Australian dollar against the Canadian dollar). Exotics include money of emerging economies, such as USD/TRY (US dollar against the Turkish Lira). Classification may vary slightly from broker to broker.
The value for each pair reflects how much the first (‘base’) currency is worth if valued in the second (‘counter’) currency. For instance, in the USD/TRY case, we see how many Turkish Liras one US dollar is worth. Each pair has two interrelated values — Bid (price for the seller) and Ask (price for the buyer).
The goal of any trade is to profit from changes in exchange values. These are always in flux, as they depend on a wide range of factors, both micro- and macroeconomic. For instance, a trader will buy a currency while it is cheap and sell it later, when the value is higher. Correct timing is achieved through analysis of market trends.
Those who lack time or experience to open positions on their own may take advantage of copy trading schemes. This system is based on delegation. Here, the strategy of a chosen strategy manager is replicated in the client’s account.
Importance of Brokerage
Broker firms provide a connection to the vast marketplace. These intermediaries register accounts, provide software, ensure support and guidance. Local brokers in South Africa are subject to strict licensing rules.
Established global brands are also reachable, and their interest in the region is only growing. Since the tightening of financial regulations in the EU, many European firms have set their sights on the South African market.
While trading is risky by nature, the wrong choice of brokerage could cause substantial harm. This is especially true for Nigeria, where regulations are essentially non-existent. In South Africa, it is also possible to encounter fraudulent websites. These are set up for monetary and information theft. Reliable companies have oversight from regulatory authorities, such as CySEC.
Training and Support
Global brokers mostly rely on MetaTrader 4 and MetaTrader 5 as digital trading environments. Both platforms are provided free of charge and work with Windows and Mac. The software has multiple embedded tools that facilitate decision-making. They allow even the most hurried day traders to keep track of momentary changes in market pricing.
Novices are advised to practice strategies in the demo mode before making a deposit. Demo accounts are easy to register, and they unlock the platform in a simulation mode. Here, rookies may open and close position, adjust risk management instruments, and analyse graphs. Once the training phase is completed, switch to a live account becomes sensible.
Deposit and withdrawals are made through a variety of means. From credit cards to Skrill, a licensed broker will ensure safe and secure transactions. Finally, registered traders take advantage of rewards and bonus schemes, which makes the activity even more profitable and exciting.
More Opportunities to Explore
Modern trading platforms accept diversified portfolios. Aside from currency pairs, one may trade stocks of major companies and multiple derivatives. These include binary options and Contracts for Difference, which are tied to underlying assets. Diversification increases potential average returns and decreases overall risk.