How to determine position size when trading Forex

How to Determine Position Size when Trading Forex

Your position size, also known as your trade size in units (lot size), is more significant than both your entry and exit points when you are day trading Forex.

You could have the best forex strategy in the world, but if the size of your trades is too large or too small, you will either expose yourself to an unacceptable level of risk or not enough risk at all. And putting too much of your money on the line will soon wipe out your trading account.

In this article, we show you how to determine your position size along with accurate risk management techniques.

Position size and leverage

It has been asserted that the size of the position that you take in your trades is the single most essential aspect in determining how much equity you can build up in your trading account with a broker like Khwezi Trade.

In point of fact, position sizing will account for the rewards that a trade can provide in the quickest and most exaggerated ways possible.

Because of the potential to leverage positions, with brokers like Khwezi Trade, and the presence of a trading system that is open 24 hours a day (5 days a week) and provides consistent liquidity, the Forex market in particular is a venue that enables different size positions to be placed.

One of the ways to take meaningful positions is to make use of leverage. You can take control of a very significant stake in the foreign exchange markets with just a relatively small initial investment; a leverage ratio of 100:1 is quite frequent in this industry.

In addition, the liquidity of the market in the major currencies ensures that a position can be entered into or liquidated at a speed comparable to that of the internet.

Because of the speed at which trades are executed, it is critical for investors to be aware of when it is appropriate to close out their positions.

To put it another way, before entering any trade, make sure to calculate the potential loss associated with that trade and then place stops that will get you out of the trade as quickly as possible while still putting you in a position where you are comfortable entering the next trade.

Although taking on huge leveraged positions opens one up to the prospect of making substantial returns in a relatively short period of time, this strategy also exposes one to a greater degree of risk.

Determining the appropriate risk

To begin, every trader needs to conduct a personal risk assessment and determine how much they are willing to stake.

Traders should only play the markets with what is known as “risk money,” which means that even if they were to lose everything, they would not be left in a desperate financial situation.

Second, every trader needs to calculate, in monetary terms, the maximum amount that they are willing to lose on a single transaction or trade.

If a trader has R 10,000 in capital to invest, for instance, they need to determine what portion of that total capital (as a percentage) they are ready to put at risk on each given transaction. In most cases, this number falls around between 2 and 3 percent.

You could raise that proportion to 5 or even 10 percent, depending on the resources you have and the level of risk you are willing to take, but beyond that point, it is not recommended going any higher than that.

You are free to increase your stake if the risk-to-reward ratio of the possible trade you are considering is sufficiently low. In order to calculate your risk reward ratio accurately, you need to have a firm grasp on your methodology, also known as the “expectancy” of your trading system.

In its most basic form, expectation can be understood as a measurement of the reliability of your system and, consequently, the level of confidence that you will have in placing your trades.

The importance of stop losses

When it comes to determining the size of a forex position, this is the most crucial phase. You should restrict the amount of money or percentage you are willing to lose on each trade. Account risk should be maintained at the same level regardless of any changes to the other trade variables.

Do not risk 5 percent on one trade, then 1 percent on the next trade, and then 3 percent on the next trade.

Make a decision on the percentage or the Rand number that you will use, and stick with it, unless you reach a point where the Rand amount that you have chosen surpasses the limit of 1 percent.

You should always calculate the number of pips you will lose if the market goes against you and if your stop is hit in order to determine how much you should put at risk in your trade and to get the most value for your money.

This will allow you to determine how much you should put at risk in your trade and will allow you to get the most bang for your buck. When trading in foreign exchange (Forex) markets, using stops is often more important than when investing in equities markets.

This is due to the fact that even relatively little shifts in currency relations can quickly result in significant financial losses.

Determine your pip risk

Now that you are aware of the maximum amount of money that can be lost on each trade, you can focus your attention on the trade that is now being presented to you.

The difference between the position at which you enter the trade and the point at which you set your stop-loss order is what determines the pip risk for each individual trade.

Pips, which is an abbreviation that can mean either “percentage in point” or “price interest point,” are often the tiniest variable component of the price of a currency. A pip, often known as one-hundredth of one percent, is the unit of measurement used for the majority of currency pairs.

The transaction is terminated according to the stop-loss order if it falls below a certain loss threshold. It is how you ensure that your loss will not be greater than the account risk loss, and the location of it is also determined by the pip risk for the deal.

Pip risk might change depending on the volatility of the market or the trading method. There are occasions when one trade can have a risk of five pips, while another deal might have a risk of 15 pips.

When you enter a trade, you need to give thought to both your entry point and the location of your stop-loss order.

You want the stop-loss order to be as close to your entry point as is practically possible, but you don’t want it to be so close that the trade is terminated before the move that you are anticipating.

After you have determined, in terms of pips, how far apart your entry point and your stop loss are from one another, the next step is to compute the value of a pip depending on the lot size.

Determining pip value per trade

If you are trading a currency pair in which the United States dollar is the second currency, also known as the quote currency, and your trading account is financed with dollars, then the pip values for different sizes of lots will always be the same.

If the quote currency in the pair you are trading is not the U.S. dollar, then you will need to multiply the pip values by the exchange rate that applies to the dollar in comparison to the quote currency. If your trading account is financed in dollars, then this step is not necessary.

Final Thoughts

The number of lots, as well as the type and size of lots that you buy or sell in a trade are the factors that determine the size of your position.

The size of the position that you take in your trades is the single most essential aspect in determining how much equity you can build up in your trading account.

In point of fact, position sizing will account for the rewards that a trade can provide in the quickest and most exaggerated ways possible.

You should always stake enough in any trade to take advantage of the maximum position size that your own personal risk profile allows, while at the same time guaranteeing that you can still capitalize and make a profit on positive circumstances.

It implies taking on a risk that you are able to withstand, but going for the maximum each and every time that your particular trading philosophy, risk profile, and resources would accommodate such a move.

An expert trader should hunt for high probability trades, maintain patience and self-control while waiting for them to come up, and then wager the largest amount possible while adhering to the parameters of his or her own unique risk profile.

How to join Khwezi Trade’s Affiliate program

How to join Khwezi Trade’s affiliate program

In the forex trading industry, one form of third-party marketing known as affiliate marketing is utilized. When one trader successfully recommends to another trader that they work with a particular broker, an example of this form of marketing has taken place.

When a person brings in new business for the firm through their role as an affiliate partner, they will be eligible for a good reward package from the company.

Referrals can be obtained through a multitude of channels, including word-of-mouth referrals from pleased existing customers, banner advertising, and all-encompassing online marketing strategies.

The utilization of trade links with the purpose of converting attention into account registrations should be the ultimate goal of each participant in an affiliate program.

Affiliate programs have the potential to create a big revenue stream; however, the amount of effort that is put into the program will determine the amount of cash that is earned from the program.

