Open an account and learn your way up to new income opportunities - Forex Trading: What to focus on when choosing the best broker to trade in South Africa
Forex offers great opportunities for people to become investors, develop new channels of income, and perhaps change their lives once and for all Some choose to trade bitcoins or different cryptocurrencies, others sell and buy apartments or play casino. All options have their risks and advantages. Foreign exchange trading in South Africa has already become popular and trusted with many success stories.
IQ Option is a global service that provides people new opportunities with favourable conditions. IQ Option offers you a Demo account with zero risks to get used to the rules in a new field. A Demo account, which you can enter with a new login in a matter of minutes, can be equally interesting for beginners and mature investors considering that its main purpose it is to introduce newly registered users to the IQ Option platform.
However, before starting a new investment path, it’s strongly recommended to learn the basics about Forex in general as well as for SA.
Forex Trading in South Africa Overview
The Basic FX Concept in the global arena
Forex implies trading pairs of currencies. That means that trader cannot buy or sell any currency individually, but only in pairs, such as GBPUSD for instance.
FX pairs are also categorized into three groups—majors, minors and exotic. The key distinction criterion for these groups is the pairs’ liquidity, which is closely related to the trading volume of these pairs.
How Forex came to South Africa and was accepted by the FSB
Despite the fact that foreign exchange has always been on the market starting from the initial start-up on the Internet, it wasn’t available to South African traders right away.
Forex’s start-up dates back to 1875 and since that time not so many countries have participated in this high-risk trading. South Africa opened its doors to brokers and traders approximately 16 years ago. In the beginning, the start-up has been quite unsuccessful, considering the considerable amount of fraud, self-directed entrepreneurs, offshore brokers and non-regulated financial activities. This situation led to governmental involvement and the establishment of official regulations by the FSB.
These measures have considerably helped to prevent legitimate opportunities in the Forex market. As a result, today we can see a pretty good choice of FX agents in South Africa.
Currency, taxes and regulations for trading in South Africa
South Africa’s rand (ZAR symbol) – is in 20th place ranked by the Bank of International Settlements in accordance with the average daily volume and turnover among other currencies of the Forex market.
Yet, it’s completely unnecessary to trade a national currency. You are free to choose any pair from any group.
However, it’s really important for beginners willing to join the FX market to know about South African taxes and regulations.
The taxation set by the South African Revenue Services (SARS) varies from 18% to 42% for individual investors and depends on the amount of profits and other criteria of every individual.
The Forex market and the entire finance sector are controlled by the South African Financial Sector Conduct Authority (FSCA). This entity makes sure that all FX agents are licensed to provide their services to South African customers.
Being an international broker, IQ Option is licensed by the EU and CySEC (The Cyprus Securities and Exchange Commission) and complies with FSCA regulation too.
How to choose the best broker in South Africa, open a Forex account and start trading
FX trading week
The trading time of the Forex market starts from 5 p.m. EST on Sunday and ends on 5 p.m. EST on Friday.
Successful FX trading strategy and style
This is just a brief overview of popular strategies.
Firstly, it’s important to clarify the trader’s objectives—are you willing to do it for fun or take it seriously? Considering great risks and stakes, an initial objective matters and affects the trader’s behaviour.
Secondly, there are two recommended strategies for beginners—scalping and Price Action, which work best when used together.
It’s worth reading analytical articles and books about investment in Forex in order to gain experience in this new field. The most common indicator used is a candlestick, which allows for the analysis of the highest and lowest prices over a certain time period. Based on the trends of a chosen FX pair, a trader can try to predict its future behaviour.
Opening a Forex Account
Regardless of the proficiency level of the trader, it’s highly recommended to open the demo account from the chosen agent in order to get used to the platform, make first bids and test your chosen trading strategy in the demo mode. It’s also worth looking at the maximum leverage and minimum amount of deposit.
For example, the IQ Option FX platform offers one of the most advantageous conditions with the highest 1:500 leverage and least amount of deposit, which is only $10.
It’s important to remember, however, that a single mistake may lead to wiping out a trader’s balance completely.
4 simple steps to start trading with IQ Option
When the trading account is opened and a new trader is ready to join the Forex game, it’s important to remember a simple formula—it’s easy to earn big on FX with high leverage and it’s even easier to lose everything due to the same reason and high volatility. Therefore, setting stop-loss orders is strongly recommended.
- Choose a currency pair. The first step is about picking the currencies you are willing to work with. The most common currencies are the most powerful like EUR and USD. However, the rand can be traded with others too. It is certainly more attractive for South Africans since they are aware of all the current news in the country that may affect it and therefore can predict its future position.
- Conduct a preliminary analysis of the past charts, global news and announcements and etc. Entering Forex is quick and easy and it is even easier to lose an entire budget. Hence, reading current and past news, reviews and analysis of the chosen FX pairs can provide valuable information that can be a saviour at the end of the day. In addition to analysing chosen pairs, it’s vital to study the entire market and general trends. Foreign news and global events have a big impact on all traders. It’s recommended to study official governmental resources of other countries along with the bloggers who may have some insights.
- Pick a quote and spread of the selected pair. The red figure states the price at which you can sell, whereas the green figure shows the price at which it is possible to buy. The difference marked between both of these rates is the broker’s commission for its services. This difference is known as “Spread” and it varies from one agent to another.
- Set the sell and buy prices depending on your belief about the future behaviour of the pair—it will either rise or fall. The fourth step is the most important and can predetermine the success or failure of the trade. Unlike trading bonds, stocks and other financial assets, which involve speculation in one direction, FX allows speculating on both—up and down directions. Therefore, you can choose the buy and sell positions at the same time.
