Currency pairs from all around the world are traded on the Forex market, which is also known as the FX market. The foreign exchange market (Forex) is incredibly alluring since it is one of the most liquid markets in the world, with average daily transaction amounts topping $5 trillion.
Any foreign exchange broker licenced by the Financial Sector Conduct Authority (FSCA) to provide Derivative products to South African clients may be used by South African citizens to engage in legal foreign currency trading. Here, we show you how to start trading Forex successfully in South Africa.
Sign up with a regulated South African broker
The first step is to open a trading account with a South African broker that is well-regulated by the Financial Sector Conduct Authority (FSCA), which is the primary financial regulator in the country.
Trading with a South African broker with a ZAR account means that you can enjoy faster deposits and withdrawals, and that you won’t have to pay currency conversion fees.
Research different broker offerings
Check out the broker’s product selection to see what options you have. When a broker also engages in the trading of securities and commodities, for example, you can assume that they have access to a larger pool of customers and more resources.
However, caution is warranted while reading reviews. Even though they should know better, some brokers will post positive ratings about themselves on review sites. Even though testimonials might give you a feel for a broker, you should always take them with a pinch of salt.
Start analysing the market
Looking at charts and/or prior data, technical analysts can make predictions about the future direction of a currency’s value. Most charting platforms, including Metatrader 4, are freely available through your broker, and you may also request charts from them.
You can use what you learn about a country’s economy from a fundamental analysis to guide your trading.
Finally, sentiment analysis relies heavily on personal judgement. To determine if the market is “bearish” or “bullish,” you look at a variety of indicators and trends. Market mood is difficult to predict, but you can usually make educated guesses that will help you make profitable trades.
Decide which currencies you want to trade
Forecast the economy’s future performance when deciding which currencies to trade. Since a weakening economy is bad for the value of the dollar, those who think the U.S. economy will continue to decline may wish to trade dollars for the currency of a country with a healthy economy.
Investigate the economic standing of a country. If a country is rich in exportable items, its economy will thrive. The country’s economy, and hence its currency’s value, will grow as a result of this trading advantage.
Learn how to calculate your profits
The difference in value between two currencies is expressed in terms of “pips.” One pip is the standard unit of measurement for currency fluctuations. A ten-pip gain in the value of your currency would be represented as a change from 1.546 EUR/USD to 1.547 EUR/USD, for example.
Simply multiply the pip change in your account by the corresponding conversion rate to get the total amount of money you’ve gained or lost.