Forex trading in South Africa: Comprehensive guide for beginners
Consider joining thousands of South Africans whose forex trading side hustle is making them a pretty profit. South Africa’s has some of the world’s best forex trading courses.
In this beginner’s guide to forex trading in South Africa, you will learn more about the alluring world of forex trading. Discover why this market is growing in popularity amongst a diverse group of people from all walks of life, ages and careers.
Doing business or shopping in other countries needs a system of accessing foreign money so that payments can be made in a form acceptable to that country. The foreign exchange market is that system. Forex simply stands for foreign exchange (FX) and is expressed by a country or group of countries’ as a monetary unit, such as the US dollar or the South African Rand.
A few stats about the forex market in 2019
The most interesting thing about the foreign exchange market is that there is no central marketplace – all trading is done electronically via computers between various traders around the world. This accessibility is what makes the forex market so attractive to so many people.
How forex trading works
Forex trading is about buying and selling currencies with the aim of making a profit. With forex trading you always trade in pairs, that is with two currencies. You buy one and sell the other. The idea is to make a profit when the currency you buy increases in value against the currency you sell. The difference in price is where you either make a profit or a loss.
There are eight major currencies involved in forex trading
The forex market is made up of a thousand or more currency pairs, for example, the US dollar and the Rand, the EURO and the Swiss Franc, the Japanese Yen and the British Pound. In reality, there are only eight major currencies that are actively traded on the Forex market and these are:
Pairs and how they work
On the forex currency exchange, you will trade in a variety of pairs: major pairs; minor pairs and exotic pairs.
Major currency pairs all have the USD on one side like this…
With major currencies, when paired they all contain the US dollar and they are the most frequently traded ones.
Minor currency pairs
Minor currency pairs or crosses as they are known are pairs that do not have the dollar on one side. A cross will always have the same currency in each pairing.
You get a variety of crosses such as the Yen above, the GBP Pound and the Euro.
Exotic currency pairs
Exotic pairs are also traded in and they one major currency paired with an emerging currency such as the USD/ZAR or Euro/Turkish Lira. These pairs aren’t traded as often as the Major or Minor pairs.
Why the forex market is the most desirable in the world
Making money is the goal for everyone who trades on the stock market. Whether you are trading stocks or currencies, your ultimate aim is always to make a profit. Trading currencies will always carry a risk and that is why many traders advise you to never trade with money you are not prepared to lose. Despite this forex trading is still very desirable and here is why:
The forex market runs 24 hours a day, five days a week, meaning you can trade whenever you want, from anywhere in the world. Whether you are trading at home after work, or while you are on holiday, or when you can’t sleep at 2 am on a weekday, the forex market is open for business.
Forex is a liquid market
A liquid market is where there are lots of buyers and sellers and the product being exchanged is in high demand. This means that you can execute a trade quickly and at a desirable price.
Even though the forex market is a big one, it has basically eight currencies to trade in vs thousands of stocks to choose from in the stock market. This means there is little confusion and it is easy to get a clear picture of what is happening.
The market can’t be cornered
The immense size of the market means no one, not even the banks, have the power to influence or control the market for a long period of time.
What you need to learn about forex trading
Forex trading can be challenging and like with most things there is a learning curve. Just like top professionals who must study and master their skills through experience, the same applies when you learn to trade. Just ask any successful trader and they will tell you that making money in forex does not happen overnight.
Get the tools of the trade
You need to have a computer, access to the internet and a trustworthy broker who is accredited and has an advanced trading platform to practice on. You can make all the mistakes you want with forex trading on a demo account first, without risking any of your actual money.
Get accredited forex knowledge
Because you are a beginner, investing in a professional forex trading course to get a solid understanding not only of how to trade, but also about the world economy, is a must. Why navigate the foreign forex world alone when you can learn from professional traders who can give you the best tips, step by step guides and strategies to speed up the learning curve.
Know the language
There is this weird trading lingo in the world of Forex trading such as pips, quotes, bid, ask, spread, lots, leverage, long, short and so on. It is very important that you understand the lingo because all forex trading platforms use the same language.
Understand the world economy
Get up to speed with how economies operate and understand what factors affect exchange rates. If you are going to trade in forex you need to learn how the economies of various countries work and how they are inter-connected. By understanding the world economy, you will be better able to trade with confidence and foresight.
The drivers of currency values
Understanding the fundamentals of what drives currency values is critical to your success and is a step you simply cannot afford to skimp on.
Get to know the basic strategies of forex trading
If you are starting out with limited funds, day trading is a short-term strategy that is easier in the forex market vs other markets. Day trading is the buying and selling of forex on the same day, based on small, short-term price fluctuations.
Scalping is also used quite often; it is a trading style of taking profits on small price changes, very soon after a trade has been entered and has become profitable. This strategy requires that you have a strict exit strategy, because one large loss could eliminate the many small gains that the you have worked to obtain.
While not as common as short-term trading, swing trading is a long-term strategy that can be used if you want to make a profit from trends in currency valuations.
Traditional safe-haven currencies like the British pound Sterling and Swiss Franc are often targets of those using swing trading. This trading style requires patience to hold your trades for several days at a time.
In conclusion, there are fundamentals of forex trading that you need to learn before diving in, but do not let that put you off. If you find a good training programme with experienced and professional coaches that you can interact with daily, it will be no time before you are trading like a pro. Convinced you are ready to start trading forex? Click here.
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