Forex Trading South Africa or Forex Trading SA (South Africa) has been giving South African citizens an opportunity to make money online by trading Forex. In this Forex guide, you will learn more about the Forex trading SA market and how it works. Forex – What is it? How it works in South Africa? Here’s our In-depth Guide for 2021.
Best Forex Trading South Africa Sites for 2021
Many readers parachute to the topic and ask themselves at first: Forex? What is? How it works? In-depth guide with complete information is what many lay people often lack at these times.
As an abbreviation for Foreign Exchange, the Foreign Exchange Market, this financial market is decentralized and is intended for trading international currencies in an integrated manner. Turned into numbers, the volume of trades traded daily by Forex is around 5 trillion dollars every day. This giant market has investments by large massive investors such as international companies, central banks, governments and other multimillion-dollar players.
Therefore, the basis for this type of investment is financial speculation. So that the investor or graphist analyzes the probable future scenarios for certain assets and speculates, invests money in what he believes will become reality in a short period of time. If correct, the price differentiation achieved between the moment of purchase and the sale will be the profit obtained as a result of the negotiation. If the market oscillates in the opposite direction, the losses will be equally proportional.
How Does Forex Trading Work in South Africa?
One of the differentials in relation to the other financial markets that ends up making the volume of money traded on Forex is much higher is that the trading sessions are continuous, with pauses only on weekends. This means that 24 hours a day, from Monday to Friday, the market will be active. Every minute on the chart can hide millions of dollars ready to be “mined” if their signals are interpreted correctly.
On the essential functioning of Forex trading in South Africa, trades are carried out using currency pairs as a tool of speculation. By indicating on an investment platform that, for example, the USD / JPY pair will depreciate, it means that you theoretically believe that there are more people acquiring selling positions than buying positions in that period, and vice versa. The valuation of the asset is due to an inversion of this trend, that is, when most people start to buy instead of selling that pair.
In this way it is easy to understand that when trading in Forex South Africa, unlike the stock market, the investor is trading not only with a single economy or fund, but with two. Therefore, the future and forecasts for a given currency pair are the result of the economic stability of two different countries or, in the case of cryptocurrencies, organizations.
What’s new in 2021 in Forex? BIG UPDATE!
The Forex trading market in South Africa is one of the most serious and profitable in the world. However, there are many companies and services that can take any investor’s dreams down the drain. As in the case of companies that advertise themselves as brokers (but they are not) and say that they trade forex in South Africa (but they don’t). These cloaked sites sometimes gain a lot of popularity for the promises of high profits without, often, the possible user without even having to do operations for that. Kind of paradoxical, but that’s what happens. Eight, Ten, twelve percent a day is what these frauds promise to lay people. To keep you updated on the scams involving the name of the forex market, keep reading and find out how to stay out of the trap.
How Can You Make Money in the Forex Market?
There are several ways to make a lot of money trading in Forex trading market, but it is necessary that the investor also does good risk management with each new order so that he does not end up losing part of his deposit by risking the market more than he should.
In principle, the least risky way to invest is to invest only the capital available on the investment platform through your deposit. Extremely suitable for forex beginners, this style of application allows the investor to better visualize the risk and apply more safely.
With a little more market experience, the investor can also opt for leveraged trades. This device is widely used in the most different types of investments and markets in order to multiply the profits – and also the losses – up to x500 without the need to apply the full amount referring to a position five hundred times higher. In short, leverage allows the investor to acquire positions much larger than his deposit, requiring only the risk margin as a guarantee.
Although there are thousands of additional indicators or created by independent initiatives, the most important ones to assist you in your investments can be easily found on the MT4 and MT5 platforms themselves. They are tools capable of indicating the volatility of the market up to the volume of purchase and sale. Check out some of the most famous of them:
Used to identify the end of a trend, this indicator is one of the easiest to use. In general, it has a high level of assertiveness, but it should be avoided in times of greater market turmoil or when there are not very well defined trends.
The famous indicator of the Bollinger Bands is characterized by 3 lines: one of them, the middle one indicates the average of the prices previously quoted, the upper one indicates the average of the highest prices, and the lower one an average of the lowest records. Several investment strategies can be adapted to this tool quite effectively.
Relative Strength Index
One of the most commonly applied in all types of investments is the Relative Strength Index, also known as IFR. This Indicator is able to map the price strength of assets almost in real time. In this way, the investor is able to know precisely whether his target is being traded above, below, or at the exact market value in a given period.
For those who like to be always up to date with new investment tools and technologies, Forex Robots can do the job, offering profitable trading in a fully automated and accurate way. Basically an innovative way to make money with low investment and profitability above 85%.
The system of robots of this type is built based on algorithms capable of detecting “signals” present in the graphs that can indicate trends, supports, limits, reversals, as well as points of entry and exit from the market. In this way, all automatic negotiations are carried out by a kind of computer that simultaneously uses all the knowledge of technical analysis in order to find the best investment possibilities. Errors in these forecasts are possible precisely because of factors related to collective psychology also present in the financial market, but, in most scenarios, they are less recurrent than successful negotiations.
How to Choose the Best Forex Broker?
In Forex, one of the most important things to keep in mind before you start your investment journey is to choose the best platform correctly. After all, there are many brokers on the market that can give a headache to those less attentive to details.
Service providers participating in this niche in the financial market must, as a rule, meet some basic prerequisites so that they can be considered viable for investors, including small ones. Information such as minimum deposit, custody fees, customer service, specialized training center for beginners, minimum spread and other information can be decisive when choosing.
