Trading Forex in South Africa
In this article
Speculating on currency movements to make a profit is what Retail Forex Trading entails. The Trading forex in South Africa is traded legally by South Africans via any FSCA-regulated forex broker that offers Derivative instruments to South African traders.
Approximately USD 19.1 billion was exchanged per day in forex trading in South Africa in 2017. In addition, the South African Rand (ZAR) was ranked as one of the top twenty most traded currencies in 2016, with an annual volume of almost USD 70 billion.
Due to forex’s higher liquidity, 24/5 market hours & rapid pace, you are likely to want to trade it as an investment instrument. Nonetheless, CFD trading is not without its risks. In this course, we will cover all the necessary steps to start trading and how much does it cost?
Don’t know where to start if you want all your questions answered? This guide will show you how to start trading forex as an absolute beginner.
Forex trading in South Africa: Making Money
The traditional mantra of “buy low, sell high” (which, by the way, works just fine) is not the only way to make money in the forex market. However, if you are knowledgeable, you will recognize opportunities when they present themselves.
Invest in carrying trading: You can profit from the directional shift of currency pairs, but you can also profit from movements in the interbank interest rate. In forex, holding a currency is the same as holding it in a bank. Your holdings earn you interest. Carry trades make their money by taking advantage of differences in interest rates between currencies.
Rather than taking profits or losses based on the movements of a currency pair in real-time, binary options provide the ability to participate in all or nothing trades. For example, if the exchange rate is a certain value on a certain date, you win money.
If the price is less on that date than what was predetermined, you lose your investment.
You can borrow a currency, sell it at a high price, and then buy it back at a lower price in the future if you think the value of the currency will decrease. This is known as the concept of shorting a currency.
Although you need to be careful when following the South African forex market for the first time. Strategies need to be followed which are well-known in delivering high profits and successful results in just one go.
Choosing the best forex brokers in South Africa
The following list of well-regulated brokers can provide an excellent place to begin searching for a decent online forex broker. FxPro, FXTM, FXCM, and Saxo Bank are online brokers with a South African presence and foreign brokers that accept South African clients, such as FOREX.com.
Consider a broker whose website is translated into your preferred language if you prefer to do business in a language other than English. Ideally, the broker would have a staff member who speaks fluently.
The top 3 brokers in South Africa on our list are:
Comtrade offers trading services to traders throughout Africa. CFDs, currencies, forex, crypto, and indices can be leveraged up to 200:1, and over 150 assets are available on the platform.
CMTrading offers a mobile app and a website where you can trade. There are four account types, as well as 24/7 support. So create your official account on this broker platform and start trading right now.
You will go from being a novice trader to an experienced and confident trader by starting with the extensive education section.
In addition to MT4, Sirix, CopyKat, Expert Advisors (for automated trading), and a selection of other trading apps, you can use a selection of additional trading apps, as well.
CFTC and NFA-regulated Forex.com is the nation’s leading forex broker based on assets held by customers. There are also regulations in the United Kingdom, Japan, Australia, Singapore, Hong Kong, Canada, and the Cayman Islands.
FOREX.com demands just $250 to open an account, and if you wish to trade micro-lots, you can do so through this broker. In addition, customers can open an Islamic account with the broker, and client funds are segregated from the broker’s own.
MetaTrader 4 and 5 platforms from MetaQuotes and NinjaTrader are among the most popular desktop, web-based, and mobile trading platforms offered by FOREX.com.
You can also trade on their proprietary Advanced Trading Platform for desktop computers and their Web Trading platform by just opening your browser.
Since 2010, eToro has provided forex and other products to retail clients. In addition, users can become part of a trading community since more than 10 million accounts worldwide.
In addition to CopyTrader, CopyPortfolios, and Social News Feed, eToro’s unique features set them apart from the competition.
A successful trader’s strategy can be copied with CopyTrader and CopyPortfolio. Copying traders is easy, and you can copy up to 100.
Does South Africa allow forex trading?
Forex brokers are available in any country, regardless of whether they are regulated or not. For example, it is legal to trade foreign exchange in South Africa, and the FSCA regulates it. Foreign brokers based overseas do not need to be regulated by the FSCA, but brokers in South Africa must be.
Furthermore, forex trading in South Africa is taxable. No matter how small the profit you make from Forex trading is, you will be taxed. A Personal Income Tax form must be filed with any regular tax payment.
There can be a tax rate of 18% to 40% on forex trading. The amount of profit you make may determine your tax rate.
