Forex Brokers in South Africa

When choosing Forex brokers in South Africa, each category within our Forex brokers in South Africa reviews should be carefully considered. It is important that traders fully understand the importance of each. Although they all matter, some carry more weight than others.

 

Most of these main categories will contain sub-categories to provide a breakdown and a deeper insight into the brokers. From STP, ECN to Market Makers, should not be your deciding factor.

We have come across a so-called ECN broker with horrible trading conditions and executions. Even broker made stop-hunts are not uncommon with STP and ECN brokers. Someone, bank, institution, broker or hedge fund always take the opposite side of your trade. Without this functionality, there is no market.

All brokers get price feeds from some source. Some brokers as mentioned, manipulate the price slightly just to stop you out. 99% Of all brokers take on full or partial risk against their clients, which is not uncommon or wrong/illegal. All you should be on the lookout for is fair trading conditions, even from a market maker.

They are not all out to get you! Most brokers want longevity and do business with their traders for as long as possible. When we say most, we are well aware of brokers that “burn” their clients as soon as possible. To them, it is a simple volume game.

Forex Brokers Reviews

Regulation and fund safety is at the top of the criteria to be checked off. The Forex industry has evolved a lot in terms of regulation. A broker without some form of regulation does not last long before they are shut down by regulators. A trustworthy broker should be regulated with either one of the following entities; FSCA (South Africa), FCA (United Kingdom), ASIC (Australia), CySEC (Cyprus).

The benefit you receive with a South African FSCA regulated Forex broker, is the surety that any issues can be resolved within SA. This simplifies matters for you as a trader.

Broker Type refers to DMA (Direct Market Access) or MM (Market Maker) brokers. Although the latter is taboo, such brokers can still offer a great trading experience with fair market conditions. At some point, an institution, hedge fund, bank, broker or trader is taking the opposite side of your trade. Where your order is executed is not as important as receiving fair trading conditions.

Order execution time, slippage and price latency will be covered within this category. Some brokers do not allow scalping or hedging – We will inform you if these trading methods are allowed.

Support is an important factor for traders seeking a good broker. Having easy access to different channels greatly increases trust and peace of mind. Educational material, trading tools and webinars play a big role in supporting traders while extending their account lifetime. The brokers that put effort into providing adequate resources are well rewarded.

Deposit and Withdrawals are right at the top after regulation. Some brokers make it extremely easy to deposit but withdrawals seem to be slow and lengthy. We will cover deposit and withdrawal fees, methods and ETAs. No “umms” and “ahhs” at withdrawal time. Minimum deposit and withdrawal amounts are also a key factor and will be discussed.

Trading Conditions are subcategorized into the different account types that brokers offer. Each account type has its own leverage, spreads and minimum lot sizes associated with it. As per our standards, each and every broker listed will provide traders with a demo or no deposit bonus account to practice with. Swap-free accounts, also called Islamic accounts, are becoming a standard offering. We expect brokers to offer these accounts to all traders in the near future.

Trading Platforms come down to trader preference. Although there are excellent proprietary platforms designed by brokers, traders tend to stick to what they know best. MetaTrader 4 is the king of the Forex trading platforms. MT4 has a vast amount of online tutorials available for free. MetaTrader is also an EA (Expert Advisor) and robot friendly. Indicators are also in abundance compared to MetaQuotes’ latest MetaTrader 5 platform.

IB Affiliate Program is not only important to marketers but to the traders that use the broker. Refer a-friend programs allow users to easily generate a tracking link to share on social media and email. Active traders produced via these links result in a financial gain to be used to trade with.

Regulated Forex Brokers in South Africa

Although there are many regulators globally, not all are rated equally. Some Forex brokers in South Africa hide behind smaller entities that are not well managed nor trusted. Brokers that are regulated by internationally recognised entities should be preferred over their counterparts in; Bermuda, Cayman Islands and St Vincent.

These are small island states that are not considered to provide the same level of safety and security to their traders.

Forex brokers that are regulated by one of these entities are a strong indication of safety, security and fair operations.

• Financial Sector Conduct Authority (FSCA) – South Africa
  The Financial Sector Conduct Authority, formally know as the FSB, is the financial markets conduct regulator of South Africa. Ensuring a transformed financial sector, the integrity of financial institutions and fair outcomes for customers.

• Financial Conduct Authority (FCA) – United Kingdom
  The Financial Conduct Authority is a financial regulatory body in the United Kingdom, but operates independently of the UK Government, and is financed by charging fees to members of the financial services industry.

