Forex Trading: What Is Forex (FX) Trading? Best Currency Trading Guide for 2019
Forex traders in South Africa can now find useful information through our website Forex Trading South Africa. We pride ourselves as one of the most reliable and trustworthy independent reviewer of Forex brokers in South Africa.
What exactly what do we do? We provide useful information about everything you need to know about currency trading. Our goal is to provide all the details you need to know about Forex.
Best Forex Trading Sites
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FSB in South Africa
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FSB in South Africa
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FSB in South Africa
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FSB in South Africa
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FSB in South Africa
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FSB in South Africa
What is Forex?
Forex or FX stands for Foreign Exchange (Exchange Currencies). It is the world’s most traded market, with turnover of $5.3 trillion per day.
What is forex trading?
Forex trading is the act of you buying foreign currency at bid price and selling it at higher price in future to make profit. Forex Market is the place where one can trade in currencies. Price of one currency is always determined in another currency because you always buy one currency using another currency. You trade in ‘currency pair’ in a form of CFD Trading, where CFD is speculation on the asset value. Example of a currency pair is ZARUSD or GBPUSD. It is a Standardized Currency Code.
Forex Trading Regulations in South Africa
Many people became aware of the forex market since the initial start-up of the internet. However, South Africa started participating in foreign exchange about 17-years ago.
During this time, there were no regulations or institutions such as FSB that prohibited people or companies to start their own forex trading companies. This led to forex investors and traders losing millions due to fraud. To make sure that forex traders do no lose their money, regulations were established to prevent fraudsters from scamming people. Regulators also make sure that brokers follow the law and they provide insurance for the traders’ funds.
The Financial Services Board (FSB) is the institution that protects South Africans in the non-banking financial sector. When you choose a broker, you are advised to always check the FSB Financial Service Providers list to see if your broker is regulated and for what instruments.
If the selected broker is not regulated by the FSB, check if it’s regulated by another regulator such as the FCA (United Kingdom), CySEC (European Union) or ASIC (Australia).
Forex Market Trading Hours
Forex trading hours in South Africa, Forex works 24/7 and 5 days a week except for the weekends. The main trading centres are in New York, Tokyo, Hong Kong, Paris, Sydney, Frankfurt, Zurich, London and Singapore. However, banks across the globe also participate in trading.
- Sydney Open – 07:00 AM Sydney Close – 4:00 PM (US Time) – 08:00 AM in SA
- London Open – 08:00 AM London Close – 4:00 PM (US Time) – 06:00 PM in SA
- Tokyo Open – 09:00 AM Tokyo Close – 6:00 PM (US Time) – 10:00 AM in SA
- New York Open – 08:00 AM New York Close – 5:00 PM (US Time) – 11:00 PM in SA
How to start Forex Trading
How to start trading Forex? Before you begin trading, you need to decide which currency pair you wish to trade. There are over 65 currency pairs to choose from. You then decide on the type of FX trade, whether CFDs, Commodities or Forex. After you have decided what you want to trade, you can buy or sell currencies.
Forex is traded in pairs, this of USD / ZAR, USD is the base currency and ZAR is the quote currency. For example, One US Dollar costs R13.41. Imagine you buy 1 000 US Dollar and you pay R15 910 ZAR. Later that day, the USD rises. When you close your position by selling the USD 1 000, you will receive ZAR 16 160. Meaning you will receive a profit of ZAR 250.
But imagine if the USD decreases later that day, when you close your position by selling the USD 1 000, you will then receive ZAR 15 660, losing ZAR 250.
Reasons to Trade Forex
- When you trade currencies, brokers make sure that they give you powerful currency trading platforms. You can trade currencies manually or use automatic trading.
- Most brokers are internationally regulated online forex trading companies, so you can trade peacefully.
- Trade leveraged trading up to 400:1 leverage on popular traded currency pairs such as USD / GBP or USD / EUR
- You get a chance to trade more than 60 currency pairs. You can trade major, minor and exotic currency pairs.
- Trade with low spreads
- Most brokers offer demo accounts for practice, as well as free manuals for forex education.
- You also get to choose from a wide variety of languages
- Guaranteed 24 hour, 5 days a week multi-lingual call centre customer service
- You can open a trading account with any of the above mentioned SA regulated brokers.