In this article, we investigate the lucrative affiliate trade partners program that is provided by Khwezi Trade. Our goal is to gain a better understanding of how the program functions and how new partners can get started.

The Khwezi Trade Partners Program

The Khwezi Trade Partners Program is divided into two distinct categories, which are the Lead Generator positions and the Affiliate positions, respectively.

Lead Generators have the potential to earn one-time commissions on all referrals made to Khwezi Trade, which enables them to increase their income with each lead that is created in the direction of the organization.

Affiliates have the opportunity to collaborate with Khwezi Trade and use their existing social media presence—whether it’s a trading blog, a dedicated investment profile, or any other kind of social media following—to introduce Khwezi trade to the followers with whom they interact on a daily basis. Affiliates can do this by using their existing social media presence.

Affiliates are eligible for generous monthly commissions on any and all referred customers who open trading accounts with Khwezi Trade, which establishes a solid foundation for the enjoyment of ongoing profits.

A flexible payment mechanism is provided by Khwezi Trade, and customers have the option of selecting either the Revenue Share Plan or the Hybrid Plan.

How to sign up with the Khwezi Trade Partners Program

Partners can earn a percentage of the money that their referrals continue to create when trading with Khwezi Trade by participating in the Revenue Share Plan and earning commissions. Partners have the opportunity to earn both revenue share and CPA under the Hybrid Plan.

Joining the Khwezi Trade Partners Program is an easy and straightforward process. Simply navigate to the Partners Program page on the official Khwezi Trade website, and fill in the contact form featured on the page.

A Khwezi Trade representative will contact you in order to discuss the various options available through the Partners Program, and to guide you through the registration process of joining Khwezi Trade as an affiliate or as a lead generator.

Advantages of joining the Khwezi Trade Partners Program

When you become a referral partner with Khwezi Trade, you gain access to a wide range of perks that are made possible by the fact that the company has been named the Best Broker in South Africa for both 2019 and 2020.

As a result of this, partners are in a perfect position to make a healthy compensation by introducing prospective traders to an established and successful trading ODP approved broker that provides a lot of wonderful advantages to customers.

Since 2013, Khwezi Trade has been subject to the FSCA’s full regulatory oversight in its capacity as both an authorized FSP (44816) and a licensed ODP. Customers are able to conduct business in an atmosphere that is both completely open and risk-free as a result.

Together with competitive spreads and robust trading platforms, the outstanding deposit bonus promotion that Khwezi Trade provides for new traders enables partners to confidently refer new customers to Khwezi Trade from anywhere in the trading community.

When you sign up for the Partners Program with Khwezi Trade, you will receive helpful marketing counsel, which will include consulting on designing eye-catching landing page designs and appealing campaign promotions. This is just one of the many benefits of signing up for the Partners Program.

How to conduct affiliate marketing successfully

Affiliate marketing in the forex market may be a successful endeavour, but it is by no means an easy endeavour to undertake. It will require a great deal of talent and perseverance on your part, particularly if you do not yet have a significant presence on the internet.

Affiliate marketing presents a financial opportunity, and a significant number of people take advantage of that opportunity.

Having said that, there is a stipulation. It is unlikely that this will replace your principal source of income unless you currently operate a website that receives extraordinarily high levels of traffic or unless you are willing to put in a large amount of effort to ensure that the enterprise is successful.

Instead, it is more prudent to treat as a bonus a promising additional income stream that, if implemented properly, may result in a high return on a relatively modest investment of time. If this stream of income is well-executed, it could result in a significant return on investment.

Be a leading voice

Affiliate marketing is distinct from just posting adverts on your website in that, as an affiliate marketer, you are actively promoting the products or services you are promoting to your audience.

You are directly assuring your audience that this Forex broker is deserving of their time and money by recommending them to use them.

That implies the people who are listening to you have to give them a reason to trust your judgment on the topic. You will need to provide evidence that demonstrates your knowledge of forex trading or investment finance in general.

You should also highlight your credentials while offering guidance and analysis. This will assist in establishing a voice that is distinct, useful, and decisive.

Increase your presence in the Forex community

If you do not have a sizable following, it may be difficult for you to convince anyone to use your Forex broker.

Not only does this suggest that you will not be an especially appealing partner for brokers, but it also indicates that you will not be able to generate a significant amount of money from your endeavour.

A significant part of this is determined by the standard of the content that you create. You also need to post content frequently enough to keep people involved with both your website and your social media profiles.

This is important not only for helping to raise your rankings in search engines like Google, but also for keeping people engaged with both.

Consider carefully the subjects that people want to learn more about, and pay attention to the issues that they want to see resolved.

Pay great attention to your SEO (Search Engine Optimization) in order to attract visitors to come to your website or blog, and make full use of social media platforms in order to spread the word about your posts.

It is also feasible to construct a site solely around reviewing products in your industry, which is something we will go over in the following part if you are skilled in SEO and have the ability to do so.

Promote the affiliate link

If you want to make a significant amount of money through affiliate marketing, it is best to go the extra mile.

At this point, it is the appropriate time to inform the people on your email list about the broker with whom you are linked.

Create an email that is easy to understand and interesting to read, and use it to detail the benefits of the Forex broker as well as the reasons why you believe it would be a smart choice for your readers.

Also keep in mind that financial tools such as these are subject to stringent regulation since it is the correct thing to do.

To ensure that the information you present to your audience is correct, open, and in accordance with the standards of the industry, your broker will give you a number of email templates and examples of wording to choose from.

Make use of PPC advertising

If you want to increase the number of referrals you receive, you might think about allocating some of your advertising budget to a pay-per-click advertising campaign that makes use of your referral code.

Online advertising networks, such as those provided by Google, Facebook, and other publishing giants, have a tendency to give advertisers a great deal of control over precisely who they want their advertisements to reach, while also providing advertisers with a great deal of flexibility and the opportunity to test out various advertisements at a very low cost.

It’s possible that a modest investment will yield significant returns using this method to expand your network and reach.

Other Resources

10 Best FSCA Regulated Forex Brokers

10 Best Nasdaq 100 Forex Brokers

10 Best Forex Brokers for Swing Trading

10 Best Same-day Withdrawal Forex Brokers

The Difference Between Rand and US Dollar Trading Accounts

The Difference Between Rand and US Dollar Account

The Difference between Rand and US Dollar Trading Accounts

The United States Dollar to South African Rand currency conversion rate is an important consideration with regard to your trading account if you are based in South Africa and trade in Forex or CFDs.

As a South African trader, which of these currency options is the more prudent choice for you to make? Are you completely aware of the hazards that come along with dealing with such a volatile currency pair?

These are questions that the majority of traders have not even given a second thought to. In order to begin trading on the foreign currency market in South Africa, it is essential to join up with reputable brokers like Khwezi Trade who offer accounts that are denominated in South African rand (ZAR), but there might also be benefits to a USD account.

