One of the most popular activities that have a high demand in the South African market is forex trading. This investment type is legal and the South African traders are completely protected by FSCA (Financial Sector Conduct Authority).
In this article, we will figure out what is Forex, how it works, and what are the advantages of forex trading South Africa.
What is Forex?
Forex trading is the process of exchanging one currency for another. The forex market is different from other markets because there is no central place where people can trade currencies. Instead, the market is affected by different events, like when a government changes a law or when there is an economic problem in a certain country.
The biggest advantage to Forex trading is that the market is open 24 hours a day, 5 days a week, which means that people in different time zones can trade without worrying about when the market is open.
Even though the Forex market operates all day long, it is more active during certain times. The highest volume of trading generally happens when the London and New York stock markets overlap. That is when Forex traders are most active. Keep in mind that South Africa is in about the same time zone as London, so you can take advantage of these market openings during regular working hours.
How to start forex trading in South Africa?
The steps below can serve as a good starting point for beginner traders. Here are they:
Search the brokerage company – be sure the broker is regulated and offers efficient tools and trading platforms to trade.
Open and fund the account – up next you need to open an account and connect your bank account with it. Most brokers offer demo accounts where you can trade virtual money, in case of any doubts. When you will be ready to trade with real money, fund the account and start.
Choose a currency pair – the most common currencies that take part almost in every trading deal are the US dollar, the Euro, and the Japanese yen.
Choose and download a trading platform – A trading platform is a computer software every trader needs to carry out deals. The most popular ones are Metatrader 4, Metatrader 5, NinjaTrader, etc..
Open a position and start trading – once the steps above are realized, you can already open a position and start the trading process.
The advantages of forex trading
Financial independence – the most obvious advantage is that by trading forex you can reach financial independence through creating passive income.
Leverage – leverage that is offered by forex traders gives the opportunity to open large positions and get high profits.
Low initial deposits – forex trading is considered a low-cost investment. Brokers may require 100$, as well as 10 or 15 $ as an initial deposit, which is very beneficial for those that don’t want to spend too much money.
Forex trading is a great way to make money, but as in any other investment type, there is a risk involved. So to wrap it up, we would like to add that it is never surplus to make sure the risks are managed and there is nothing to interfere with an efficient trading process.
Good luck with all your financial goals and achievements!