Advantages of trading with a local broker
South Africa has a thriving economy and is the only African nation to belong to the Group of Twenty, an international forum for economic cooperation.
The country’s flexible economic climate has contributed greatly to the growth in popularity of foreign exchange trading among locals in recent years. When it comes to retail Foreign Exchange, South Africa dominates the rest of the continent.
A growing number of brokerages are showing interest in the South African Forex market as a result of the region’s proximity to Europe and the region’s tightening regulatory frameworks and reduction in leverage ceilings. The country is becoming a popular choice for brokers who want to save costs and increase their clientele.
At the same time, a great number of local South African brokers have emerged to provide unique advantages for local traders. Here, we explore some of the many reasons why trading a with a local broker is advantageous to South African traders.
Access to local regulation
Trading foreign currency is allowed in South Africa, and it is becoming increasingly popular among locals.
The Financial Sector Conduct Authority (FSCA) acts as the local regulator in the foreign exchange market to safeguard traders, promote honest exchanges, and forestall criminal activity like money laundering.
In order to lawfully operate in South Africa, foreign brokerage firms must first obtain permission from the Financial Sector Conduct Authority (FSCA). Brokers in South Africa should have sufficient liquidity and a physical presence there.
Over-the-counter derivatives transactions are authorised in addition to spot Forex trading for locals. A valid ODP (Over-the-Counter Derivative Provider) licence issued by the FSCA is required for the marketing of derivative products.
Foreign exchange, commodities, interest rate, and equity derivatives are just some of the derivative products that licenced brokers can provide. Derivatives are governed under the Financial Markets Act of 2012, which has been amended in numerous ways over the years.
Access to local deposits
To fund your live trading account, South African brokers accept a wide range of payment methods. Some of the most hassle-free methods include using an electronic wallet service like Skrill, PayPal, or Neteller.
All that is required of you is to sign up, validate your account information, and add funds to your electronic wallet.
Some brokers on this exchange let South African buyers and sellers to use their country’s domestic EasyEFT payment system.
Direct money transfers from your online banking account are now possible with this relatively new online payment method. The service is cheap, easy to use, and does not require customers to have credit cards.
EasyEFT makes it quick and easy to add funds to your account. To use this option, if it is offered, simply log in to your trading account and select the payment system. The next step is for you to select your bank from the available options and proceed with the payment as directed.
Access to Forex trading software
Trading any currency pair from the convenience of your own home is a major perk of the Foreign Exchange markets.
During market trading hours you can trade any time during the day or night. To do this successfully, though, you will need Forex trading software. An easy-to-navigate interface is a must-have for every trading platform.
Traders of varying skill levels should be able to use the platform with ease. Complexity is bothersome since it makes navigating more difficult and it might create trading errors. The simpler, the better, is the rule of thumb.
The software should also allow users to access many charts simultaneously and make use of a variety of market analysis tools. Backtesting and the flexibility to choose between different time frames are always welcome features.
You can always sign up for a practise account with a South African broker to see whether they match your needs. You can check out the trading platform’s interface and functionality before committing to it.
The MetaTrader 4 platform is widely used in South Africa. In 2005, MT4 was released to the public.
Charts can be viewed and annotated, and several periods and technical indicators for studying the market are available. Because of how user-friendly it is, the platform is popular among first-time traders. With the help of so-called Expert Advisors, automated trading is also a possibility.
In addition to MT4, several South African brokers provide access to the more feature-rich MT5, which allows traders to trade not only forex but also equities, bonds, futures, and options.
Either version can be accessed through a specialised WebTrader in a web browser. The latter provides similar features to the downloadable programme but without the need for any further set up on the user’s end.
Access to mobile trading
The prevalence of mobile phones in South Africa is rather high. As of early 2019, there are around 22 million smartphone users in the United States, or about one-third of the total population. Several million more are expected to join them in the years to come. As of the year 2020, South Africa will be home to more than 58 million people.
Investors in the country have a wealth of trading options at their fingertips thanks to the availability of cutting-edge mobile programmes for iOS and Android smartphones from all reputable brokers operating in the country.
Each brokerage’s app is available for free download on their website and in app stores like Google Play and the Apple App Store.
There are a number of advantages to conducting business in the field. For one, you may always be up-to-date on the newest market trends thanks to the apps’ real-time feeds. You may check out the latest market prices by pulling out your phone from your pocket.
The apps’ design for touchscreen devices makes placing orders a breeze even while you’re on the go. In most cases, you can increase the magnification to see every last detail.
Traders who use mobile devices also have the option of seeing and adjusting many charts simultaneously. Newcomers to mobile trading can profit greatly from the abundance of available educational resources.
Choosing a Forex broker in South Africa
It’s important to do your research before settling on a broker in South Africa. You can’t participate in the foreign exchange market as a sole trader. The forex market is entirely digital. It’s not based in any specific place .
Brokers act as middlemen between buyers and sellers of foreign currency, holding their funds in segregated accounts and providing the necessary trading software.
Brokers play the role of market makers for contracts for difference (CFD) share trading, arranging execution and settlement internally based on the stock prices from the underlying national exchanges.
You can’t trade currency pairs or CFDs without brokers, as you can see. Therefore, if you want to work with the best Forex brokers in South Africa, you should pick the broker that suits your demands the best.
Focus on regulation first
The Financial Sector Conduct Authority (FSCA) in South Africa requires all currency brokers and top Forex brokers to display their regulatory information (licence number, etc.) on the home page of their websites.
Regulation indicates that the currency broker has been registered and licenced by the country’s financial market regulators to handle, process, clear, and settle traders’ monies.
You don’t have direct market access. This requires the use of a broker. How else can you ensure that the broker will not disappear with your assets if not through the regulatory process?
Make sure they ringfence your deposits
Account segregation, sometimes known as ringfencing, is a legal requirement in many jurisdictions. This aspect determines whether clients’ monies are protected in the event of insolvency or whether they are completely lost.
Ringfencing means that the brokerage company will maintain all funds belonging to clients in a separate bank account from the bank account(s) that hold the brokerage’s operational funds.
Look into their track record
Choosing the best currency or stockbroker in South Africa is more than just looking at regulations. A broker may be well-regulated and follow all regulations, yet there may be some difficulties that influence the whole experience.
Trading is more than just placing buy and sell orders on equities or currencies. You may have questions that require answers, in which case responsive, courteous customer service is preferable.
You could also want to look for features that will improve your experience, such as the addition of payment options that allow for speedy deposits or withdrawals.
Some currency traders may prefer a cold wallet that allows them to withdraw winnings from their trading account and reserve what they have made while working with the rest. Every forex trader has specific expectations from their employment with a currency broker. If this is missing, there will be issues.
The only way to tell if a broker is right for you is to look at their track record. Fortunately, there are numerous internet forums and blogs.
On these sites, you can learn first-hand from other traders about how excellent or awful a South African broker is. Such unbiased sources of information might reveal a lot about a forex broker’s track record.