In this article, we look at the primary differences between Rand and USD trading accounts and consider which is best for traders in South Africa.

Understanding the base currency

The first currency that is listed in a forex pair’s quotation is referred to as the base currency. Because you are purchasing one currency while simultaneously selling another on the market for foreign exchange, one currency will always be quoted in relation to another currency.

The first currency that you see will be known as the base currency, and the second currency that you see will either be known as the quote currency or the counter currency.

The quote currency will always be displayed as the price on a chart. This price shows the amount of the quote currency that must be spent in order to acquire one unit of the base currency.

Quotes in the foreign exchange market are always presented in pairs due to the fact that traders always purchase and sell currencies simultaneously.

For instance, when a customer acquires EUR/USD, it essentially means that he is simultaneously making a purchase of euro and a sale of dollars denominated in the United States.

When investors believe that the base currency will increase in value in comparison to the quote currency, they will purchase the pair. On the other side, if they believe that the value of the base currency decreases then they will sell the pair.

When a USD account is beneficial

To this end, if you have to pay fees for currency conversion every time you wish to buy or sell a securities traded, those costs may really add up over time. This is where the use of a trading account denominated in US dollars can be helpful.

Because you won’t need to convert your money every time you make a trade when you have a dollar account denominated in US dollars, you’ll save money on currency conversions and be able to purchase and sell stocks listed in the United States.

If you trade frequently, settling trades in the same currency (such as purchasing and selling U.S. stocks in U.S. dollars) might help you save money on transaction expenses. This is especially helpful if you trade internationally.

However, these benefits will only apply to traders located in the United States, where the USD is the domestic currency. For traders outside of the US, such as South African traders, a USD account loses all of these benefits.

In fact, South African traders utilising a Dollar-based account will actually incur more costs that eat away at their profits. This is where having a ZAR based account with reputable South African brokers like Khwezi Trade becomes invaluable.

Additional transaction fees are charged from a South African trader’s USD trading account whenever the trader makes a withdrawal or deposit of funds from their account.

This is a common protocol utilized by many different USD trading accounts. Forex brokers like Khwezi Trade that offer South African Rand accounts, on the other hand, remove the necessity for you to deal with such a bother and do not demand any additional fees at any stage in the process of funding your account.

One of the primary advantages is that local brokers who keep ZAR accounts are able to send their clients’ money to them directly through the local banking system. This is an important convenience for traders.

If we are speaking about USD trading accounts, then you should be aware that for many of these different sorts of accounts, you will be subject to additional fees if you make a deposit or a withdrawal of funds.

It is common practice for many financial institutions to charge a commission fee equal to six percent of the total amount whether a customer withdraws or deposits money.

As a result of this, it is in the best interest of South African traders to join up with forex brokers who offer accounts denominated in ZAR. Doing so will exempt you from having to pay any additional fees or penalties that may otherwise apply.

Added to this, the procedure for withdrawing and depositing funds in ZAR trading accounts has been made far more efficient and user-friendly. It enables traders to withdraw any amount of their funding at any moment of the day or night, no matter what day it is or what time it is.

The holder of the ZAR account is connected with a local broker like Khwezi Trade who gives them access to the global markets with margin in the form of Rand currency. This funding is provided to the holder of the ZAR account.

As a result of this, you won’t need to wait any longer than is really necessary in order to receive or send your money.

In other words, the process of conducting trades is made a great deal easier for traders who use ZAR trading accounts. This simplifies the process to an outstanding degree.

Finally, a broad number of local forex brokers make available to the holders of their ZAR accounts a comprehensive selection of alluring bonuses.

Traders who use ZAR trading accounts are given access to a plethora of excellent trading features and tools, which in turn enables them to improve their trading talents.

Trading the USD/ZAR

When it comes to currency trading or forex trading, the USD/ZAR pair is considered to be an exotic pair. This is due to the fact that the rand component (ZAR) is an emerging market currency, which carries less liquidity than that of currencies used in developed markets.

Due to the fact that exotic currencies have lower liquidity than major most traded market currencies (such as the United States dollar, Swiss franc, euro, British pound, Japanese yen, Canadian dollar, and Australian dollar), exotic currencies will have a wider spread, which will result in a higher cost to trade them.

However, because of the decreased liquidity, there is a higher level of volatility, which in turn results in a greater potential for gain (or loss).

Having said that, the South African economy is further along in its development than many of the emerging markets with which it competes. As a result, the country’s level of liquidity is deemed to be higher than that of many of its competitors and is more than adequate for trading purposes.

Hedging the USD/ZAR

It’s possible that some traders will want to employ the USD/ZAR pair as a means of hedging their currency exposure in preparation for the purchase of an asset or the receipt of money denominated in USD.

Because of this, they are able to secure the current exchange rate, which helps them prevent swings in currency value.

Traders who deal in the USD/ZAR currency pair, as well as traders who deal in other forex pairs, have the option of going long or short on the currency pair.

Taking a long position in the rand market indicates that we anticipate an increase in the value of the dollar relative to the rand, whereas taking a short position indicates that we anticipate a decline in the value of the dollar relative to the rand.

Speculative trading on the USD/ZAR

When a trader speculates on the USD/ZAR currency pair, they are essentially taking a position that the currency pair in question is going to either rise or fall over a given period of time and betting on which of those outcomes will occur.

The deal, in contrast to hedging, is not tied to the protection of another asset, which may be referred to as a bonus. The strategies of day trading and swing trading are frequently utilized by speculative traders.

Final Thoughts

For South African traders, opening a ZAR denominated trading account with a reputable broker like Khwezi Trade will allow them to reap the benefits of faster withdrawals, no conversion fees, and easier deposits.

Other Resources

10 Best FSCA Regulated Forex Brokers

10 Best Nasdaq 100 Forex Brokers

10 Best Forex Brokers for Swing Trading

10 Best Same-day Withdrawal Forex Brokers

Tokyo session time in South Africa

Tokyo session time in South Africa

Trading in foreign exchange takes place around the clock, five days a week, with the main sessions taking place in London, New York, and Asia.

Traders are able to implement their strategies in a timely and effective manner at any given time since every key geographic market centre can display a drastically diverse set of traits and patterns. This article will focus on the aspects of trading the Tokyo session in South Africa with brokers like Khwezi Trade.

The Tokyo Session from a global perspective

The Tokyo session starts at 23:00 GMT and continues until 8:00 GMT the following day, which is equivalent to 19:00 EDT to 4:00 EDT during the summer and 18:00 EST to 3:00 EST during the winter.

Because only a few centers, such as Sydney, are trading at the very beginning of the session, this explains why trading volumes are generally low. As a result, price fluctuations are likely to be minimal in comparison to price movement seen during the European and American sessions.

As a result of the reduced level of liquidity during this session in comparison to that of the European and American sessions, the currency market frequently enters a state known as “consolidation,” which is characterized by prices that remain relatively stable within a narrow trading range.

