The Forex market is in many ways similar to the stock market, where stocks are traded. Here it is also necessary to follow the quotations, make analyses, keep track of world news, and consider their influence when making forecasts.
The Forex market turnover is colossal – just in one day, about five trillion dollars pass through it. What is the main difference between the Forex market and the stock market?
First of all, this market is not trading shares but currencies. Big companies, middle and small businesses, and individual brokers regularly come here to sell or buy currency.
South Africa is no exception. The foreign exchange market or Forex is where currencies are traded. Traders are making money by selling currency pairs (ZAR/USD, USD/EUR, etc.), the difference between currency values is the trader’s profit. Traders make money online, they are not tied to place or time.
The FX market is regulated by The Financial Sector Conduct Authority (FSCA).
There is USD 25 billion traded in the South African Forex market every day.
Of course, Forex is not only about profit but also risks. A lot of people take Forex trading lightly. Losing money is often caused by a lack of knowledge, insufficient preparation, and discipline. Some things can put you at greater risk:
- Trading with brokers without a license. The license can be national or international, but at least the license is a guarantee of their reliability for potential customers. Such licenses are issued by various financial commissions, which check the legality of the broker’s activities, conduct his audit and, after the license is issued, monitor his work.
- Random trading. Yes, one of the million traders gets money from the deal even without knowledge, you can try your luck too, but I bet you will lose money. FX trading, like all other jobs, needs to be done by a prepared person. And it is the trader’s responsibility to self-educate themselves, gather information about industry and markets, attend seminars, and take all useful information from mentors.
How Transactions in the Forex Market Are Made?
All transactions are in the format of buying one currency and selling another. You choose the currencies themselves before the transaction, one of which is the base currency and the other is the quoted currency. The key task of the trader is to make a correct forecast, to guess in which direction the rate of one currency will change against the other.
There are a lot of currency pairs, but the most common currency is the dollar. The number of deals where the base or quoted currency is the dollar is greater than the others. Therefore the chance to buy/sell currencies at a better price is much higher (more players – more room to trade).
A Short Guide How to Become a FX Trader in South Africa:
- Find a stable internet. Connect your device, it could be whatever you want (experienced traders use multiple screens, but you can start just with a smartphone).
- Make some research, and choose the best online broker. A great part of your success depends on your choice.
- Follow your broker’s instructions to open an account, and connect it to your bank account.
- Deposit your account. Also, many brokers allow you to use a demo account, to understand how the market works.
- Download the trading platform, most brokers have their own.
- Here we are. Start your trades.
Important: a Forex dealer does not operate free of charge; you must pay a certain percentage for his services. Take this point into account before making a deal.
In addition, remember that he may charge a percentage for connecting to the trading program, transferring money to the account, maintaining the trading platform account, and so on. And to be aware of all the fees and commissions – carefully read the contract.
How to Choose a Reliable Broker?
The first and most important criterion for choosing a broker is Reliability. All other characteristics are also important – but what good are sweet words if you lose your money to the fraudster?
Make sure the trader is experienced by studying his work history, license, and reviews. You can ask around about the broker from his clients or even competitors. If your competitors have heard of the broker for the first time, it means that he is either a fraudster or inexperienced. Better to have a negative review from a competitor than no review at all.
Next in importance is the amount of commission. You don’t want all the interest earned on the transaction to go to the broker, do you? Read the contract carefully and study all types of commissions.
If the broker is reputable, it has the following features and options:
- Availability of a license;
- Good reputation, availability of international awards;
- Low requirements for the deposit;
- Suggests currency pairs you want to trade;
- Offer educational materials and market news;
- Make prices with decent dealing spreads
- Have minimal order slippage
- Offer enough leverage for your trading strategy;
- Provide negative balance protection;
- Have a comfortable trading platform interface;
- Suggest 24 hours customer support;
- Provide a variety of ways to make the deposit and withdraw money;
To help you choose the broker, we prepare a list of Reliable forex brokers in South Africa. You can compare their characteristics, and choose a suitable one by visiting smartyafrikaners.com.
How Not to Fall for a Fraudster?
Just like in the stock market and in any other business where there is a lot of money to be made – there are a lot of scammers. To distinguish a reliable broker from a scammer who only wants to steal your money, we’ve prepared a few signs:
- the company (or individual broker) provides detailed information about himself or the company;
- the broker works not only with beginners but also with experienced exchange players;
- its website has an example of an agreement and/or all of the commissions are listed;
- the support service (or the broker himself) is quick to contact;
- fast withdrawal of funds from the virtual wallet to your account;
- good reviews.
