Binary options, unlike forex trading, always have a predetermined end value. This means that you always know exactly how much you stand to gain and how much you stand to lose upon the execution of your trade. Let’s look at how South African brokers can trade binary options and if it’s legal at all.
How binary options work
The potential profit is given in the form of fixed odds. The maximal potential loss is your stake.
The difference between Forex Trading and Binary Options
In forex trading, profits are variable. There is no upper limit to how much you can earn (or bottom limit to how much you can lose). Margins do not exist in binary options trading because they are simply not needed. Your maximum loss when trading binary options is always your stake, you can never lose more than your stake. And you win a predetermined amount if you are right.
So, the profit potential is much higher for forex trading than for binary options.
How to trade binary options in South Africa
If you intend to trade binary options in South Africa, you need to have a brokerage account with a trustworthy international platform. South Africa does not prohibit locals from trading binary options offered by international brokers. You need to consider the reputation and authenticity of the broker by ensuring they meet the following criteria:
- The brokers should be regulated by an international authority.
- You need to check the payout percentage of all the assets. If the platform offers a good payout percentage, you can rely on it.
- Check if they offer trial or demo accounts with their platform. This is because beginners need to test their knowledge and skills in trading binary options in South Africa before trading with real money.
- The withdrawal ease is also one of the most important aspects to consider before choosing any platform. The withdrawal time should not exceed 3 to 5 days.
Is binary options trading legal in South Africa?
South Africans have shown a keen interest in trading binary options. The financial market in South Africa has enormous scope to help investors buy and trade various financial instruments. However, certain regulations are mandatory for the South African public to follow.
The number of international brokers who let South Africans trade in binary options is increasing day by day. Under the current laws in South Africa for binary options, South African brokers are not allowed to offer their trading services to South African investors or traders.
Therefore, South African traders have to look for international brokers who are licensed and authorized to offer their services. The legalization of binary options trading in South Africa is currently in a grey zone, and it is unclear when it will be regulated by the government.
Will binary options trading be banned soon?
There is a very rare chance that the country will completely ban binary options. Instead, they will soon introduce regulations that will be beneficial for traders. Many countries have already banned or regulated the customization of binary options trading. This is because of the high risk of traders going bankrupt. South Africa will likely not stand out as an exception by allowing unregulated binary options trading.