Forex Trading in Swaziland
Did you know over $5 trillion worth of transactions happen in the forex market daily?
If you are a Swazi trader looking to find the nitty-gritty of forex trading in Swaziland (now Eswatini), then this post is for you.
We are going to go through all the details, from getting started in forex to some of the key forex strategies you can use.
So make sure to stick till the end!
The Swazi economy is similar to the economy of South Africa, from which it receives more than 90% of its imports and sends almost 70% of its exports.
Swazi investors who want to enter the forex market must first learn how to navigate a market context. Since there are no forex brokers in Eswatini, anyone who trades from the country does so through an offshore broker.
Fortunately, several businesses are looking to grow into Eswatini, and there is plenty of protection in place to protect investors from fraud.
It can be more difficult to find a broker who accepts Swazi lilangeni. Since 1974, the lilangeni has been pegged at par to the South African rand, but some brokers still need investors to trade in a more liquid currency.
The lilangeni’s value is linked to the South African economy, especially during times of inflationary pressure. The Eswatini Central Bank, on the other hand, maintains the right to freely set the country’s interest rates to preserve the country’s economic balance.
Getting started as a forex trader is much simpler than any other kind of trader. You just need a laptop or a phone and a stable internet connection. Forex trading in Swaziland has grown in popularity, and it is closely linked to the rapidly growing forex trading industry in neighbouring South Africa.
Although there are no locally based Swazi forex brokers, many globally recognized and regulated forex brokers serve local traders.
Here’s what you need to get started:
- Select a broker: The first thing you must do is choose a forex broker. Before opening an account with a broker that offers forex trading to Swazis, do your research. We will go through the account opening process in more detail later.
- Deposit amount: After creating an account, you will need to deposit to start trading forex. You can choose your account currency and fund your account in a number of ways, depending on the broker you choose. Wire transfers, debit cards, and electronic payment services such as WebMoney and Skrill are some of these funding options.
- Make your first trade: Once your forex broker has received and verified your funds, you can start trading currency pairs.
FCA, FSCA, ASIC, SCB
What do you need to know as a beginner Swaziland trader?
1. Understand the basics
Forex trading is the practice of speculating on currency markets in order to benefit from them. Currencies are exchanged in pairs, so by exchanging one currency for another, a trader is speculating whether the value of one currency will rise or fall against the value of the other.
Trade flows, economic, political, and geopolitical events that affect forex supply and demand affect the value of a currency pair. This causes regular uncertainty, which can provide a forex trader with new opportunities.
For instance, the USD/SZL rate indicates how many Swazi lilangeni is needed to buy one US dollar.
As a forex trader, you will come across many forex terminologies, so it’s important to understand them:
A pip is one-hundredth of one percent, or 0.0001, and signifies the smallest movement in a particular exchange rate.
Leverage is when a trader borrows funds to invest in a currency. Leverage is a term that is often used in forex trading. Borrowing funds from a broker enables you to trade larger positions. As a result, leverage increases the returns from fluctuations in the exchange rate of a currency pair. However, leverage is a two-edged sword, and you must carefully select your account’s leverage.
The bid price signifies the maximum price you are willing to pay for a currency pair. The ask price indicates the minimum price that you are willing to take for that same currency pair.
Both bid and ask prices are given in real-time and are updated regularly. For example, the bid price for the Euro against the US dollar is 1.1990, which is the price at which a seller wishes to sell the EUR/USD.
The spread is the difference between the price you can purchase the currency and the price you can sell it. Typically, the spread is calculated in pips.
Forex lot sizes
A lot is a unit of measurement in a forex transaction.
When you place orders on your trading platform, orders are placed in sizes quoted in lots.
There are three lot sizes in forex:
- Standard Lot – 100,000 units
- Mini Lot – 10,000 units
- Micro Lot – 1,000 units
Understanding the above terms will help you understand what is going on when you see a forex pair rising or declining.
2. How does the forex market work?
In the financial world, forex trading is one of the most common forms of trading. Even if you realize it or not, currencies significantly impact almost everybody on the planet. This is because currencies are the means of exchange for international trade and industry.
There is no central exchange market where foreign exchange is traded. Over-the-counter, or OTC, trades are performed electronically. All trades are carried out via computer networks that link traders all over the world.
The market is also open 24 hours a day, five days a week, and virtually every brokerage company offers services during that time.
Almost every time zone allows you to execute trades in London, New York, Zurich, Paris, Tokyo, Singapore, Sydney, and Hong Kong.
Even if the trading day in the United States has ended, the forex market in Tokyo or Hong Kong has started anew. With the constantly shifting price quotes, you can see that the forex market is active almost at any time of day.