• Australian Securities and Investments Commission (ASIC) – Australia
  The Australian Securities and Investments Commission is an independent Australian government body that acts as Australia’s corporate regulator. ASIC’s role is to enforce and regulate company and financial services laws to protect Australian consumers, investors and creditors.

• Cyprus Securities and Exchange Commission (CySEC) – Cyprus
  The Cyprus Securities and Exchange Commission, better known as CySEC, is the financial regulatory agency of Cyprus. As an EU member state, CySEC’s financial regulations and operations comply with the European MiFID financial harmonization law.

Choosing South African Brokers

The importance of choosing the right Forex broker is what sets you up for long term success. That is only the beginning of a profitable trading journey. We elaborate and provide insight into choosing the right broker. First and foremost you need to understand; what is Forex trading and how does it work.

How to Select the Right Broker?

Whether you are a new, intermediate or expert trader, you might want to re-evaluate your broker choice. We point out the review and selection process you should follow. Your broker is like your bank. You are trusting them with your money. This decision should not be taken lightly. You should feel at ease at all times. You should be able to recommend your broker to family and friends. These are good indications that you have made the right broker choice.

How to Start Forex Trading?

Your first step is to make an educated decision on the broker you will trade with. Opening a live account with your selected account currency, account type and leverage is an important step. Deciding how much you are going to fund your trading account should be well thought through. Never risk money you cannot afford to lose. Don’t put yourself under unnecessary financial stress.

You are then ready to implement your trading strategy and execute your very first trade. Read our full article on how to start Forex trading.

How to Decide How much You Should Deposit?

This is a very important topic and ties in with other mentioned factors. How much should I start trading with? What you put in is what you get out. Trading is no different from any other business. A business that only has a capital input of R1,000 is not going to get very far in the respected industry. You should have the same mindset when it comes to your trading account. Never risk money you cannot afford to lose.

How to Avoid Tax Trading Forex?

Depending on your country there might be different tax implications set on profits or losses. You should always consult an accredited accountant or local TAX revenue service.

How Much Do I Need to Start Trading Forex?

Only you as a trader can truly answer the question as to how much you should start trading with. We can simply provide you with industry averages and reasoning to better make your decision. The median first-time deposit in South Africa is R15,000 with the low end being R1,000. These are usually available by Forex brokers with ZAR accounts. Seeing first-time deposits of R100,000 and up is not uncommon.

As trading is a, ‘you get out what you put in business’, it does not make financial sense to start with an amount you would not be satisfied with getting out on a monthly basis. Unless you are a trading wizard you cannot expect to triple your account on a monthly basis. Realistic returns based on our research is between 3% – 30% depending on your overall skill level.

How to KYC/Verify Your Account with Your Broker?

Any and all regulated Forex brokers in South Africa and globally have to KYC (Know Your Client) each live account opened by individuals or companies. This is to prevent money laundering. You would normally be asked to upload the following documents; Proof of Identity (ID, Passport), Proof of Address (Utility Bill, Bank Statement), Proof of Bank Account (Bank Statement, Bank Verified Proof of Account).

Some brokers might require more than 1 document depending on your country and risk profile. Verification time can range from a few minutes to 48 hours with some brokers.

Choosing a Broker that Offers Stocks?

If stocks or Equities are important to you, a broker that offers these assets is key. Spreads and commissions will differ between brokers and is an important factor. We are also building out a stock market education section.

Forex trading in South Africa should be approached the right way. We are here to make that journey informative and successful. Be sure to trade with the top Forex brokers in South Africa. Visit our Forex trading education section to boost your knowledge.

Bar Charts, Volume & Time Comparisons

Technical analysis may provide a wealth of trading knowledge in a very short period of time. Traders can easily detect trends and place trades based on those trends.

Of these technical analysis styles, bar charts, volume comparisons, and time comparisons are usually needed.

Bar chart

Bar charts are made up of several price bars, each of which depicts how an asset or security price changed over a given time span. Each bar usually displays the open, high, low, and closing (OHLC) prices.

Traders may use bar charts to evaluate patterns, identify possible trend reversals, and track volatility and market movements.

Volume analysis

The study of the number of contracts or shares of a security that have been traded in a given time period is known as volume analysis.

Volume analysis is one of the considerations that technical analysts use to inform their trading decisions. Investors can calculate the importance of price fluctuations insecurity by examining volume patterns in accordance with price movements.

