Forex trading is a globally popular industry that generates billions of dollars regularly. Forex trading SA (South Africa) has gained a firm footing as tens of millions of dollars are exchanged everyday attracting more and more people to join. If you want to start Forex trading in South Africa, it is advisable to step into the group with preliminary knowledge, this article will help you with that!
What is Forex trading?
Foreign exchange transactions are subject to changes in exchange rates through currency conversion. In order to trade, a trader must choose a direction in order to predict changes in currency pairs and exchange rates. Exchange rate variations between the two currencies allow traders to trade at profit or loss.
Can you legally trade in South Africa?
Foreign exchange transactions in South Africa are legal because the South African government does not have relevant laws to govern them. The Reserve Bank of South Africa controls the currency by tracking the country’s cash flows. As long as you comply with the Currency Control Act and file income tax, foreign exchange transactions are legal. While the law does not require the use of regulated brokers, some brokers are regulated by South Africa’s own FSCA and other recognized organizations around the world.
Some differences between Forex and stocks
- Difference in volume
One of the main differences between foreign exchange and stocks is the size of the foreign exchange market. The daily trading volume in the foreign exchange market is about USD 5 trillion, while the average trading volume in the global stock market is about USD 200 billion. So many large trades have brought huge profits for investors, and large trades mean it is easier for traders and closer to the price they want.
- Commission costs
Most regulated forex brokers charge no commission or charge a small commission instead of margin. On the other hand, when trading stocks or futures contracts, the trader must pay the broker the spread and commission.
- Market timings
Foreign exchange transactions are carried out through the interbank market, which allows you to continue trading globally in different countries, at different opening hours and trading hours. Forex traders can trade almost 24 hours a day, 5 days a week. On the other hand, large stock indices trade at different times and depend on different variables.
What are forex trading platforms?
This is the software that you use for trading, provided by your foreign exchange broker. Some brokers have their own platforms, but most support third-party applications such as MetaTrader 4, MetaTrader 5, and cTrader. Many brokers provide more than one type of platform, so demo accounts are provided by different brokers so that clients can explore and test different platforms.
How much do you need to start forex trading?
Trading accounts can be opened as low as $5 (70 ZAR), but most brokers require a minimum investment of between $100 and $200. A trader must have a minimum balance between $200 and $500 . Traders will make minimal initial profits while maintaining a cautious view of risks.
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