Currency pairs are traded on the forex market. A market price is given to each forex pair. The price mentions how much of the second currency is needed to buy one unit of the first currency.
If the GBP/USD currency pair price is 1.3800, this means that it costs 1.3800 US dollars to buy one British pound.
Since the forex market has become more accessible, and you can open an account in a few minutes, you want to ensure that everything goes as planned so that you can trade without any doubt. You must understand that one of your top priorities should be security.
So, before you open a trading account, make sure to check out the broker’s website. If you see anything suspicious, do not open an account with that broker.
4. Payment options
Eswatini Central Bank is in charge of foreign currency operations. The bank supervises forex Bureaus to ensure that they comply with laws and regulatory requirements under this mandate.
You can pay with VISA, MasterCard, Skrill, Neteller, and various other online money transfer services such as MTN and WebMoney.
Forex trading example in Swaziland
Let’s look at an example of how a Swazi trader can approach forex trading.
Consider the Swazi lilangeni (SZL) against the US Dollar (USD). One US dollar equals 14 Swazi lilangeni. If you buy USD 1,000, you will pay 14000 SZL. Assume the value of SZL rises in the market. In that case, you would pay less SZLfor each USD bought. That means that for every USD sold, you will receive more SZL than you charged. The difference between the SZL charged and the SZL earned is your profit.
How to open a forex trading account in Swaziland?
You can open an account by deciding on a licensed forex broker and signing up with that broker. We will talk about Swaziland forex regulations after this section.
The first step is to open an account with a forex broker. To get your account set up, you will need to include a lot of personal information, including the following:
Your name, address, email address, phone number, account currency type, trading account password, and date of birth.
After opening an account, you need to deposit funds to start live trading. You can use any of the payment options we mentioned earlier.
Once the broker has verified your payment, you can start taking your positions. Note that read all the instructions that your broker provides about their regulations, trading platform, and spreads.
If you do not want to open a live trading account, you can also open a demo account. A demo account lets you trade with virtual money. It is really helpful if you want to learn forex and don’t want to trade your money.
Swaziland forex regulations
As mentioned earlier, the Central Bank of Eswatini regulates all forex-related activities in the country.
The bank checks forex bureaus to ensure that they comply with applicable laws and regulations.
The primary operation of forex bureaus is the buying and selling of foreign currencies. In this context, no person or company can transact in foreign currencies unless approved by the Central Bank of Eswatini.
Anyone who unlawfully sells or trades national or foreign currency commits a crime and is convicted under the penal code’s provisions.
In addition, the bank has established a system that works with the global forex market and a regulatory framework that allows for online forex trading.
However, it is not required to get authorization from the Central Bank of Eswatini to offer financial services and forex trading to the residences of Swaziland.
How much capital do you need to start trading in Swaziland?
Suppose you are looking to get started trading forex. In that case, the barriers to entry are lower and less significant than in almost any other type of trading, making forex even more appealing to new traders.
When it comes to opening a forex trading account, most forex brokers have a very low minimum requirement. On average, you can start trading with as little as $10.
In certain cases, forex brokers will also allow you to open a micro or a cent account, which will allow you to trade with as little as USD 1.
If you are a novice, you can have some profit-making experience. But all it takes is one bad trade to wipe out all your money.
This is when the value of the risk/reward ratio comes into play.
The secret to success is finding the right balance between the risk per trade and the desired profit. Besides that, this balance should be rational and in line with your trading strategy.
The risk-to-reward ratio calculates the potential return for a given level of risk.
If your risk/reward ratio is one to three, you risk one dollar to earn three dollars.
This means that you should adopt the rule of thumb and adhere to the 1% principle.
Best forex trading platforms for Swaziland traders
The best forex trading platforms for Swaziland are those provided through forex brokers. The MT4 platform is available at every broker, while some brokers also provide the MetaTrader 5 and cTrader platforms. You can download these platforms through brokerage websites on your desktop, or you can install their apps from Google Play and the Apple store.
What is the best time to trade forex in Swaziland?
The best time to trade forex in Swaziland is between 11 a.m. and 5 p.m. when both the London and New York sessions are active and you overlap. During these trading hours, volatility is at its peak.
While you can trade at any time, the London/New York overlap works best if you do not want to devote full-time to trading.
The best time for trading forex in Swaziland according to four major forex sessions is:
- 11 p.m. – Sydney session
- 3 a.m. – Tokyo session
- 11 a.m. – London session
- 3 p.m. – New York session
If you can trade during the overlapping sessions between Tokyo and London or London and New York, you can take advantage of the most liquid and volatile sessions.