When the Tokyo session gives way to the London session, there is typically an increase in market activity, and some traders may decide to take advantage of this situation by getting themselves ready to trade the forthcoming breakouts.

Economic movements around the Tokyo Session

Because Japan’s economic expansion is driven primarily by exports, and because Hong Kong is primarily known as a financial centre, the major participants in the foreign exchange market during the Asian session are typically commercial, investment, and central banks, as well as companies that are involved in exports.

During the Asian trading session, market participants should pay greater attention to the currencies of countries located in the Asia-Pacific region of the globe than they do to the currencies of countries located in other parts of the world.

When the Asian session is active, it is possible that currency pairs may see higher levels of volatility. These currency pairs include the Japanese yen, the Hong Kong dollar, the New Zealand dollar, the Australian dollar, and the Malaysian ringgit.

This is because commercial entities and merchants from every country in the region will probably utilize their own national currency for the majority of the foreign exchange transactions they engage in, due to the fact that their home currency is more stable than other currencies.

During the Asian session, several sets of macroeconomic data are typically released out of Australia, New Zealand, and Japan, or statements by policymakers from these countries are typically announced.

As a result, traders whose trading strategies are based on fundamental analysis (also known as “news traders”) may decide that the Asian session is the best time to trade the currencies of nations located in the Asian-Pacific region.

Because the most important pieces of economic data are released first thing in the morning, this is the most active phase of the trading session.

Because the Asian session begins the earliest of the three sessions, traders in Europe and the United States will likely watch its outcome in order to create or adjust their trading strategy until the day’s end.

The Tokyo Session for South African traders

The United States Dollar and the European Union’s Euro are the two most commonly traded currencies in the world, with the Japanese Yen coming in third place.

The yen is involved in approximately one in five (17%) of all foreign exchange transactions, and the Asian trading session is responsible for twenty percent of all foreign exchange trading activity. Because of this, the significance of the Asian trading time should not be underestimated.

The three most important financial hubs in the region—Tokyo, Hong Kong, and Singapore—are also the three most dominant players in the Asian Session. Because of the rising amount of currency trading that takes place in Singapore, the Asian trading session may eventually be referred to as the Singapore Session instead.

Singapore and Hong Kong are responsible for more than 8 percent of the total trading volume, although Tokyo is only responsible for 4.5 percent of the total market value.

The most action takes place at the Tokyo Session, which occurs at the start of each trading week. These times are Sunday evening in New York at 17:50 Eastern Standard Time (09:50 GMT), and just before midnight in London on Sunday night at 10:50 British Summer Time (BST).

When to trade the Tokyo Session from South Africa

The Tokyo open market often experiences its greatest trading activity as soon as economic reports and figures are released in the early morning hours.

Nevertheless, make sure that you are keeping an eye on Hong Kong and Singapore in addition to Sydney, since these three cities tend to heat up throughout the Asian trading day.

Asian economies are highly dependent on exports and banking; these sectors do not experience the same level of volatility as high technology and commercial services on other stock exchanges. As a result, there is less liquidity in Asian trading sessions than in New York and London.

Therefore, South African traders should start their trading day with the Tokyo Session, from 8 AM to 10 AM CAT.

Top tip: If you haven’t done so previously, you really should start trading EUR/JPY right now. When there is a lot of movement in the price of one pip, there is an opportunity for trades, despite the fact that volatility isn’t as high as usual.

Strategies for trading the Tokyo Session

Because support and resistance levels are adhered to more regularly during the Asian trading session than they are during the more liquid London and US trading sessions, range trading is particularly well-suited to the Asian trading session.

Breakouts and range trading are the two trading methods that are used the most frequently during the Tokyo forex session.

Range Trading Strategy

When the price moves in a discernible direction, a trader should follow it since doing so increases the likelihood of making a profit.

This is the fundamental idea of trading with the trend. The trader will get out of their market position when the trend comes to an end, possibly making a profit in the process.

When a trader engages in range trading, they are attempting to make a profit from a market that is range-bound, also known as a trading range. But what exactly does it mean when a market is range-bound?

A market is said to be range-bound when the price of a securities remains stagnant for an extended length of time, moving sideways between two prices without making any significant gains or losses.

The price encounters resistance at the high point of the range, while the price encounters support at the low point of the range.

Range traders utilize both long and short positions, purchasing when the security is reaching its support level and selling when it is approaching its resistance level. This differs from trend-following traders, who open a position in line with the market’s direction.

In general, a trading range can be identified when the price has recovered two times from the same support level and two times from the same resistance level. In other words, this is the minimum number of times the price must recover before a trading range can be established.

Keep in mind that the highs and lows that comprise the regions of support and resistance won’t always be exactly the same – in fact, it’s quite doubtful that they will be – but they still need to be somewhat near to one another.

Once a trading range has been recognized, a trader can try to enter market positions in an effort to profit from it.

Break-out trading strategy

The goal of a breakout strategy is to enter a trade as soon as the price is able to move out from its previous range and into new territory. Traders seek for high momentum, and the actual breakout is the signal to enter a trade so that they can profit from the subsequent movement of the market.

Traders have the option of entering positions at the market, in which case they will be required to carefully monitor the movement of the price, or they can enter the positions by setting buy stop and sell stop orders.

They will typically position the stop slightly above the level that formerly served as support or just below the level that formerly served as resistance. Traders may make use of traditional support and resistance levels when determining their exit goals.

When applying the breakout entry strategy, one approach to use it is to enter a trade whenever the price has broken through a resistance level. Many traders believe that if a price is able to break over a level of resistance, it indicates that it has the potential to continue climbing.

The reasoning for this is that if the price breaks through a level of resistance, it may indicate that traders are bullish and will support an increase in price.

Although this isn’t certain to be the case every time, many traders consider a breakout from a resistance level to be an excellent entry position.

Other Resources

10 Best FSCA Regulated Forex Brokers

10 Best Nasdaq 100 Forex Brokers

10 Best Forex Brokers for Swing Trading

10 Best Same-day Withdrawal Forex Brokers

What is Margin in Forex?

In the foreign exchange market, margin trading refers to the procedure of making a deposit of good faith with a broker in order to open positions in one or more currencies and to maintain those positions.

A trader’s margin is neither a cost nor a fee; rather, it is a portion or a percentage of their account balance that is held in reserve in order to facilitate trading.

The minimum amount of margin that must be maintained varies from brokerage firm to brokerage firm, and there are a variety of ways that traders can use margin with brokers like Khwezi Trade.

Understanding margin in Forex

To open a trade, you will need to put up a certain amount of money, known as the margin, which is a certain percentage of the total value of the position you want to open.

Traders have the ability to increase their market exposure through the use of margin trading. This results in an increase in not only profits but also losses.

