Welcome to 24 Trade Forex, a Forex Trading South Africa guide for forex traders in South Africa. We are the most trusted and reliable foreign exchange website review in Mzansi. Start trading forex in South African Rand (ZAR) at the best forex trading websites in 2019, with the best pips, deposits, and FOREX bonuses.
We provide useful information about everything you need to know about the best forex trading South Africa websites. You can buy and sell currency on your Tablet, Windows Phone, Blackberry, Android or Apple. The main objective of 24 Trade Forex is to provide all the details you need to know about trading forex online. In addition, we also list the best forex trading South Africa brokers and also help you understand why forex in South Africa is a popular money making scheme.
Best Forex Trading Brokers in South Africa
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What is Forex Trading and why trade forex in SA?
FOREX also referred to as the ‘FX market’, ‘Foreign exchange currency market’ or ‘currency market’ is the world’s biggest financial market. Essentially, the forex market is the place where investors, banks, governments, businesses and traders draw closer to buy, sell, exchange and conjecture on currencies. The FX market or currency trading market is huge and the majority liquid market on the planet with an estimated turnover of $5 trillion.
In a simple definition, forex trading is the act of buying and selling a foreign currency. You exchange currency so that you will be able to use in the foreign country to buy services, pay transport or pay accommodation.
Forex Markets consist of participants and influencers
Under Participants we have, Companies or Organisations, Central banks, Financial intuitions and Individual forex traders while Influencers consist of Interest rates, Trade laws, Economic news and Natural or geopolitical events.
How to trade forex in South Africa?
Base currency/Quote currency
One USD costs 13,41 South African Rand.
Trading forex is simple. Imagine buying USD 1000, paying ZAR 15 910 from your forex trading account using a forex trading app. Later that day, the USD rises. When you close your position by selling the USD 1 000, you will receive ZAR 16 160. Meaning you will receive a profit of ZAR 250.
But imagine if the USD decreases later that day, when you close your position by selling the USD 1 000, you will then receive ZAR 15 660, losing ZAR 250.
Why is currency trading so popular in South Africa?
Currency exchange in South Africa is so popular in South Africa because is by far one of the largest currency exchange markets in the whole world. FX market also gives people an opportunity to become rich and live a luxury life. For most SA residents who made it, they said it was not easy because it requires dedication and discipline.
Forex Trading in South Africa and Regulations
Forex trading in South Africa has become increasingly popular among forex traders. Many South Africans became aware of forex trading South Africa since the initial start-up of the internet. However, South Africa started participating in foreign exchange about 17-years ago.
During this time, there were no regulations or institutions such as FSB that prohibited people or companies to start their own forex trading companies. This led to forex investors and traders losing millions of Rands due to fraud. To make sure that traders do no lose their money, regulations were established to prevent fraudsters from scamming people. Regulators also make sure that forex brokers follow the law and they provide insurance for the traders’ funds.
The Financial Services Board (FSB) is the institution that protects South Africans in the non-banking financial sector. When you choose forex trading brokers, you are advised to always check the FSB Financial Service Providers list to see if your broker is regulated and for what instruments.
If the selected broker is not regulated by the FSB, check if it’s regulated by another regulator such as the FCA (United Kingdom), CySEC (European Union) or ASIC (Australia).
List of successful forex traders in South Africa
- Ref Wayne
- Sandile Shezi
- Louis Tshakoane
- Jabulani Cashflow Ngcobo
- Shaun Benjamin
Getting Started With Forex Trading in South Africa
The best way to get started with forex trading is by opening a demo account. This type of account is provided by South African FX brokers and allows forex trading beginners to open an account and trade with fake money and real market data. However, some demo accounts have limited time but you can always ask your broker to extend it.
Once you start making a consistent profit in your demo account, you can jump straight into a live trading account and start trading with real money. Remember to trade without emotion.
