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The forex market is a popular investment option in South Africa. It is entirely legal, and the Financial Sector Conduct Authority safeguards South African Forex dealers (FSCA). An introduction to forex trading for South African newcomers is provided in this beginner’s tutorial.
To trade forex is to exchange one currency for another, which is known as forex trading. Forex trading, which is also known as foreign exchange trading or FOREX trading, is a common practice among financial institutions and investment banks in order to generate profits and protect other assets. In South Africa, retail Forex traders -individuals who invest their own money in the forex market – are quite common.
The Forex market is the biggest financial market around the globe with a daily trade volume of about 100 trillion Rand (6.6 trillion USD from 2019). The process of buying and selling currencies in the market for foreign exchange is called Forex trading. The Forex traders buy currency at the current price of the market and then trade it back at a price that they want to purchase later on. Because prices of currencies fluctuate in the market, the prices for buying and selling can differ and result in a loss and loss to the person trading. Even though Forex trading at first sight maybe seems something that is complex, it doesn’t necessarily mean currency trading for beginners can be hard to learn or start and the main idea behind this is that there are many educational materials on the internet, which allows beginners to learn more about FX trading. Only by taking advantage of the market’s volatility Forex traders can make a profit. Because of this, according to Axiory FX broker, volatility tends to be highest during the normal trading hours of Sydney, Tokyo, London, and New York’s stock exchanges. Forex traders are most active when the London and New York trading hours coincide, which results in the greatest amount of trading. Taking advantage of these market openings during normal business hours is possible since South Africa shares a time zone with London.
A Forex broker is the only method for individual traders to get access to the worldwide market. In order for a trader to conduct research on the market and buy and sell currencies, a Forex broker will offer its customers with trading software and market access.
The Financial Sector Conduct Authority oversees Forex trading in South Africa (FSCA). For the protection of South Africans against financial fraud and for a healthy, competitive financial market, the FSCA is accountable to them. It regulates all financial service providers, such as Forex brokers, banks, hedge funds, insurance firms, and the Johannesburg Stock Exchange. It also supervises the Johannesburg Stock Exchange.
Even though the Financial Services Commission of South Africa (FSCA) is an effective regulator, foreign exchange trading is less regulated in South Africa than elsewhere. No negative balance protection is required for customers here, and there is no restriction to the amount of leverage that forex brokers may provide. To avoid losing more money than they already have in their trading accounts, South African traders must use extreme caution while trading.
Customers’ money must be kept separate from business operational funds, and FCA-regulated Forex brokers are subject to frequent checks to make sure that customer funds aren’t being abused.
ZAR trading accounts are available to South African Forex traders as well. The majority of Forex brokers only provide trading accounts in USD or EUR (EUR). Every time a South African trader deposits or withdrawals money from a USD trading account, they lose money due to currency conversion costs. There are no conversion costs while using a ZAR trading account. To top it all off, most ZAR trading accounts are held in South African banks, allowing for lightning-fast withdrawals and deposits
South African merchants’ money is safer if it is kept in a local bank. If a broker goes out of business or is shut down, the FSCA has the power to seize your money and return them to you (as was the case with JP Markets in 2020).
For those who are new to the Forex market, here are a few pointers to keep in mind:
To be successful in the Forex market, you must have a solid understanding of how it operates. Forex trading is a kind of gambling that requires some level of knowledge to get started.
Consider taking classes in market and technological economics. In order to get the most out of your trading, it’s important to understand what affects the price of a currency pair and when those price changes occur. When trading Forex, only deal with a licensed and well-known broker. Be careful to read the terms and conditions of the client contract, as well as any exclusions or qualifications.
Always check to see whether the Forex trading platform of your choice protects you from losing money. If you suffer a significant loss without negative balance protection, you may owe your broker money.