When trading forex on margin, traders have the ability to expand the size of their position. Traders are able to open leveraged trading positions thanks to the use of margin, which enables them to have greater market exposure with a lower initial capital investment.

Remember that leverage can be a double-edged sword because it multiplies both gains and losses by basing them on the total value of the trade rather than simply the amount that is required to open it. This means that leverage can magnify both earnings and losses.

The amount of leverage that is made available to a trader is determined either by the margin requirements of the broker or by the leverage limitations that have been established by the appropriate regulatory body.

When the size of the trade increases, the required quantity of margin also increases. If you are considered a “professional client,” your margin needs may be different from those of other customers.

Before investing money that has been leveraged, it is essential to have a solid understanding of the associated dangers, despite the fact that margin trading and leverage are important tools that provide larger market exposure and more flexibility.

The most important thing to keep in mind with regard to margin trading is to exercise strict command over the amount of money you put at risk on each individual trade as well as throughout your entire trading portfolio.

If you are able to do this, you will not only keep yourself in the game, but your stress levels will also stay low.

How margin accounts work

Sourcing money to raise the size of a position is the fundamental function of a margin account, which is typically utilized in an effort to improve returns generated from investing or trading.

For instance, while purchasing forex, investors frequently make use of margin accounts. They are able to control a larger position in forex thanks to the margin, which enables them to control a larger position in forex than they would be able to control with just their own capital alone.

In the foreign exchange market, currency traders also make use of a margin account. You should anticipate that the sort of account you maintain with a broker will have some kind of bearing on the amount of margin and leverage that is available to you.

If you just have a standard account with a broker, the available leverage is likely to be significantly smaller, and the margin that is necessary to ensure that leverage will be larger. If you only have a standard account, there is no other way to increase your leverage.

This is due to the fact that you most likely have a lower degree of experience and are dealing with lower quantities of money compared to people who hold higher-level accounts, such as professional and VIP.

When a client engages in margin trading, the broker is exposed to a higher level of risk than when dealing with other clients. Brokers assume some level of risk whenever they work with a client.

Customers that have higher-level accounts are likely to have more faith in the business, which means that better margins and greater leverage will be available to them.

In a nutshell, your leverage-to-margin ratio will be significantly improved the more prestigious the account type that you hold with the broker.

Margin level

When a trader in forex opens a position, the broker will keep the trader’s original deposit for that trade in segregatedd bank accounts as collateral. The total amount of money that the broker has held onto in order to maintain the open positions of the trader is referred to as the utilised margin.

When a trader opens additional positions, a greater percentage of the available funds in their trading account will be needed as margin.

The amount of money that a trader still has available to start new positions is known as the trader’s available equity, and it is one of the factors that can be utilized in the calculation of the margin level.

Understanding margin call

When a trader has positions that are in the red, the margin level on the account will go down to compensate for the loss.

When the margin level of a trader drops below 100 percent, it indicates that the quantity of money in the trader’s account is no longer sufficient to meet the criteria of the trader’s margin. The amount of equity held by the trader is now less than the margin that was used.

A margin call is sent to the trader when this occurs because the broker will typically require that the trader’s equity be increased before releasing the margin call.

An email or push notification would be sent to the trader in this situation if the trader had a trading account with traders such as Khwezi Trade. This would alert the trader to the fact that their account value had reached this level.

In the event that this may occur, and the trader does not make the necessary deposits into their account, some or all of the trader’s open positions may be closed. Traders should do all in their power to avoid getting margin calls.

It is possible to prevent margin calls if you monitor your margin level on a frequent basis, use stop-loss orders on each trade to control your losses, and maintain an adequate balance in your trading account.

Trading on margin is an option that can be used with many different types of investments and financial goods. One is able to take a stake in a wide range of asset types, such as foreign exchange, indexes and commodities.

Advantages of margin trading

The most advantageous feature of trading on margin is the increased leverage, which allows for bigger potential returns to be realized.
When you trade on margin, you increase your buying power, which gives you access to more trading possibilities than you would otherwise have.
The interest you pay on margin loans is typically tax deductible against the profits you make from your net investments.

Disadvantages of margin trading

The catastrophic drawdowns that even very moderate price falls can inflict on anyone who is overleveraged can only be equalled in severity by the huge profits that come with margin-fuelled bull runs. These drawdowns can be wreaked upon anyone who is overleveraged.
When you trade on margin, you expose yourself to a higher level of risk. You run the risk of losing the money you invested.

Final Thoughts

One of the most essential ideas to grasp before engaging in leveraged FX trading is the concept of margin. The amount of money that a trader needs to put up in order to open a position and keep it open is referred to as the margin for the transaction.Margin is not considered a transaction cost; rather, it is a security deposit that is held by the broker while a forex trade is active.Trading foreign exchange on margin is a common method since utilizing leverage to establish larger holdings can result in a positive return on investment.

When trading on margin, profits can be magnified, but losses can also be magnified to a greater extent.Both of these things are crucial to understand. Before engaging in leveraged trading in the foreign exchange market, speculators should devote sufficient time to learning how margin trading operates.It is essential to have a solid comprehension of financial concepts such as the margin level, the maintenance margin, and the margin calls.Forex traders need to be aware that if their margin level drops below the required minimum level, their positions could be closed out and their funds returned to them.

Other Resources

SA’s best FSCA-regulated Forex Brokers

Deposit vs No Deposit Bonus Brokers

Best Economic News Websites

Fundamental vs Technical Analysis

What is a demo trading account?

What is a demo trading account?

Before you begin trading on a forex platform with a Forex broker, it is essential to get familiar with how to make use of the capabilities offered by the platform.

Traders are fortunate in that they are able to test out each platform using a demo account with brokers like Khwezi Trade, which means that they do not put their own money at risk.

In this article, we will go through the benefits of demo trading and provide you with some pointers on what to look for while evaluating various trading platforms.

Understanding a Forex demo trading account

A free demo account trades with virtual money rather than real money on a real trading platform. The use of a practice account, also known as a demo account, comes with a number of advantages, including the following:

Real-world application within the context of an active market
The capacity to become acquainted with the operational specifics of the software platform.
Access to a variety of market charts, trading signals, forex news, and other resources
The capacity to put one’s forex trading techniques to the test without incurring any financial risk

Along with the rise of internet trading in the twenty-first century, the use of demo accounts also grew increasingly common.

They are advertised to customers as a method for users to evaluate the user experience and features of a platform before committing their own money to these investments or paying the trading commissions that are required by the platform.

You can sign up for a demo account online whether you are a prospective customer of the broker or if you are already a customer and you just want to spend some time learning trading methods without taking any risks.

Demo accounts are another popular option for traders who already have expertise trading equities but wish to try their hands at trading other asset classes.

Even if they have a lot of experience in the FX market already, investors may still find it beneficial to practice their skills on a virtual stock market by signing up for a trial account before they start trading futures, commodities, or currencies.