List of Common Risk Factors in Currency Markets
Although trading forex comes with lots of benefits that attract South African investors, it also comes with significant risk factors that affect investors and forex traders. Over the years, the foreign exchange market has become an important financial sector. One of the major misconceptions about forex is that you will become filthy rich. Below are 8 common forex risks every trader and successful forex traders in South Africa should know:
- Exchange Rate Risk
- Interest Rate Risk
- Credit Risk
- Country Risk
- Liquidity Risk
- Marginal or Leverage Risk
- Transactional Risk
- Risk of Ruin
Skills needed to become a successful forex trader
- Confidence – believe in yourself and have faith that you will succeed
- Dedication – aim to become the best fore trader you can possibly be
- Ability – have ability to accept failures and don’t take things emotionally when you lose money
- Discipline – you need to be disciplined. Don’t spend the money you don’t have or not willing to spend because of temptations
- Flexibility – you need to adjust to the forex market industry. When the FX market changes, you will need to adapt as well so that you can trade more successfully
- Self-control – you need to know when to stop trading on your forex trading app. Don’t over-trade thinking you will become an instant millionaire
- Patience – you need to take things slowly. Use your forex strategies to stop where the market is more profitable
- Organised – reinforce positive trading skills. Don’t forge things or take short-cuts
- Realistic – be realistic. You won’t become a millionaire in just a day. Start trading small before moving to depositing large amounts
- Focus – don’t stray away. Concentrate on your trading plan and know the reason you started trading forex
Forex trading strategies
- Technical trading – most FX traders in the world use charts to learn forex trading and determine whether to enter or exit the currency trading trades. Technical traders refer to paying attention to price patterns. By paying attention to charts and weighing price, volume, volatility and timing, it is possible to find patterns that point out opportunities. The example would be, if the price of a currency does not fall or rise but frequently reaches a certain value, it is said to be in a stable position or found a resistance level. Many successful forex traders in South Africa tend to take advantage of it and take a position in order to sell or buy. This forex trading strategy works well for some traders.
- Fundamental trading – this refers to focusing on elementary indications of economic health. In this forex strategy, supply and demand for a currency choose the price. Most SA currency traders look at the central banks’ interest rates to determine which way the market might shift to.
Strategies for part-time forex traders
Not every forex trading South African is available to trade full time. Some successful South African forex traders make their trades during lunch at work or at night when they come back from work. Trading forex from time to time makes people to miss opportunities to buy or sell currencies. These missed trading opportunities might cost the part-time trader some serious money.
There are some strategies designed for part-time traders and they work based on a part-time schedule. For example, if you know that you only trade forex at night, you must employ a strategy that works best at night. There are certain currency pairs that are most active at night. A good example can be the American dollar (USD)/ Japanese yen (JPY) pair. When choosing a pair, it is crucial to analyse them and implement a forex trading strategy which will help you trade successfully.
Part-time trading comes with challenges and one of them is limitation. Unlike day trading customers, you will have to stick to a trading schedule which you follow every-day. Below are strategies for part-time traders who have an incoherent schedule:
Stop loss orders in trading forex
One of the best strategies for a part-time forex trader is to monitor the price movement. Use your PC or laptop as your trading partner. There are forex trading programs designed to help you stop loss orders. This means that the program will alert you if the price movement drops or move against your position. This strategy also protects your money should the FX market works against you.
Know your FX Markets (forex markets)
For example, you have a nine to five job every-day. The best time to trade is before you go to work and when you come back from work. The best strategy is to choose time with the most price action. Know which currencies are most active. Knowing the right time and most active currency pair will lead to you benefiting a lot from forex trading.
Sydney opens at 5:00 p.m. to 2:00 a.m. EST
London opens at 3:00 a.m. to 12:00 noon EST
Tokyo opens at 7:00 p.m. to 4:00 a.m. EST
New York opens at 8:00 a.m. to 5:00 p.m. EST
Japan and Europe open at 2:00 a.m. to 11:00 a.m. EST
Price action in SA Forex Trading
It is also important for part-time traders who trade now and then to implement a price action strategy. Analysing charts of currency pair is called “price action trading”. Forex traders take a look at down bars and up bars which help them determine what the right time to close a position is.