Types of Forex Trading Accounts
- Demo accounts – Demo or practice account, uses fake or virtual money. Demo accounts are for training purposes. If you are a forex beginner, you need to practice with demo before trading with real money.
- Cent Accounts – have a minimum deposit of $5 (+/- R80), Spreads from 1.5.
- Standard Accounts – have a $100 minimum deposit (+/- R 1,400), Spreads from 1.3.
- Micro Accounts – require a minimum of $100.
- Mini Accounts – this type of accounts does not require clients have a minimum amount. Some brokers recommend mini accounts for beginners. It has loose spreads.
- ECN Zero Accounts – require a minimum deposit of $500 and provide 0-pips spreads in exchange for transaction fee. Some experts don’t recommend this type of forex account for beginners; only experienced traders with sizable assets can choose it.
- Premium Accounts – have a $2,500 minimum deposit. Premium accounts give traders access to a wide range of expert advisors and auto-trade benefits.
- VIP Accounts – require a minimum deposit of $20,000 or more.
After you have decided which forex account you wish to choose, you can sign up an account with a broker. After signing up, the broker will verify your information through a phone call and you will also be required to submit supporting documents such as copy of your ID.
How to open a forex trading account in South Africa?
Before you open a live forex trade account, you need to understand how forex and market analysis work. You need to understand that the currency market here might be different from another country. Here, trade forex involves taxation. The South African Revenue Services (SARS) taxes trading profits for forex traders who trade in SA and make regular profits. According to SARS, Tax rates range from 18% to 42% depending on the amount of profits generated and other factors relating to each individual’s tax status.
You also need to have knowledge about the regulation in your jurisdiction. Brokers in South Africa are regulated by the South African Financial Sector Conduct Authority (FSCA), which is is responsible for market conduct regulation and supervision. Forex brokers, who are licensed and regulated by the FSCA, are not permitted to give clients’ information to third parties and are required to maintain trader funds in separated accounts.
How to trade Forex in South Africa?
You need to understand the foreign market before you start trading forex. The market opens 5 days a week from 5pm EST on Sunday until 5pm EST on Friday. Below are steps to take before you begin to trade currencies:
Step 1: finding the right forex broker
With the help of the best brokers, you can run trading strategy smoothly, both in technical analysis or fundamental skills. But you also could end in failure if the broker you choose turns out to be of poor quality. Characteristics of a good Forex broker is not rigging its clients. To find out which cheating broker, you can see from regularity and by trying to trade on demo accounts.
For new traders may be more important is using the demo account to practice your trading skills. If you are a new trader, remember to start your trading experience only with a demo account! You certainly don’t want to want to lose money because of the first error, isn’t it?
Step 2: learn the basics of forex
If you’ve found the appropriate forex broker, then it is time to shift the focus of information about forex. You can get it easily from sites provide a variety of information.
There are many articles and websites dedicated to the basics of forex, you need to do is simply type in Google about “the basics of foreign exchange market”. You will find everything you want, even more. This step should not be taken lightly, as it tries to trade without understanding how the market works is extremely risky.
Step 3: forex education
Forex education is like no other education. The subject of forex education market is very messy, so that education about it also likely fared the same. There are no fixed rules in foreign exchange market movement, otherwise it is unstable and likely to be dynamic.
To be successful you have to learn new things about forex regularly and continuously. Try to read many books, articles, and hear the opinions of other traders. The more learning, then you will be more educated and experienced.
Step 4: develop a forex strategy
When learning you will be satisfied with seeing and trying other people’s strategies or even follow signals given other currency traders. But remember, your goal is actually to be able to develop its own strategy. In order to do so, not only needed repair for one hour only. You will be obliged to follow the development of trading and the forex market day by day. Thus you will not only create new strategies, but also able to repair if the error and failure when trading currency.
The improvements should continue to do until you find the most appropriate strategy. After the strategy is found and the system is fixed, then it’s time to enjoy your currency trading results. Furthermore, forex will be a real pleasure, which leads to your financial freedom today and in the future.
Forex Trading FAQs
Get answers to the most frequently asked questions about Forex Trading
What are forex rates?
In the currency exchange world the pairing of the currencies is conferred as a rate that reflects the magnitude relation between the values of the 2 currencies. Take for an example, the rate for buying the pair USD / ZAR is 1.00, that is R1 = 0.071 United States Dollar ($).
