Many South Africans tend to ask how much they need to start forex trading in South Africa. Depending on the South African forex broker that you chose, you will be required to deposit anything between $5 and $250 to open a forex account.
The money deposited into the account will impact the amount of leverage you, as a forex trader, will be able to use in our trades.
The forex market moves in Pips. A pip, stands for point in percentage, is a very small measure of change in a currency pair in the forex market. The USD/ZAR may be priced at 14.3025 the fourth decimal place represents one pip of movement. If the USD/ZAR moves to 14.3026, that is a one pip move, if it moves up to 14.3125, that is a 100 pip move.
Forex pairs trade in 1000, 10,000 and 100,000 units, called micro, mini and standard lots. Forex trading beginners are advised to open a micro lot account when they start forex day trading. Trading micro lots enables for more flexibility so risk remains below 1% of the account on each trade.
For example, a micro lot trader can buy R 6000 worth of currency, but if they open a mini lot account they can only trade in increments of R10, 000, R20, 000 or R60, 000 etc. If trading standard lots, a trader can only take positions of R100,000, R200,000, etc.
When the ZAR (South African Rand) is listed second in the pair, as in the USD/ZAR, the value of the pip is fixed. If you hold a 1000 micro lot, each pip movement is worth $0.10. If you hold a 10,000 mini lot then each pip is worth $1. If you hold a 100,000 standard lot then each pip move is worth $10. Pip values can vary by price and pair, so knowing the pip value of the pair you’re trading is critical in determining position size and risk.
Most forex trading beginners initially struggle in understanding and predicting forex signals. Today, there are hundreds of forex trading software that help investors determine the signals in forex and also make them gain profit very easily.