Other forex strategies for part-time traders
- Analyse long-term trends
- Take smaller quantity of positions, hold onto them for days
- Use technology
- Set up limits
Commonly Traded Currency Pairs across the globe
Forex Market Schedule
Forex trading in South Africa works 24/7 and 5 days a week except for the weekends. The main trading centres are in New York, Tokyo, Hong Kong, Paris, Sydney, Frankfurt, Zurich, London and Singapore. However, banks across the globe also participate in trading.
Benefits of forex trading
It’s no surprise that forex trading sa is one of the most popular forms of online trading in South Africa and around the world. In recent years, we’ve seen the rise of the currency trading globally. The foreign exchange market has many benefits for South African forex traders which they enjoy. Below are 5 benefits of forex trading:
A free market
As you already know, SA forex brokers don’t charge traders any fees on trading transactions. There are no fees that traders have to pay. Forex brokers are paid through the spread representing the difference between the purchase price and the buying price of a currency. However, some forex brokers will charge you a commission on a certain number of transactions.
A market that never goes to sleep
Unlike other financial sectors, the FX market opens 24 hours a day from Sunday evening to Friday evening. For forex traders, this means they can trade stock anytime they want depending on their schedule. This also means that traders can combine their professional life with trading activities anytime.
A market where traders win on both rises and falls
Forex is based on the prediction of the currency (e.g ZAR / USD). You predict whether the currency will fall or increase. Since forex is traded on pairs, it is beneficial to traders.
A market free from manipulation
Since forex is the world’s leading market, it is difficult for people to manipulate it. Traders must follow future trends to speculate how the currency will turn out to be. More than $5 trillion is traded daily which makes it the most liquidity market.
A predictable market
On the foreign exchange market, it is easy for you to avoid losing lots of money. There are usually some announcements made stating that there might be an interruption on the currency rate. To avoid this, you need to be on the lookout, check out forex trading tips, read forex trading news, visit forex trading sa websites which usually announce latest forex news.
Advantages of Forex Trading
- No middleman
- Long trading hours
- High liquidity
- 2 ways opportunity
- Demo accounts for practice
- Free of commission
Disadvantages of Forex Trading
Although trading forex SA comes with lots of benefits that attract South African investors, it also has disadvantages that affect investors and forex traders in South Africa. Over the years, the foreign exchange market has become an important financial sector. Below are the disadvantages of forex trading:
A market victim of its success
With FX trading, there are lots of transactions that are processed every day. Although it is rare for online trading platforms to make errors or tailback, sometimes technology might affect you. If you placed an order, it might delay to take them into account and you risk losing all your money due to the technique. However, most trading platform developers have taken into account that this makes people lost money. They now offer the ability to place an order through your mobile device.
Robots analyzing data
Since forex trading is done via the internet, online robots are responsible for making analyses that guide investors and traders to make choices. The analyses we are referring to are the graphs that are used to study the movement of currencies. Since these robots are only artificial intelligence, sometimes they make errors.
Using leverage with caution
The leverage on the FOREX is a tool to multiply its profits. But to some extent, it can make a trader to lose money when it multiples the same losses. All traders are advised to pay attention to their position.
Things you need to start trading forex
- Reliable and trusted forex broker
- Limited funds
- Stable and reliable internet connection
- Personal computer or a laptop
Explaining currency pairs
As mentioned above, forex trading involves buying one currency and selling another currency at the same time. For this reason, when traders trade currencies, they trade them in pairs, meaning people trade two currencies.
Placing an order in forex means placing an order, you speculate on a currency whether it will depreciate or appreciate relative to another currency. The main reason we speculate on currencies is because we want to make profit from the fluctuation of the exchange rate.
Pairs of cross currencies or minor currency pairs
Cross-currencies are currency pairs that don’t comprehend the USD. However, nowadays, South African forex brokers now offer direct exchange rates. The most used cross currencies come from three most important currencies besides the USD. The three currencies are the British Pound, the Yen and the Euro. These three key currency pairs are also called minor currency pairs.