What is the best stock trading website for beginners in Johannesburg?
Well, we only recommend the ones listed on our site. They are more trustworthy and reliable. You can also use their demo forex accounts to practice using virtual money before using real money.
What is online trading and how does it work?
Buying and selling stock or anything online is referred to as “online trading”. Brokers buy and sell stock online through forex investment and they charge people a commission. To become a forex broker, you need to have a license that permits you to trade stock through exchange.
Is it safe to trade online in South Africa?
Yes, it is safe to trade currency. In fact, make sure that the broker’s website is secured with an SSL Certificate to avoid your information being stolen or leaving your sensitive information on the website. Nonetheless, we recommend you trade with trusted trading companies. Do your research to find out if the company is legit and not just some online scam.
Is currency trading in South Africa legit?
Currency trading is real and legal in RSA. However, some people come up with scams online. Forex market regulators work day and night to eliminate scammers who rob people their hard earned money through foreign exchange investment.
Is currency trading legal in South Africa?
It is legal as long as you follow the laws and regulations of the forex markets to avoid money laundering and you provide your income tax.
What is a binary options broker?
Binary options broker is a person or a company that runs a financial option whereby the payoff is either some fixed economic amount or nothing at all.
Is Binary Options a gamble?
Binary options in some parts of the world are seen as a form of gambling. Some binary brokers and outlets have been exposed as scams. Some parts of financial investments regard binary option as a high-risk.
How do I start investing with little money in Forex market?
Well, it’s easy, start by saving every month. Avoid spending your money on unnecessary things. Save with a goal in mind. When you are done saving money, use your savings. Begin to trade currency or binary options little by little. There’s no rush, take your time to avoid risks. This saving strategy works better for forex for beginners.
How much money do I need to start forex trading in SA?
It depends on the broker, for example, some brokers require you to deposit any amount between $5 and $500 to open your forex account. The quantity you deposit can impact the quantity of leverage you’ll be able to use in your trades, as equity and margin are essential in Forex.
Can I lose more than I invest in Forex?
Normally you can’t lose. Brokers never let a trader lose more than funds available on their trading account. When the balance in your account approaches zero, brokers close your position. The loss which is large than the trader’s deposit is a loss of the Forex broker. Brokers must prevent this kind of loss.
Can you trade South African Rand in Forex?
The answer is yes, traders can trade the South African Rand. The rand (sign: R; code: ZAR in Forex) is the official currency of ZA. Currency traders commonly trade ZAR. Some best brokers pair the Rand with other currencies such as US Dollars, the Great British Pound and Euros.
How many times a day can you trade forex?
You can only make five trades per day. You don’t have to overdo it. Furthermore, we can always recommend additional reading. We are here for you.
What is a foreign exchange rate?
In forex, foreign exchange rate is the rate at that one currency is going to be changed for another currency. It’s additionally considered the worth of one country’s currency in relevance another currency. Foreign exchange rates can change and there’s no guarantee until payment has been processed. For example, the exchange rate for USD to ZAR is 1 United States Dollar equals to 14,43 the Rand.
How can one be a successful trader?
Becoming a successful currency trader comes with practice. You cannot wake up today as a successful trader. Do your research, find yourself a mentor (someone who will guide you), develop forex strategies and use demo accounts to practice more. Furthermore, if the market is favouring you, take advantage of it. Remember, you also need to teach others so that you won’t forget your foreign exchange trading tips. Sharing is caring.
Is it easy to trade forex?
Forex in Africa is easy once you understand how it works. Remember to start off with demo accounts before trading using real money. Also learn different forex terms so that you will know exactly what you are doing.
How can I become a successful trader?
Forex is just like any other work. There are many forex trading beginner’s guide you can find online. Some brokers also offer free course where you can learn trading jargon.
What is Leveraged Trading?
Leverage is given by the broker to modify traders to carry trading positions that square measure larger than what one’s own capital would otherwise enable.
What is a Pip?
Pip in forex is an acronym for “percentage point” or “price interest point”. Pips are the smallest possible variation of a course anytime. When a currency pair increases or decreases, its movement is measured in pips. For example, if ZAR/USD moves from R13.36212 to R13.36321, it has moved a single pip. Pips are the fourth decimal place of the currency pair. But currency pairs that are calculated in hundreds, the pips is the second decimal place. A good example will be R13.36