Two main elements of forex trading in South Africa
A Forex trader’s foundation is built on the pillar of taxation. The South African market has a tax rate ranging from 17% to 41%, depending on the profit generated. Every individual’s tax status also affects the level of taxation.
Regulating is the second most crucial factor! In South Africa, the financial department and foreign exchange market are regulated under the Financial Services and Commodity Authority.
A forex broker must acquire a licence approved by the Financial Services and Consumers Agency (FSCA) to balance clients’ funds in a separate, well-organised manner. Your deposit amount is at risk if the licence is not approved.
How to open a forex trading account in South Africa
When you have gained an in-depth understanding of Forex Trading and its main components, the next step is to open an account. Are you aware of opening an account for Forex Trading in South Africa? Let’s find out!
1. Find out what forex broker requirements are
You need to figure out your forex broker’s needs and requirements to start. The knowledge and experience you have in forex trading will also be important.
By using the best trading tools and high-quality trading platforms, you can select a broker based on your experience in trading. In addition, any of your forex brokers will give you a demo account for free.
Beginners will greatly benefit from having a demo account. Moreover, it gives you a sense of how the trading platform will work and helps you better understand how to deal with traders and forex brokers.
2. Find the best forex broker.
Choosing a reliable Forex broker is now the next step! Know your requirements and needs before opening an account. The next step is to choose a forex broker after you have completed this query. There are local and foreign brokers. Your forex broker should offer a variety of features that you are looking for. These include:
- Rules & Regulations
- The ability to leverage
- Platforms for trading
- Educational resources or the customer access
- Demo trading account
3. Sign up for a forex account
The third step is to open your Forex account in South Africa! The FCSA also regulates forex brokers who accept South African traders and are regulated. You may choose some South African brokers; however, you have to wait a moment and make sure they have a good reputation on the market.
4. Let’s start trading now.
You have now completed your primary mission! Now it is time to trade! Once you have completed the account opening process, the last step is to begin trading online. Have you done your homework thoroughly?
A trading plan based on ethical management principles can be an ultimate option if you still lack knowledge. This can even increase your profits. It teaches you about all those risks of the trading market that you should stay away from to avoid loss of your deposit.
Why is forex trading in South Africa advantageous?
South Africa is a popular market for Forex trading because of numerous reasons. Some of the benefits are as follows:
1. The financial position of South Africa is strong in the global market
The forex market is all about the exchange of currencies, as we all know. Currency positions vary, such as Dollars and Euros, with some weaker than others. South Africa’s currency, the rand, isn’t losing any ground at all.
It has the highest ranking on global financial charts and is one of the strongest currencies. Therefore, in South Africa, you are unlikely to lose money by investing in the forex market.
2. Many trading accounts prefer the South Africans
Investors in South Africa who want to open a trading account in GBP, USD, or EUR are more likely to choose these exchange rate platforms. This is because profits are withdrawn into personal bank accounts more frequently. South Africans, therefore, love investing because they know they have a high chance of gaining profit.
3. It’s a well-paying trade
Investing in trading can help you settle all of your daily expenses in a well-paying manner. This can make your life more enjoyable, and you gain wealth faster.
What are the disadvantages of forex trading in South Africa?
- Calculating prices is a complicated process
- fraught with risk.
How much money do you need to start trading on the South African forex market?
Forex traders in South Africa need a minimum of R1500ZAR or USD 100 to start successfully trading forex!
To open a live trading account with a forex broker in South Africa, you typically must deposit a minimum amount. However, the deposit size will vary depending on the broker, the trading market, and the services the broker offers.
Forex traders in South Africa make how much money a day?
Traders in South Africa earn an average of 45,000 ZAR annually. However, an increase in this earning limit may be possible following the trader’s performance and experience.
To determine how much money you can make in a day as a full-time trader, you must first determine how much money you’re willing to invest.
You have to invest more in the South African forex market to make more income. The smallest lot size makes it impossible for anyone to make a good return with a 500 USD deposit. Traders who start with 50,000 dollars or larger lot sizes can make more than 20,000 dollars per day.
Whenever you make massive returns, it would be helpful if you were not dependent on your trading amount. So as well as following a trading strategy and considering risk management, there is also a need.
Discover the new trading trends, how they impact the SA Forex market, and how they affect new traders.
South Africa’s forex trading is not very different from other countries. An account can be created, or a reliable platform can be chosen with a little difference. Ensure you read all the regulations and rules of trading in South Africa before you start trading to avoid regretting it in the future.
Opening a Forex account in South Africa is not complicated at all. It would be best to learn how the Forex market works and attain a strong position in forex marketing through a few principles. Our guide will help you learn some of the great trading techniques.
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