Pairs of major currencies
In Forex trading, the major currency pairs all consist of the United States Dollar as the base currency and/or as the quotation currency. The most traded pairs in forex are USD/EUR and EUR/USD. The reason for this is because major pairs are the most liquid and carry the lowest spread. The EUR/USD is one of the most traded pairs on a daily basis with a volume of more than 30%.
Base and quote currency
The first currency indicated in a currency pair is called the base currency while the second currency on the right is called the quote currency or the counterparty currency. The quote currency lets us know its value against one unit of the base currency. For example, if USD/ZAR (South African Rand) trades at 1.3000, it means one US Dollar equals to R13.41.
The base currency is essential for the buying power or the sale transaction. If we think the US Dollar will gain against the South African Rand, we buy the USD/ZAR pair. This means that we buy the USD which is the base currency and sell simultaneously the quote currency which is the ZAR (South African Rand). However, if we think the US Dollar will not shift to our advantage, we sell the pair, meaning we sell the Rand and buy the US Dollar simultaneously. Two jargons you need to know:
- Speculating upwards – buying the base currency in forex. You speculate if the currency will move to your advantage
- Speculating downwards – selling the base currency. The aim is to generate profit from the depreciation of the pair
In forex trading, the most liquid currency is the base currency. In most cases, currently the USD is the base currency in Forex. However, when it comes to EURO, the USD is not the base.
The spread in forex
The spread in forex trading is the charge or the difference between the price of the offer and the asking price for a transaction. All transactions in forex are carried out by intermediaries who charge specific fees for their services.
To understand the spread, you need to understand the basics of forex trading. For example, the USD can be worth 1.532 times the ZAR (South African Rand). You might speculate that the Rand will gain against the USD, so you buy the asking price. However, the asking price might not be the exact 1.532, maybe it might be 1.534, which is the price you will trade for.
On the other hand, the seller will not receive 1.532 too, he/she might receive 1.530. The difference between the asking and buying price will be 0.0004, therefore the spread is 0.0004.
How to manage and minimize the spread
There are two things that you can do in order to minimize the spread:
- You can trade during the day where most of the successful forex traders in South Africa are active. During the most favorable times, there is a huge number of active sellers and buyers for a specific pair and the spread is reduced.
- Avoid trading weak currencies. Currency pairs such as USD / GBP or GBP / USD are the most traded currencies and different markets compete for them. Weakly traded pairs carry a wider spread and you should avoid trading them because of lower competition.
What are Pips in forex exchange?
Pip is an acronym for “percentage point” or “price interest point”. Pips are the smallest possible variation of a course anytime. When a currency pair increases or decreases, its movement is measured in pips. For example, if ZAR/USD moves from R13.36212 to R13.36321, it has moved a single pip. Pips are the fourth decimal place of the currency pair. But currency pairs that are calculated in hundreds, the pips is the second decimal place. A good example will be R13.36
How to calculate the value of a pip in a currency?
The value of pips depends on the leverage, the currency of the trading account and the currency pair. For example, if the trading account is in South African Rands, and we take a position of ZAR / USD with R20 000 and a leverage of 10, we’ll invest 10 x R20 000 to buy on this pair.
To get the value of the pip, multiple R20 000 by the value of pip: 0.0001, which is $1. You then apply the exchange rate, the Rand against Dollar is about R13.00. So you take $1 = R13.00, which will give you a pip at R12.00 (for example). So the investor or trader who invested R20 000 will gain 20 pips and profit of R1 666 on their forex trading account (REMEMBER THIS IS AN EXAMPLE).
What is leverage in forex?
Leverage in forex exchange enables traders and investors to get access to large amounts without having to deposit lots of money or capital. SA Forex brokers offer their customers leverage. Leverage allows you to speculate with more money than the capital accessible, but it carries higher risks.