Time comparisons

Forex timeframes are simply various hours, such as 15-minute or weekly, that can be used to see if the price has changed, and then traders can conduct technical analysis on the charts.

Economic Calendar

The economic calendar is one of your strongest trading allies. You’ll only spend one minute a day (or less) on it, but that one minute is critical if you want to be a successful trader.

An economic calendar is a list of important news releases and activities that could impact currency exchange rates and the stock market as a whole.

These occurrences often have a large impact on capital markets and currency volatility.

An economic calendar informs traders of what will happen when.

The economic calendar is used by traders to schedule trades and be aware of any event threats that may impact their open trade positions.

Economic calendars are typically focused on the planned publication of economic reports for a specific nation.

An economic calendar can include GDP results, jobs reports, central bank announcements, consumer sentiment, and hundreds of other types of events.

The majority of the events are divided into two categories:

1. Provides information about previous financial or economic activities.
2. Forecasts of financial or economic developments in the future.

Following the economic calendar can be particularly useful for a trader who wants to trade news.

If news traders correctly predict the outcome of a news release, they may open a place immediately before the expected news and close it within hours of the announcement.

Elliot Wave Principle

Back in the 1920s-1930s, there was a brilliant genius and professional accountant called Ralph Nelson Elliott.

Elliott discovered that financial markets, which were thought to behave in a very disorderly manner, actually did not by closely reviewing 75 years of stock results.

His theory was published in the book The Wave Principle.

Elliott demonstrated that price fluctuations triggered by collective psychology often appeared in the same repeated patterns.

He referred to these up and down swings as “waves.”

He assumes that if you can correctly recognize price repeating trends, you will forecast where the price will go (or not go) next.

As a core principle, the theory represented impulse and corrective waves. As a result, they are Elliot wave forms.

1. Impulse/Motive

Impulse waves are made up of five additional waves, three of which are motive and two of which are corrective. It’s written as 5-3-5-3-5. This series of five waves represents the continuation of a trend.

2. Corrective waves

Corrective waves, also known as diagonal waves, are made up of five waves that show a pattern reversal.

To apply the Elliot principle, traders must first count waves before deciding whether to ride the trend or go against it. You need to follow a few sets of rules before applying it as a trading strategy.

How to Establish a Directional Bias

A trader’s assumption that the market will advance in a certain direction as a result of particular events is known as directional bias, and it can be defined in a variety of ways.

Developing a directional bias also entails examining charts for support and resistance levels as well as price action. It’s also important to consider market momentum: the market will continue to move in one direction until something triggers a break in the trend and reverses the tide.

Creating a directional bias is a two-step process:

1. Predicting whether the price will rise or fall.
2. Trigger conditions or trading rules that validate your market bias

Psychologically, once you’ve established a directional bias, you’ll be more confident in executing your trading strategy because you already know what you’re going for.

With a directional bias, you are no longer a reactionary investor but can schedule your trades ahead of time and are less emotionally attached to the markets.

It is not enough to create a directional bias; you must also have trading rules in place to validate your bias, or you will end up being more wrong than right.

In the trend vs. counter-trend strategy, directional bias is extremely important. Finally, directional bias can assist you in determining the course of the trend and whether to go long and buy or short and sell.

Introduction to Sentiment Analysis

There is no question that forex is the most liquid market in the world, with regular transactions exceeding $5 trillion.

It stands to reason that market participants can exhibit signs of emotion. It’s in human nature wherever there is a significant amount involved; emotions come into play.

Sentiment analysis is used to determine how other traders feel about the overall currency market or a specific currency pair.

The forex markets do not simply represent all available information because traders can all act in the same manner.

Regardless of the information available, each trader’s thoughts and opinions, expressed by whatever position they take, contribute to the market’s overall sentiment.

The problem is that as a retail trader, no matter how much you believe in a particular trade, you cannot influence the forex markets.

As a trader, you must take all of this into account. You must conduct sentiment analysis.

It is up to you to determine whether the market is bullish or bearish.

Then you must determine how you can integrate your market sentiment perception into your trading strategy.

It is entirely up to you if you want to ignore market sentiment. But, we’re telling you right now, you’ll end up at a loss!

MetaTrader 4

MT4 is one of the best platforms for financial trading. The platform is well-known for its user-friendly interface and ease of use.

MetaQuotes developed the platform in 2005, and it is available in 40 languages, as well as on Android and iOS.

Although the app was created to trade forex, it can also be used to trade metals, indices, and other assets.

