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How Does Forex Trading Work in South Africa

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Want to start Forex trading but not sure how it works in South Africa? Forex trading in South Africa is regulated by the FSCA (Financial Sector Conduct Authority) which is the financial and securities governing body in South Africa.  

Forex trading in South Africa is one hundred percent legal when trading with an FSCA licensed broker. An average of around $25 billion USD / R 400 000 000 000 ZAR is traded every day in the South African FX Market. In this article, we will have a look at how Forex trading works in South Africa. Let us take a look. 

How do I Trade Forex in South Africa? 

The great thing about Forex trading is that it is accessible to everyone that has an internet connection. But it is important to note that Forex trading is not a quick scheme for making money. If you would like to be successful and make a decent profit you need to have education, discipline, and a proper strategy in place. Luck will only get you so far, you need to be serious about learning and educating yourself every day. A learning platform like BabyPips is an excellent tool to use if you want to learn more about Forex. You can also use the OANDA currency converter calculator if you want to check the latest foreign exchange average bid/ask rates and convert all major world currencies. Always work on your skills and strategies. Let us look at the essential things you are going to need as a Forex trader in South Africa: 

  • A Fast and Stable Internet Connection: This is crucial as the Forex markets move super-fast and if you struggle with slow internet, you can lose a lot of money. You need to keep up or your winning trades can change into big losses in seconds. An interesting fact is that most South Africans use their cell phones to trade.  
  • A Forex broker: This is the most crucial step on the list. The main job of a forex broker is to provide you with easy access to the forex trading market and make some money in the process. Many of them will even assist you and answer any questions you may have. 
  • Demo Account: This is especially important if you are a beginner, trading in South Africa. Demo accounts are a comfortable way to try out new strategies and trade different currencies without there being any risk. Do this before you deposit your money into a real account so that you can learn how the market and trading platforms work.  

Terms to Get Familiar with When Forex Trading 

Whether you are a new South African Forex trader or know exactly what you are doing, it is always a good idea to learn or refresh your memory on certain Forex terms. Especially as it can have a huge effect on your trading strategies.  

  • Forex Mini lot: Most forex traders you come across are going to be trading mini lots or micro lots. It might not feel glamorous, but keeping your lot size within reason relative to your account size will help you preserve your trading capital to continue trading for the long term. A mini lot equals 10% of a standard lot (100 000 x 0.10) = 10 000 units of a base currency. Thus, when you open a trade with a 0.10 lot, you will trade 1 mini lot. It is a great choice for those forex traders who may want to trade with a lower, or perhaps no leverage at all. 
  • Forex trading quotes: A forex quote is the price of one currency in terms of another currency. These quotes always involve currency pairs because you are buying one currency by selling another. 
  • Forex withdrawal: You can withdraw money from a forex account when you have accumulated your profits in that account. Your access to cash through trading in forex is also facilitated by linking your bank account to your trading account. 

Which Currency Pairs Can I Trade? 

Beginner traders should start with a minimum account balance of 200-500USD. This will allow you to make small profits, while still having a sensible approach to all the risks. A lot of traders will choose to focus on one or two major currency pairs so that they have a good understanding of those specific currencies. By doing it this way traders can then focus on their trading strategies and trade patterns.  

 The major currency pairs are the dollar and pound, the euro and the dollar, and also the dollar and the yen. The reason they are called major currency pairs is that they are the biggest and most popular currencies in Forex trading. It is very easy to buy and sell them.