There are different levels of leverage in forex. For example, we have 1:100 to 1:400. Brokers also borrow you this money for free. Leverage exists to help traders make profit, that’s the reason you need to take advantage of it.
What is a lot in forex trading SA?
A lot refers to a group of units in a trade. A standard lot is 100 000 units of currency. Many traders don’t usually have 100 000 dollars or Rands to place on each trade. With this being said, most forex brokers offer leveraged trading. Traders can also trade micro lots and mini lots worth 1 000 unites and 10 000 respectively.
For example, if you visit your favourite supermarket and you want to buy a 12 pack of alcohol, you are actually buying 1 lot. You have to buy the whole pack and not just pick two bottles from the pack.
In the supermarket, there are examples of lots that you probably know. If you buy a pack of 6 cans of your favourite drink, you are actually buying 1 lot. You cannot buy three cans of the drink; you must buy them by full batch.
How to choose FOREX broker in South Africa?
When you want to invest in Foreign Exchange (FX market) or forex South Africa, you need a South African forex broker who will be your interface with the market even if it’s done via online trading platforms. The currency exchange market is indeed an interbank market, trading place between the major international banks and a virtual meeting for traders sharing the same interests.
There are two types of FOREX trading operations: Brokers who are best known as “Dealing Desk” and brokers known as “No Dealing Desk”. However, we also have another type of broker which is different from the above types and is called “ECN” brokers.
What is the Dealing Desk in FOREX?
Dealing Desk brokers in FOREX do not use banks to respond to your requests to buy or sell currencies, they play the role of stockbroker themselves. That’s what they call the Market Maker: No matter what happens on the market, Dealing Desk will always offer you a quote.
To make money, they arrange to offset your buy or sell orders with those of other customers. If at a given moment they manage to bring a seller and a buyer closer together for the same request, they reach the spread without any risk. As a reminder, the spread is the difference between the purchase price and the selling price on the market. The Market Maker rebuilds a market with a buyer, a seller and a spread but it has the advantage of being the market and therefore to pay as such.
When the amounts committed by the trader become too large or the dealing desk (Market Marker) cannot meet the demand by another customer, he has no choice but to cover himself by actually using the market interbank. Indeed, the market maker is forced to buy and sell at the price he publishes. But do not worry about him, he will find a cheaper price with banks than the one he offers; this is his second means of remuneration.
What is the No Dealing Desk in FOREX?
No Dealing Desk is seen as a marketing effect because it is more of a concept than a really existing broker. The No Dealing Desk is an additional intermediary that systematically redirects your orders to Market Maker or to the interbank market. STP (Straight Through Processing) are pretty close because they work without delay or break by retransmitting your purchase and sale orders to banks.
What is ECN broker in FOREX?
ECNs (Electronic Communications Network) allow you to place your orders directly in the order book. What is the order book? This is the centralized market that includes all requests for purchase and sale. In South Africa, ECN brokers are therefore only a legal intermediary to intervene on the interbank market since only brokers are allowed to place orders on this market.
Forex Trading South Africa FAQs
Get answers to the most frequently asked questions regarding forex trading South Africa, forex trading education, trading strategies, currency trading, forex markets, and foreign currencies.
What is forex?
FOREX stands for Foreign Exchange (Exchange Currencies).
What is forex trading?
As explained by many forex trading South Africa review websites, Forex trading, just like trading in shares, is an act of you buying foreign currency at bid price and selling it at higher price in future to make profit. Forex Market is the place where one can trade in currencies. Price of one currency is always determined in another currency because you always buy one currency using another currency i.e. you trade in ‘currency pair’. The price is always given as USD/INR, GBP/USD, etc. using Standardised Currency Code.
Forex trading change all the time due to various factors, and professional forex traders attempt to make profit from these changes. Forex market is the largest, most liquid financial market in the world. It operates 24 hours a day and is commonly separated into four sessions: The Sydney session, the Tokyo session, the London session, and the New York session.
What is the best stock trading website for beginners?
Well, 24 Trade Forex only recommend our forex trading SA partners’ websites. They are more trustworthy and reliable. You can also use their demo forex accounts to practice using virtual money before using real money.