Is forex trading legal in Swaziland?
As we mentioned earlier, the Central Bank of Eswatini is the main governing body of financial markets. The bank is in charge of developing policies and enforcing regulations in the financial sector.
Although forex trading is not illegal in Swaziland, it is a grey area, and locals are advised to trade with a broker who the Central Bank approves of Eswatini.
Forex trading strategies for Swaziland traders
A strategy is what puts your trading in perspective and allows you to consistently set and meet goals. Strategies eliminate most of the research work involved in finding profitable trading opportunities.
Here are some of the common forex trading strategies you can utilize:
Trend trading is a basic forex strategy that is used by many traders of all levels of experience. Trend trading seeks to generate positive returns by capitalizing on a market’s directional momentum.
Day trading is a method for trading financial instruments on the same trading day. This means all positions are closed before the end of the trading day.
This may be a single trade or a series of trades in a day.
Scalping is a forex approach that describes the process of taking small profits multiple times a day. You can achieve this type of trading by repeatedly opening and closing trades during the day.
You can do scalping manually or through an algorithm that follows predefined rules on when and where to enter and exit positions. In scalping, traders pick the most liquid forex pairs, as spreads are tighter on these pairs and suit this type of strategy.
If you want to keep up with economic and geopolitical news, news trading might be for you. Following a major economic news release, the approach involves taking advantage of rapid swings in the exchange rates of major currency pairs such as EUR/USD or GBP/USD.
Carry trading is one of the most basic currency trading strategies. When you buy a high-interest currency against a low-interest currency, you are engaging in a carry trade.
While you are paying the low interest, you are earning a higher interest rate on the financial instrument you borrowed/sold, and you are receiving a higher interest rate on the currency pair you bought.
As a result, the profit is the money you make from the interest rate difference.
The momentum trading strategy is based on price continuation. A trader buys a currency pair when it is performing well constantly and sell when it is under-performing.
The essence of a momentum strategy is to predict future price movements based on past price trends.
Momentum strategies often use visual tools such as oscillators and candlestick charts.
Swing trading is a strategy that seeks to profit from both range-bound and trending markets. You can enter long and short positions by choosing highs and lows.
Is forex trading illegal in Swaziland?
No, trading forex is legal in Swaziland. Although there isn’t any regulatory body for forex trading, the Central Bank of Eswatini deals with the capital markets.
How do you get started with forex trading in Swaziland?
You can start trading forex in Swaziland by looking for a broker who meets your trading needs, opening an account, and depositing funds.
How much money do I need to start trading forex?
Some forex brokers will let you begin trading with as little as $1. Others require you to start with $100 and work your way up to $1000. It all depends on how much money you want to invest.
Which African countries are known for forex trading?
Pros of forex trading in Swaziland
- Since the forex market is the biggest in the world, it is extremely liquid. This ensures that it is simple to get your capital into and out of the market.
- The forex market is open 24 hours a day, seven days a week. This is convenient for those who work during the day because it allows you to trade forex at night or before heading out to work.
- This is helpful because it encourages you to make bigger trades than you have available funds for. This means that if you have $100 in your account, you can exchange up to $1,000 at a time. This helps you to make significant progress.
- The spread is the difference between the bid and ask rates, and it is your only expense when trading forex. Unlike the stock market, where there are commissions are higher.
- Although it is good to use leverage to maximize the size of your profits, if you invest incorrectly, you might be in trouble. Consider getting $100 but having to pay $2,000.
- If you want to succeed in forex, you must first understand forex basics. Because of the steep learning curve, several forex brokers have a free demo account if you don’t want to trade with real money for now.
- Just because the forex market is open 24 hours, a day does not mean you can trade all day.
- The market moves differently during the day, with just a few peak hours where the moves are big enough to capture.
The forex market is massive, but that doesn’t mean you can’t find your place. To find your way around the market, you have to learn about forex as much as you can.
Explore as much as you can about the ins and outs of the forex market before putting your money on the line.
Choose your broker wisely, as it will make or break your trading journey.
Before putting in real money, take a test drive on the demo account. A demo account is like a standard account where you can trade with a virtual capital provided by the broker.
After familiarizing yourself with a demo account, open a real account. Take baby steps and start with a small account.
Keep your emotions in check. It’s hard to do that, but forex trading is 90% psychology.
If you don’t understand anything, reread the guide, you’ll find all your answers.
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Heinrich is a forex and CFD enthusiast with a passion for writing good informative quality content. He strives to showcase the best forex brokers in Africa. Join him on his Journey!
Content Writer | Market Analyst
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