Forex Trading is legal in South Africa and more than 50+ brokers are giving their services in the forex market. These brokers act as a middleman for buying and selling foreign currency pairs. But, choosing the right South African broken is like finding a needle in sand. In this article, you will learn about forex trading and how to choose a forex broker in South Africa.
What is Forex Trading?
Forex trading is buying and selling currencies in the forex market to make a profit. The forex market offers trading only in currency pairs like EUR/USD, GBP/USD, and USD/CAD. The prices of currency pairs fluctuate with time, and traders predict the value of the currency pair to accumulate profits.
You cannot directly start trading in the forex market, you will need a forex broker to help you in currency trading. Now, you must be wondering, what is this Forex Broker? A forex broker buys and sells currency on your behalf, or you can say a forex broker acts as a middleman in the forex exchange market.
Let’s Understand the Role of a Forex Broker With an Example:
If you want to study in South Africa, you need to pay all your fees in Rand. To convert your currency into South African currency, you will go to a bank that will pay an equal amount of your currency value to buy Rand. In this way, you are trading in the forex market by selling your home currency to buy Rand.
Forex trading is emerging as a profitable trading option, and customers are trading (buying and selling currencies) through forex brokers. But, with all the limelight, forex trading has several risks and challenges. If you are a new player in forex trading, you can learn the basics or work to improve your trading skills through a forex demo account.
Advantages of The Forex Market
- It provides 24×5 – Monday to Friday, services that work as per the different time zones.
- It provides high liquidity flow.
- You can start forex trading with low capital
Disadvantages of Forex Trading
- It is an extremely volatile market
- It requires years of experience and knowledge to become a successful trader.
How to Choose a Forex Broker in South Africa?
Forex Trading is legal for South African citizens, and the government has assigned a regulatory body called FSCA (Financial Sector Conduct Authority) to address legal issues of forex trading. To provide trading services to South Africans, forex brokers need to own an FSP licence. A forex broker can only apply for the FSP licence if it fulfils all its requirements and follows all guidelines. Thus, the number one feature to look for in a broker is regulation.
Here Are Other Features That You Need to Look for in a Forex Broker:
- Fees and commissions: A good broker should offer low commissions as well as low spreads. Check all the fees charged by your broker and compare them with other brokers in the market to find out the price differences.
- Trading platform: Choose a broker that offers a user-friendly and reliable trading platform. MT4 and MT5 trading platforms are two of the most widely used trading platforms.
- Customer support: Look for a broker that offers excellent customer support, including assistance with account opening, trading, and any other issues you may have.
- Educational resources: You can consider a broker that offers educational resources such as trading guides, webinars, and seminars to help you improve your trading skills.
Several best South African Brokers can help to participate in forex trading. Before shaking hands with any broker, thoroughly check its website, authenticity, and brand value.