What is online trading and how does it work in South Africa?
Buying and selling stock or anything online is referred to as “online trading”. Forex brokers in South Africa buy and sell stock online through forex investment and they charge people a commission. To become a South African forex broker, you need to have a license that permits you to trade stock through exchange.
Is it safe to trade online in South Africa?
Yes, it is safe to trade online South Africa. Make sure that the broker’s website is secured with an SSL Certificate to avoid your information being stolen or leaving your sensitive information on the website. Nonetheless, we recommend you trade with trusted forex companies. Do your research to find out if the company is legit and not just some online scam.
Is currency trading legit?
Currency or trading forex is real and legal in South Africa. Although there are so many scams associated with forex trading. South African forex regulators work day and night to eliminate scammers who rob people their hard earned money through forex investment.
What is a binary options broker?
Binary options broker is a person or a company that runs a financial option whereby the payoff is either some fixed economic amount or nothing at all.
Is binary options a gamble?
Binary options in some parts of the world is seen as a form of gambling. Many binary brokers and outlets have been exposed as scams. Binary option is regarded as a high-risk part of financial investment.
How do I start investing with little money in South Africa?
Well, it’s easy, start by saving every month. Avoid spending your money on unnecessary things. Save with a goal in mind. When you feel like you are done saving enough, you will then be able to use your money and start investing on forex South Africa or binary options little by little. There’s no rush, take your time to avoid risks.
How much money can you start trading with in Rands?
In South Africa, you can start trading from as little as $100 or R1000 Rands, but this also depends on your forex broker.
How many times a day can you trade?
You can only make five trades per day. You don’t have to overdo it. 24 Trade Forex can always recommend additional reading. We are here for you.
How can one be a successful forex trader in South Africa?
Becoming a successful forex trader comes with practice. You cannot wake up today as a successful trader. Do your research, find yourself a mentor (someone who will guide you), develop forex trading strategies and use demo accounts to practice more. If the market is favouring you, take advantage of it. Remember, you also need to teach others so that you won’t forget your forex trading tips. Sharing is caring.
Is it easy to trade forex in South Africa?
Forex online is easy once you understand how it works. Remember to start off with demo accounts before trading using real money. Also learn different forex terms so that you will know exactly what you are doing.
How to trade forex in SA?
Step 1: Understand basic forex terminology
Step 2: Read a forex quote
Step 3: Decide what currency you want to buy and sell
Step 4: Learn how to calculate profits
Forex Trading Glossary
Equity: This refers to the current market value of your account
Free Margin: The amount in your account available as margin for new positions
Forex: Foreign Exchange
Margin: The amount that is needed in your account as margin for open positions
Margin Call: A requirement by the broker to deposit more funds in order to maintain an open position.
Market Order: An order to sell at the Current bid price or buy at the current Ask price
Offer: Price at which brokers are willing to sell.
Take Profit: An order to buy or sell at a specified price when the market moves down to that price
Technical Analysis: Analysis that is applied to the price action of the market to mature trading decisions
Ask: Refers to the ‘offer’ or a price which a broker is willing to sell
Balance: The value of your account not
Bid: Price at which broker is willing to buy
Ask Spread: The distance between the Bid and Ask price
Drawdown: The amount of a decline in account value
Fundamental Analysis: Macro or strategic assessments of where a currency should be trading based on any measure but the price action itself
Leverage: The amount uttered as a multiple, by which the estimated amount traded surpass the margin needed to trade
Limit: An order to sell at a specified price when the market moves up to that price or to buy at a specified price when the market moves down to that price
Pip: The smallest price growth in a currency
Roll over: Changing of futures when they run out to the new contract
Spot Foreign Exchange: Currencies traded between two participants, usually banks
Stop: An order to buy or sell at the market merely when the market moves up to a specific price
Swap: The cost of holding an open position
Liquidity: A function of volume and activity in a market
Tick: The smallest price growth in a CFD price