If this currency pair will rise in the market, what will be the best possible price to sell it for, considering the initial quote? The analysis conducted earlier may give a hint as to the most common top indicators of this pair in the history.
For instance, if the current quote of the ZAR/EUR pair is 1.34911/788, the trader believes that it may increase up to 1.35562/183 due to some factors causing the “bullish” behaviour and sets the “Buy position” accordingly. As time passes by, if events turn out to be as predicted, the trader may close the position and win.
The same logic can be applied when setting a “Sell position”. In the case of “bearish” influencers in the market, the position may decrease; the trader still has a chance to close the position after losing not such a considerable number of pips.
Why joining FX Trading market at all?
Foreign exchange market is highly liquid and extremely large. Daily volume reaches up to trillions of dollars.
The main attractiveness of FX traders is small amount of investment and possibility of big gain. However, trading with leverage means not only gain opportunities, but loss too. SA Forex trading is not different in this sense. However, working with reliable and best Forex brokers in South Africa covers certain risks which are not directly dependent on you. A brief overview of pros and cons is presented below. Afterwards, you can decide whether to stick to the same way of living, learn about bitcoins and cryptocurrencies or log into your newly created demo Forex account today!
Advantages of Forex
Strong position of SA Rand
Since foreign exchange is the key concept of FX, it’s important to choose the currencies you trade with and also check their exchange rates to your national one, since you will be withdrawing the profits in it. Typically, all currencies are compared to Euros and Dollars.
Position of the South African Rand ranks high on the global financial charts. This gives traders a great advantage and more confidence. The weaker the currency is, the greater chance of loss are and vice versa.
Many trading accounts favor Rand
Even though vast majority of people choose USD, EUR or GBP for FX trading, the best Forex agents in South Africa and in other countries provide favorable exchange rates for withdrawing profits to the personal bank accounts. This is another big bonus for SA traders, as they can be confident that exchange rate will not cut their gains or turn them into unforeseen losses.
Forex trading companies in South Africa provide freedom
Owing to the regulations set by the FSB, opening a Forex account and operating it today is quite simple. Furthermore, serious investors and traders who treat FX as their full or part-time job have a freedom to work from home, national park, hotel or office.
Foreign exchange brokers in South Africa let you be your own boss and choose your own schedule. This way, people have more time to dedicate to their friends, families and hobbies or purchase something they have always long for.
Gains pay off the efforts
Forex can be considered as a tool to improve lives, as it contains the possibilities to earn extra cash. Usually, a full-time job covers the bills for rent, electricity, water, Internet and so on and it forces people to live from paycheck to paycheck.
Foreign exchange allows people to make extra profits and if used wisely, make lives wealthier and happier.
Options provided by Forex brokers in South Africa
The best Forex brokers in South Africa offer favorable exchange rates, know how to open new FX account faster, can consult about the FSB regulations promptly and even provide teaching sessions for amateur sessions or recommend where you can learn about this new field. Treating your foreign exchange broker as a partner is quite important as it can keep you informed on recent news and play a role of trader’s insurance agent in some sense.
Disadvantages of Forex
Even though the list of advantages and benefits provided to South African traders by the FSB and brokers is pretty compelling, the risks are always part of the game. Generally speaking, the risks are not necessarily relate to SA, but rather universal to any country.
South African brokers vary by their size, quality, conditions and scope of services provided. Conditions include not only the entry and withdrawal amounts, but also the transparency of the transactions, that may include hidden charges.
Similarly to Stocks exchange market, the nature of Forex is fast changing and the rates of all currencies including the strongest and most stable ones reflect the global news. Furthermore, the fluctuation may depend on the region and trader’s results depend on the position of the South African Rand compared to other and more powerful currencies.
Like any other industry, foreign exchange has its own terms, which need to be learned before starting trading. Perhaps a basic internet course will be enough to start but Demo account and first transactions on the real one. However, before collecting the profits, it’s worth studying ll the details about the terms and regulations.
High risk factor
Similarly to any business that is capable to generate big profits, foreign exchange contains high risks of losing money for many reasons, starting from simple lack of attention to market crashes. Lack of attention for example, may result in pushing the wrong buttons in the Forex account or entering wrong amounts. More sever risks involve wrong, impulsive decisions led by stress, lack of knowledge of specific currency pairs and etc.
Final Forex tips
The bottom line of advantages and disadvantages is the following—it’s all about the Risk/Rewards Ratio that every trader regardless of his/her proficiency is striving with. You should be ready to lose and invest as much as it’s okay to lose without severe harm to your budget.
Trading psychology plays a big role in decision making and therefore is worth studying. The ability to stay calm is even more important at times than academic knowledge and experience combined. The investor’s psychology usually shows common biases and traps that lead to impulsive decisions. It also teaches you how to avoid them and regain a stable emotional state.
Studying tips is another great idea, which can disclose information and tricks that may not be emphasised in books. Furthermore, reading real-life stories allows you to understand the nature of trading a lot more precisely.
Foreign exchange has become more and more popular in recent years in South Africa owing to its expanding economy. Therefore, starting earlier gives you the advantage of succeeding and learning how to make profits.
Furthermore, it’s not necessary to start with big deposits; on the contrary, it’s a lot more effective to start with minimum amounts first and the IQ Option platform permits the lowest entry balance possible—$10.
Losing funds in the beginning is an inevitable learning process; therefore, it makes sense to start small.
Constant research into the financial market and self-education are the real keys to any trader’s success.