This is due to the fact that unlike stock markets, these markets are influenced by a distinct set of factors, permit a more diverse range of market orders, and have margin requirements that are structured in a different way.

Demo accounts were not very practical before the widespread usage of personal computers and the Internet. When trades were largely documented using paper, monitoring a virtual trade would have been time-consuming and costly, eliminating the principal benefit of a demo account – that it is offered for free.

Demo accounts began to be given by online brokerages in the 2000s, as high-speed internet was starting to be utilized by more traders.

The difference between a demo and a live account

The majority of foreign exchange brokers provide their customers with access to both live and demo trading accounts.

A live account is one that is used to really make deposits, open genuine trades, generate profits or suffer losses. These activities can all take place in a live account. In a nutshell, they are the ones that are risk their capital during actual trading.

Demo accounts are available from most brokers, due to the fact that real trading accounts come with a variety of financial risks and that there are many people who are just beginning out in the world of trading. Demo accounts might have fewer instruments available, and the spreads slightly wider, but is a great tool to back-test strategies with zero capital risk.

Traders can practice their skills without risking their own money by taking use of the demo account’s provision for the use of fictitious capital rather than real money when engaging in financial transactions.

Demo accounts and live accounts are typically quite comparable to one another in terms of their ability to reflect price patterns and swings, the trading tools and indicators they provide, and the general realism of the experience they provide.

People are able to choose their favourite trading instrument, determine the size of the position, and begin trading on the market, regardless of the sort of market they are trading in using a demo account, just as they would with a live account.

However, rather than making deposits from your own personal wallet, you are utilizing virtual funds provided by the broker.

This is in contrast to making deposits from your own wallet. It indicates that you are not trading foreign exchange, indices, commodities, or any other instruments with the money of another individual.

The procedures for setting up each type of account is another way in which they are distinct from one another.

On the one hand, there is the option of opening a live account, which normally necessitates the trader submitting some kind of identity for FICA to the broker, along with completing appropriateness and making a deposit.

A demo account, on the other hand, typically does away with all of those stringent requirements and instead only requests the most fundamental information, such as the user’s name, email address, and so on. In addition, there is no minimum amount required for the deposit.

The most significant distinction is that users of a demo account do not have to risk any of their own money when making trades.

Demo accounts are a great way to learn the fundamentals of trading in virtually any financial market, including foreign exchange (Forex), indices and commodities.

Who should make use of demo accounts

Beginners are the most evident group that can fully exploit the advantages of a demo account because they have the most to gain from doing so.

Many seasoned and successful traders believe that engaging in live trading and putting your hard-earned money at risk without having the necessary knowledge and experience is a much riskier endeavour than trading already is.

Therefore, it is ideal for them to hone and polish their trading skills utilizing an FX demo account before moving on to live trading. After that, they can proceed with live trading.

Beginner traders have the ability to efficiently answer some of the most crucial questions that every trader should ask themselves before to entering a financial market by using a demo account. These questions include the following:

Which tradable instrument is best suited for them; it is not a good idea to start trading the very first instrument that you come across, no matter how appealing it may appear.

Every instrument has its own quirks, such as varying levels of volatility, trading hours, and market density, all of which need to be taken into consideration before deciding which asset will act as the primary trading asset.

When is the most profitable time to start trading? This question is especially relevant for day traders, who are defined as investors who open and close positions within the same trading day.

Traders will have a better grasp of when the financial instrument is most active and volatile, as well as the optimal time to make a trade, if they experiment with a variety of different timing approaches.

What is the most effective strategy to execute trades – by utilizing several trading strategies on demo accounts, people can find the ideal one that delivers the biggest payment and minimizes the losses.

The question of what is the most effective strategy to execute trades is an important one. It is essential to put trading techniques to the test in real-world conditions, and a trial account can serve as an excellent training ground for this purpose.

This is due to the fact that trading strategies are not universal and that different approaches are successful for various traders.

Using demo accounts to test trading platforms

The majority of brokers provide access to many platforms. The prominent trading platforms MetaTrader 4 and 5, usually known as MT4 and MT5, respectively. In addition to that, the majority of brokers offer supplementary platforms.

While each platform may function and look slightly different, most provide roughly the same features. These features include forex quotes/prices, charts, technical analysis tools, news feeds, trade history, drawing tools, and functionality for buying and selling currencies.

Some platforms have more features than others. For example, some of them have integrated fundamental analysis tools. That may be important for a long-term investor, but it doesn’t matter for a short-term trader.

When you have a firm grasp on the fundamental features of a trading platform, you should switch over to the demo version so that you can practice trading using different techniques.

Demo trading is not the same as real trading, but it can help you become more prepared for the real thing. After suffering a significant loss in a demo account, a lot of people are completely unfazed by the experience.

On the other hand, some of them go completely off the rails after suffering even a moderate loss in a genuine account. You need to trade the virtual money in the demo account as if it were real money if you want to get the most out of the demo trading experience.

Other Resources

SA’s best FSCA-regulated Forex Brokers

Deposit vs No Deposit Bonus Brokers

Best Economic News Websites

Fundamental vs Technical Analysis

Pros and cons of high vs. low leverage

Pros and cons of high vs. low leverage

High leverage is one of the main attractions of the foreign exchange market, allowing traders to trade larger positions with smaller amounts of capital. Higher maximum leverage ratios will allow South African traders to open larger positions in forex markets, increasing their chances of earning larger potential profit.

This is done when the broker offers a loan to the trader, requiring that the South African trader pay a margin requirement as collateral for the trade. While this tool is a trading advantage, leverage comes with increased risks.

Using a high maximum leverage ratio can result in larger losses and it can often clear out the trading account. Apart from using risk management protocols, traders are urged to use educational materials to ensure that they know how to trade using leverage and margin.

Another protective measure when trading with leverage is to ensure that the retail trading account has negative balance protection applied, protecting the investor from a negative account balance. South African brokers offer generous amounts of leverage and South African traders are not restricted from using high leverage ratios.

Therefore, we have compiled a comprehensive list that features some of the best forex brokers in South Africa that offer high leverage.

Pros and cons of high vs. low leverage

To master the art of trading foreign currencies, one must have in-depth knowledge of the economy and political climates of various nations, as well as global macroeconomics and the influence that volatility has on certain markets.

But the fact of the matter is that economics and international finance aren’t typically what causes first-time forex traders to make mistakes. Instead, a fundamental lack of information on how to make use of leverage is frequently at the base of trading losses.

In this article, we explore the advantages and disadvantages of using either high or low leverage, as well as how to mitigate the risks involved with using leverage with brokers like Khwezi Trade.

When to use high leverage

High leverage is essentially a personal perspective, however higher leverage is generally considered to fall between a ratio of 1:400 to 1:1000 and higher.

Using high leverage can be a good strategy when trading on a smaller account. In the world of trading, leverage generally refers to money that is borrowed.

