South Africa has a population of more than 50 million people. This population, as well as the nation’s growing economy, has made forex trading a preferred option among the traders. As it is known, choosing a reliable and trustworthy broker is one of the most important tasks when it comes to trading, especially in the case of beginners. However, there are some other elements too, that you need to be aware of, if you want to get into trading, such as taxation and regulations of the country.
Forex trading in South Africa
The first thing you need to do before you get into trading is studying the forex market to understand it better. The forex market is entirely different from any other market in the world. It opens at 5 p.m. EST on Sunday and closes at 5 p.m. on Friday. The daily turnover of this market is $5 billion on average. All traders need to first understand the dynamics of the market and then take steps to start trading.
How to Select your Forex Broker
It is of utmost importance to select the right broker. Choose a broker after considering these factors:
- Trading platform: Some forex brokers offer their own proprietary trading platforms. They also allow customers to trade on MetaTrader 4 and 5 trading platforms. If you are experienced enough, then you can choose a software package fulfilling your needs. Traders with limited experience should first learn trading on MetaTrader platforms.
- Regulation: Make sure to choose a broker regulated by major regulators like the South African FSCA, U.K. Financial Conduct Authority (FCA), U.S. National Futures Association (NFA), Cyprus Securities and Exchange Commission (CySEC) and Commodities Future Trading Commission (CFTC).
- Leverage: The leverage ratio represents the position size that can be held with one unit deposited in the account. For example, if the leverage ratio is 50:1, then the trader can control a position worth $50 with $1 only. The leverage ratio depends on the location and regulation agency of brokers.
Open Your Forex Account
The operations of many forex brokerages are based in South Africa. Traders can also open their accounts with internationally based forex brokers. However, you need to choose one that is regulated by the FCSA and accepts South African clients. If you are a South African trader and want a local broker, take some time and study the reputation of the broker among other traders. You can visit forex websites and forums to read their reviews. For example, you can choose Plus500. Plus500 is a well-known broker in South Africa and quite popular among the beginners. Once you have found your broker, you can open an account. It is a wise decision to open a demo account first if you are a beginner and learn the tricks of trading before you start full-fledged trading.
After opening your trading account, you are all set to start online forex trading. To start trading, you need to come up with a forex trading strategy that works. Keep in mind that you will lose more money than earning profits if you do not develop a plan of action. The forex market is very volatile, so it is essential to choose a trading plan with money management principles. Trading leveraged positions is a great option as it allows the trader to make more money. However, doing this can result in your account getting depleted quickly if you get on the wrong side of a market that is moving fast. Thus, it is important to use stop-loss orders. It will help you to avoid losing the entire deposit.
Forex trading is indeed complicated, so you need to have the right knowledge and experience in the forex market. Choose the best online brokerage and be a part of the growing forex industry in South Africa.