Below is a list of the main brokers with support also for South African investors. These are some suggestions based on the quality of the services provided to the customer, as well as in a general context in relation to the company’s reputation in the market.
One of the great leaders of the national market, the IQ Option platform has several ideal features for those starting out in the Forex market. The company has a learning center with essential knowledge to start investing in the best possible way and also provides free access to a demo account. The perfect match for those who wish to learn to trade in this market and still train their knowledge without any risk of losses with real money.
Next on our list comes the Fx Pro broker, which, in addition to the advantages mentioned above available on IQ Option, also has support for its own platform called cTrader. The trading service has graphical models and additional indicators, providing greater capacity for personalization of the application for clients of the most varied profiles.
Despite being a little younger in the South African market, eToro is no exception. It has an excellent reputation in relation to service and the minimum deposit amounts available to its users. Another important feature to be considered is that the platform also functions as a kind of social investment network, in which it is possible to share knowledge and tips with other investors in real time.
It is a relatively new platform on the market, but it has been gaining popularity at a fast pace due to the quality of services provided to investors. It has a very fast customer service center and has a good list of tradable assets available to all its users.
Learn how to recognize
Despite being a very serious issue that has become a topic of debate at the turn of the year in South Africa, the financial pyramids are very easy to recognize. With the basic information and knowledge about the business model, you can easily see if a particular company is just another financial scam or is it really a legitimate service.
- The first step is to notice if the company offers profits well above the average of other companies. If big investors are very happy with a monthly average of 5%, it is certainly unlikely that anyone can consistently make 10% a day.
- Once you have the suspicion that the platform or website is offering too large profits, stay tuned to the customer acquisition model. If he offers bonuses for referral or prospecting for more “investors” for the service, it is probably a scam. After all, that’s where the money comes from. Nobody in the company really invests.
- Trusted companies tend to be more serious in the media, too. So, if such a website has an exaggerated communication and full of testimonials about daily earnings of “10%” or crazy testimonies, be smart, it could be a scam.
MT4 vs. MT5: Which Forex Platform Should You Choose?
Below are some of the main characteristics of these two investment platforms and some differences between them that should be highlighted.
Also known as MT4, this platform was the first of its kind to be launched on the market as a tool for financial speculation over the internet. Available to the public for the first time in 2006, the online trading platform is still the most used today by investors around the world.
When it was created, MT5’s proposal was not exactly to replace the predecessor MT4 with the offer to provide broader services and improved performance. In spite of having more tools, different indicators and greater capacity for personalization by the user, the platform was designed to also support other assets such as commodities and stocks with the excellence obtained by Metadrader4 in relation to Forex.
There are few issues to be mentioned in relation to the comparison of the two platforms, since they are different services for different purposes. The only indispensable feature to be commented on is that, as a matter of practicality, if the investor wishes to trade only with Forex, our recommendation is to use MT4. If you want to invest in other markets as well, such as stocks, for example, use MT5. Thus, it would not be necessary to change platforms whenever you want to invest in a different asset.
Forex in South Africa
In general, companies that offer trading services in the Forex market to South African investors have some differences in relation to the same services provided to investors in other countries. This is due to the fact that Forex exchange negotiations do not yet have their own legislation in the constitution of South Africa. Because of this, a part of the multinational companies in the sector end up preferring not to compete due to the lack of more comprehensive legislation. Even so, it is possible to trade Forex normally regardless of your location. The only disadvantage in this regard is the limitation faced by brokerage firms vis-à-vis the country’s government.
An efficient way found by these companies to optimize the entire investment process for South Africans was the use of payments via Wire Transfer. This strategy aims to streamline the entry of interested parties in the financial market, avoiding all that bureaucracy that usually surrounds the banking sector.
In addition, most of the Forex brokers that invest in the South African market also offer the facility of pages translated into other languages.
Daily profit pledges
Many of these companies that claim to do the investment work for you usually promise very high profits a day. Percentages that, in most cases, are statistically unlikely. As soon as you become a customer they pay you the first promised amounts, but over time the frequency decreases until it stops altogether. This is because this is just another old scam retrofitted to Forex. This is what is known as the financial pyramid.
All fraudulent services that fall under the category of financial pyramid constantly claim that they are not a pyramid, but that, in a brief analysis, they can easily be perceived as such. These companies simply move the capital of the new customers it acquires to the bank accounts of the older users. Something that, in the case of forex, creates the false impression that they are actually profiting and receiving the values promised monthly by the money invested in the false broker. So, financial pyramids do not produce or invest any capital. They only pay old customers of the platform with money deposited by new customers.
How to Choose an Investment Strategy?
Everything you need to know is here: from choosing the right broker to investment strategies and indicators. But defining an adequate strategy to increase and consolidate the investment success rate is the main goal of any and all negotiators or graphics interested in living in the market. This step takes longer than it may seem and requires a good deal of extra dedication.
There are several very famous strategies such as, the Martingale technique, Fibonacci and many others. What many people ignore is the fact that no strategy will work 100% of the time with all investors. Therefore, there is a need for adaptation. By knowing a good part of the available strategies, learn its fundamentals, understand how they work. From this, you will be able to find the one that best fits your investment style, as well as the one that you are most familiar with using. From this point on, you can still make some small adaptations of the strategy to your reality, but once you find the exact measure, the tendency is for the results to be more and more satisfactory.