Leverage is a tool provided by brokers that enables traders to open larger positions in the market than their current account balance would normally permit.

The most appropriate leverage for a small account is the kind that enables you to open sufficient positions in accordance with your trading strategy without putting you in danger of receiving a margin call during volatile conditions when the market moves against you.

This can be anywhere from 1:100 and 1:1000 for accounts that are between R100 and R5000 in value. Remember that one standard lot in foreign exchange (1.0) is equal to 100,000 worth of the base currency, and one micro lot in forex (0.01) is equal to 1,000 worth.

You will require at least approximately sixteen thousand rands in order to establish a 0.01 lot size position on the , and you won’t be able to add any additional trades if you don’t use leverage. A single position with a lot size of 1.0 will cost you a total of R160 000 to open.

Retail traders with modest accounts who would normally be excluded from the market are given the opportunity to participate by brokers through the use of leverage.

Everyone trading with less than sixteen thousand rand, those trading with one hundred and sixty thousand rand, and those trading several positions are included in this category.

Advantages of using high leverage

Ability to make higher profits

You can make more money with less work if you use high leverage in your trading strategy with brokers like Khwezi Trade.

Leverage’s primary function is to increase your profit from each available transaction by multiplying the stakes, regardless of the instrument being traded or the amount being staked.

To achieve the same result, you could spend more money in each position, but leverage works to ensure that you’re able to increase your available capital artificially, frequently hundreds of times over.

More efficient use of your capital

A higher profit per transaction also means better use of your capital because you can earn more money every transaction. Consider your capital as a yield-producing asset for the sake of argument.

Leveraging up will reduce the time it takes to make R1000 from unleveraged positions from two days to a matter of minutes, allowing you to reinvest your cash more frequently and use it to achieve the highest possible return.

Leverage has a tremendous impact on capital efficiency and ensures not only better potential profits in the short term, but also a considerably greater return on investment over a much shorter time period.

It can reduce the effects of low volatility

High leverage also has the effect of mitigating low volatility, which is an important consideration when trading forex. Because markets move in longer cycles than more stable instruments, the most profitable deals are frequently those that are most volatile.

Volatility tends to be lower in the forex markets because of the cautious character of currency traders and the limited number of external indicators that can predict currency price changes.

High leverage can help alleviate the stifling effect of low volatility by allowing for higher profits to be generated from fewer transactions. Leverage allows traders to profit from minor changes in market pricing, which can become significant when holding positions with high levels of leverage.

Disadvantages of using high leverage

Risk of higher losses

High leverage can be tricky since it facilitates larger losses. Even if you keep your gains and losses, leverage can wind up costing you a lot more than you paid for when you suffer losing trades.

The risk of margin call

There is always the possibility that you will fall short of your broker’s margin requirements.

As soon as you go below this percentage, your broker will initiate a margin call, which means your portfolio will be immediately liquidated in order to fulfill your obligations as far as meeting those commitments is concerned.

Positions which may have yielded huge profits are closed out early (creating an inevitable opportunity cost) in addition to liquidation losses that might recoup.

When it comes to managing your wealth, it’s important to remember that this is a constant danger posed by the presence of leverage.

When to use low leverage

Low leverage and proper capitalization allow you peace of mind because losses are smaller. Avoiding catastrophic losses is far more important than chasing profits in a market with unlimited opportunities.

Trading in volatile markets necessitates a low-leverage strategy for this same reason. It is possible to be exposed, but not overwhelmed by its potentially overwhelming dangers, with minimal leverage.

Advantages of using low leverage

Reduced losses

If you’re new to trading, you should know that leverage can be just as risky as it is profitable. It can help you gain more, but it can also cause you to lose more.

This means that the risk of losing money is greatly reduced when you have a lower level of leverage. Also, even if you lose a transaction, because of the low leverage, you can keep trading for a longer period of time with brokers like Khwezi Trade.

As leverage increases, the less room the market has to move before a margin call occurs. That’s why a lot of beginner traders begin with modest leverage.

Capital can be recovered more easily

When it comes to online trading of financial instruments and digital assets, it is impossible to avoid incurring losses. To be successful in trading, all that is required is for your profits to be higher than your losses.

The use of minimal leverage enables traders to recover their capital losses in the simplest and quickest manner feasible.

Reduced transaction cost

The transaction expenses involved in using leverage are one of the lesser known disadvantages. When it comes to trading CFDs online, spreads are typically of no consequence. However, the fees can pile up quickly when you use leverage, which can limit your profitability.

A lower leverage helps to keep your exposure low, which limits the size of the swings when the market is volatile.

You can also trade around unpredictable events, such as news releases, because the potential for widening spreads will not have a significant influence on the size of your bankroll.

In addition, you are able to open several transactions in a variety of markets without having to be concerned about incurring enormous transaction expenses.

Reduced stress when trading

When trading leveraged goods like contracts for difference (CFDs), emotions have been identified as one of the primary reasons why traders end up losing money. Emotions are a natural part of human life, but negative emotions can cause people to make poor decisions in the market.

When you have overextended your account and are staring at a loss that is going to wipe out your account, you have a greater chance of giving in to negative emotions such as fear, greed, and bias. This is because you are more likely to feel powerless in these situations.

You will have the mental clarity necessary to make objective trading decisions in the market if you engage in trading with a low leverage ratio.

Disadvantages of low leverage

Reduced chance of profits

When trading with low leverage you are only able to open smaller a position than you would of trading on higher leverage. Opening smaller positions means that your chances or earning higher profits are reduced.

Final Thoughts

Leverage is a tool that is used by traders to open larger positions than they would be able to using their own deposited funds. As such, the use of leverage allows for greater flexibility and access to more profitable trades on the Forex market.

There are advantages and disadvantages to using both high and low leverage, but deciding which to use ultimately comes down to your level of trading experience, the amount of funds you are able to risk, and your trading strategy.

To this end, when using leverage you should always have a risk-adjusted strategy in place in order to ensure that you can mitigate your potential losses as far as possible.

Other Resources

SA’s best FSCA-regulated Forex Brokers

Deposit vs No Deposit Bonus Brokers

Best Economic News Websites

Fundamental vs Technical Analysis

How traders can participate in the commodities market

How traders can participate in the commodities market

For investors, commodities can be an excellent means of diversifying their portfolios beyond standard assets. Because the prices of commodities tend to fluctuate in opposition to equities, some investors also lean on commodities during moments of market instability.

Formerly, commodities trading took substantial quantities of time, money, and experience, and was primarily reserved to professional traders.

Today, there are more opportunities for participating in the commodity markets with brokers like Khwezi Trade.

Understanding commodities trading

To speak in the most general terms possible, the fundamental concepts of supply and demand are what drive the markets for commodities. Alterations in the supply have an effect on the demand; lower supplies result in higher pricing.