Some key features of MT4

• In MT4, you can open up to 99 charts at once.
• You can use two indicators at the same time. The primary indicator must be added first, followed by the secondary indicator.
• From time to time, we’re all curious about the length of a trend or pattern. The ruler function in MT4 comes in handy for this. When you press the mouse wheel, drag the left mouse button from one point to the next to scale. It will show several bars as well as the ruler’s start and endpoints.
• In MT4, you can place a pending order. A pending order is a special function that enables a trader’s application to sell or buy to be executed automatically once the price reaches a predetermined level.
• You can get news from financial institutions, central bank prices, and economic and political news from various countries on your MT4 platform.

Technical Analysis vs. Fundamental Analysis

Fundamental and technical analysis are two of the most common methods used by investors and traders to decide which forex pairs or other assets to buy or sell.

Fundamental analysis entails determining a country’s economic well-being and currency. It does not account for changes in currency prices. Fundamental forex traders but would use data points to calculate the power of a specific currency.

Pattern identification on a price chart is used in technical analysis. Technical traders seek after Price patterns such as triangles, flags, and double bottoms. A trader can decide the entry and exit points based on that pattern. Unlike a fundamental trader, a technical trader is not concerned about whether anything is moving because the movements and patterns on the charts are their signals.

Fundamental and technical analyses are very different trading techniques and methods, each providing specific value and insights to help trading decisions, such as when to enter or exit a trade. Although some traders tend to use these forms of analysis separately depending on their trading style and objectives, many use a combination of the two.

Technical and fundamental analysis work hand in hand to allow you to develop good forex trade ideas.

All of the historical market action and economic statistics are available – all you need to do is put on your thinking cap and put your analytical skills into action!

What are Lots and Leverage?

Forex is usually traded in lots, which are essentially the number of currency units you can buy or sell.

A lot is a unit of measurement for a transaction amount.

When you place orders on your trading platform, they are placed in lots of a certain amount.

Lot sizes are classified into three types:

Micro lots

A micro lot is 1,000 units of the base currency and is usually the smallest place size you can exchange.

Mini lots

10,000 units of the base currency constitute a mini lot.

Standard lots

A standard lot is defined as 100,000 units of the base currency.

Using leverage involves borrowing money from your forex broker, which allows you to open much larger trades than you would have been able to open without leverage.

Currency pairs can take days or even weeks to move a few percent. This means that if you do not use leverage, you are unable to make a decent return on your investment in a short period.

The amount of leverage you use will be determined by your broker and your level of comfort.

Typically, the broker would ask for a deposit, also known as a margin.

You will be able to trade once you have deposited your funds. The margin needed per position (lot) traded will also be specified by the broker.

What is Equity & Margin?

Equity reflects the current value of your trading account.

When you look at your trading platform on your screen, equity is the actual value of the account, and it goes up and down with each tick.

It is the sum of your account balance and all floating (unrealized) gains or losses from open positions.

When the value of your current trades rises or falls, so does the value of your equity.

If you don’t have any open positions, your equity equals your balance.

To open and maintain a new position in forex trading, you just need a small amount of money.

This capital is referred to as the margin.

Margin can be thought of as a good faith deposit or collateral required to open and maintain a position.

It is a good-faith guarantee that you can continue to keep the trade open until it is closed.

Margin is a portion of your funds that your forex broker deducts from your account balance in order to hold your trade open and ensure that you can cover any future losses.

As margin is expressed as a particular amount of your account’s currency, this amount is referred to as the required margin.

What is Price Action Trading?

The price movement of a financial asset is referred to as price action.

Technical analysis includes the study of price behaviour.

Price action is about getting to the bare bones of trading instead of using chart pattern recognition or applying technical indicators derived from price changes and having a normal lag.

By analyzing market movement over a fixed time, you can obtain all of the details you need to exchange patterns, breakouts, and swings effectively.

Price responds to all known news, so price movements tell you what the collective perception of breaking news is rather than any single person.

The core principle of market action analysis is that price is always right.

Price action traders prefer breakouts, candlesticks, and patterns as tools. They also employ concepts like support and resistance. These methods and ideas are used by traders to create strategies that fit with their interests.

Price action trading can be beneficial to all new traders. Learning to read and interpret price chart changes develops into a trading device in and of itself. It can be useful if you plan to use other research methods like statistics, indicators, or seasonality.

Price action trading does not assure profits, but it can become an excellent trading style with time and practice.

Become A Better Trader!