Choosing A ZAR Forex Broker – How to Guide
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As a Forex trader, picking the right broker is an important decision. It will affect your trading experience in the currency market and your broker will act as the trading medium, a platform you will visit on a daily basis to execute your trades.
For new Forex traders, it’s essential to pick a broker which has a good reputation and a large number of users, indicating popularity amongst the trading community.
A popular broker means that a lot of people find it a good place to do their trades, hence making it more likely that you as well will enjoy the experience. However, it’s probably not the best idea to simply pick the most popular broker without considering a few things. Which broker suits you best depends on your situation and requirements.
How to find the best ZAR Forex Broker
There are a few fundamental things that generally apply to everyone that does Forex trading in South Africa, regardless of your circumstances, level of experience, or time that you will spend trading on the Forex market.
Transactions need to be safe, and the interface must be user-friendly, otherwise, you will want to turn away or give up on the trading. The internet is a great place to do research on the best ZAR Forex brokers in South Africa. You can read detailed reviews and compare the different options to see which one fits you best.
What is a Forex broker?
Starting with the basics, a Forex broker is a person or organisation between the trader and the network of banks that trade with one another. The broker allows buyers and sellers from all over the world to trade with currencies on the Forex market. Hence, the broker is a middleman between you and the market, but also between you and a so-called liquidity provider. With a Forex broker, you have 24 hours of access a day to the market, and you can speculate on currency pairs from a huge number of countries over the world.
Liquidity in Forex trading
Liquidity often describes cash in a company or on a market, but the term has a specific meaning on the foreign exchange market. When we say the market is liquid, that means a high number of people are buying and selling. High liquidity means that the trades are frequent. Sellers that sell large amounts of currency are called liquidity providers.
Liquidity providers are market makers
What is a liquidity provider? As we mentioned earlier, the broker acts like one. The liquidity provider will buy and sell currencies at set prices. In other words, the liquidity provider makes the market – a market maker. They contribute to price stability and improving liquidity overall which is positive for the market.
A highly liquid market is sometimes called a deep market or a smooth market. On the contrary, if the market is illiquid, it will be characterised by gaps in prices and sudden changes. A good liquidity provider is identified by stability and high trust from the traders.
The Forex market has high liquidity
In general, the foreign exchange market has a high level of liquidity compared to many other markets. The reason why it’s so liquid is partly that it stays open all weekdays for 24 hours.
Furthermore, because the Forex market is so large, there are consistently a very large number of trades happening all the time. The trading volume is high even when some markets around the world close and the liquidity fluctuates.
The difference between a broker and trading platform
You may have heard of both Forex brokers and Forex trading platforms. They are two different things, but at the same time, both of them are linked together. The broker organises the buying and selling of Forex on behalf of the traders.
To compete with other brokers, they try to keep their costs down. As a trader, you will pay fees when you trade, for example, a spread which is the difference between the buy and the sell prices.
What is a Forex trading platform?
In order to interact with the broker, you need a trading platform. The trading platform is often a website or a mobile app, so it can be accessed from your laptop, PC, tablet, or mobile phone. By using this in your web browser or as software which you download, you can create an account and start trading with currencies.
The trading platform is a kind of tool used to analyse the market and sell and buy through a broker. In order to trade, you need both a broker and a trading platform. The broker supplies you with a software interface, which is the currency trading platform you use to carry out online trading.
Forex brokers in South Africa
The top brokers in South Africa are all safe to use, with competitive trading costs and access to the global interbank system. By doing research and comparing different options, you’re more likely to make a good decision which you’re happy with and want to stick to for your Forex trading.
Which is the best broker?
When it comes to finding the best Forex broker, it varies depending on the requirements and goals that you have. Have a look at the list below where we have concluded some useful things to look at when choosing your Forex broker.
- Customer service – what’s it like? Since the market is open 24 hours a day, you probably want to make sure that you can receive the help you need anytime during the day. Check if you’re able to call a live person or do a live chat, instead of waiting for an email reply.
- The trading platform should be easy to learn, with clear buttons for buying and selling, and at the same time provide all the analytical tools that you might need. Consider creating a demo account on the trading platform before you start out, to find out whether you like the user experience.
- Account features and types, how do they fit you? Consider features such as commissions and spreads, the initial funding needed (deposit), how easy depositing and withdrawing money is, and access to leverage.
- Currency pairs may vary at different brokers. Make sure they have the Forex pairs that you’re interested in trading with.
As a trader, these 4 factors should always be taken into consideration when making your decision to choose a ZAR Forex Broker. Be smart and do your due diligence!
Jason Morgan is an experienced forex analyst and writer with a deep understanding of the financial markets. With over 13+ years of industry experience, he has honed his skills in analyzing and forecasting currency movements, providing valuable insights to traders and investors.
Forex Content Writer | Market Analyst