Therefore, any big disruptions in the supply of a product, such as a war breaking out affecting the supply of oil producing nations can lead to a price spike in the demand for oil.

The progression of the global economy and developments in technology can also have an effect on prices.

For instance, the rise of China and India as prominent actors in the manufacturing industry (which has led to an increased need for a greater volume of industrial metals) has contributed to a decrease in the availability of metals such as steel for the majority of the world’s population.

Trading stocks and bonds has a far more recent history compared to the profession of trading commodities, which dates back much further in time.

It is possible to trace the creation of a great number of empires back to their capacity to develop sophisticated trading networks and to streamline the process of commodity exchange. Even in the present era, people all around the world continue to trade various commodities.

In recent years, a number of commodity exchanges have either consolidated into a single entity or ceased operations entirely. Although some exchanges focus only on one category, the vast majority of exchanges deal in a variety of different commodities.

Popular commodities to trade

Typically, tradable commodities are classified into the following four basic categories: metal, energy, livestock and meat, and agricultural.

Agriculture

Corn, soybeans, wheat, rice, cocoa, coffee, cotton, and sugar are all examples of commodities that come from agriculture. When it comes to the agricultural industry, the summer months and other times of the year when there are weather-related shifts can be times of extreme volatility for grains.

Population growth, when combined with limited agricultural supply, can provide opportunities for investors interested in the agricultural sector to profit from rising agricultural commodity prices.

Energy

Investors who are interested in entering the commodities market in the energy sector should also be aware of the ways in which economic downturns, any shifts in production enforced by OPEC and new technological advances in alternative energy sources can impact on the market prices.

Metals

Gold, silver, platinum, and copper are examples of the commodities known as metals. Because of its status as a reliable, dependable metal with real, conveyable value, precious metals, and particularly gold, are attractive investments for some investors during times of market volatility or bear markets.

In particular, gold is attractive because of its status as the most valuable precious metal. Investors also have the option of purchasing precious metals as a hedging strategy to protect their wealth during times of excessive inflation or currency devaluation.

Commodities in the energy sector include gasoline, natural gas, crude oil, and heating oil respectively. Oil prices have traditionally increased as a result of global economic advancements and decreased oil outputs from established oil wells around the world.

This is because demand for energy-related products has increased at the same time as oil supplies have decreased.

How to trade commodities

The commodity market of today is far more advanced than it was in the past. Not only is there a lengthy list of different commodities being traded, but it is also a global market with exchanges located all over the world.

During the week, it is possible to trade commodities for nearly the whole 24 hours of each day. There are a few distinct approaches you may take to trade commodities in your portfolio, each of which comes with its own set of benefits and drawbacks.

Commodities ETFs and Mutual Funds

There are three different types of funds that are based on commodities: exchange traded funds (ETFs), exchange traded notes (ETNs), and mutual funds.

These funds pool the capital contributed by a large number of individual investors in order to construct a large portfolio that attempts to replicate the price movement of a single commodity or a group of commodities.

One common example of this type of fund is a mutual fund that invests in a variety of energy commodities. Either the fund may purchase futures contracts in order to track the price, or it may invest in the stock of various companies that have exposure to various commodities.

If you make a modest investment, you can gain access to a significantly wider variety of commodities than you would be able to acquire if you tried to construct the portfolio on your own. In addition to this, the management of the portfolio will be handled by an experienced investment professional.

On the other hand, in order to participate in the commodity fund, you will be required to pay a higher management fee than you would have paid if you had handled the assets on your own.

In addition, depending on the strategy that the fund uses, it may not replicate the movement of the commodity price exactly.

CFDs

The purchase and sale of contracts for difference on the international financial markets is by far the most frequent method for the trading of commodities. The way that this system operates is that you purchase a CFD on a trading platform operated and offered by an online ODP broker.

You are not actually purchasing or selling the underlying physical commodity when you engage in the trading of CFDs.

Brokers do not actually take delivery of millions of barrels of oil or ounces of gold because the entire purpose of CFD trading is to speculate on fluctuations in price.

To participate in CFD trading, you will need to open an account with a specialized brokerage firm like Khwezi Trade that facilitates transactions of this kind before you can begin trading.

Having an account with a brokerage firm that provides CFDs is required for traders to participate in these markets. When you start or end a position in commodities CFDs trading, you will be responsible for paying the broker the spread, which is the difference between the bid and ask price.

Final Thoughts

Raw materials that drive the economy of the entire world include iron ore, crude oil, and precious metals, among other commodities.

Investing in commodities involves specialized knowledge and may carry greater risk than investing in conventional assets such as equities and bonds. However, they provide exceptional chances for astute investors to profit from the ever-changing values of the commodities they purchase.

Other Resources

SA’s best FSCA-regulated Forex Brokers

How do interest rates affect traders

Calculating Forex lot sizes

How to trade while working full-time

How is Forex income taxed in South Africa

How does your bonus affect your leverage?

How does your bonus affect your leverage?

A bonus, in its most basic sense, is just a method of offering traders an incentive for choosing a particular broker over another.

After establishing an account with a Forex broker like Khwezi Trade, a trader will be able to trade currency pairs and will be required to bear the costs of the spreads that are incurred by every other trader in the market.

Once the trader has demonstrated that they are an active participant in the market, the broker will award the trader with the bonus when they deposit as a way of thanking them for their choice of trading platform and allowing them more buying power in the market.

Forex bonuses present several advantages to new and existing traders, and in this article, we explore the way that receiving a Forex bonus will affect your leverage.

Understanding how Forex bonuses work

There are a number of incentives that brokers like Khwezi Trade are willing to give to traders, and one of these is by providing the trader with a credit once they have finished making a deposit. The credit or bonus is normally a percentage of the deposited amount varying between 20% and 60%.

Forex No Deposit bonus

This Forex trading bonus is provided to traders at no additional cost to them and does not need a deposit on their part. In most cases, the amount of such a bonus ranges anywhere from R100 and R500.

In most cases, brokers will make such offers available to traders in the hopes that they will become more likely to carry out transactions and will learn how to trade currencies more successfully.

As the money that is traded takes place on live servers, these bonuses can provide a preview of live conditions.

Traders with more experience can benefit greatly from this type of bonus. When it comes to the construction of trading techniques, no deposit bonuses are among the most helpful tools available.

The fact that novice traders typically begin their involvement in the market by taking advantage of Forex trading bonus offers is the most significant drawback associated with these bonuses. It’s important to note that no deposit bonuses are not withdrawable and a trader should be familiarised with the brokers terms and conditions.

This is due to the fact that a no deposit bonus enables traders to test out new methods of trading and tactics without putting their live accounts at risk of suffering substantial losses. Trading can become less stressful when you open an account that offers a bonus with no initial deposit required. Khwezi Trade recommends rather starting with a demo account to test the trade execution times of the platform and get a feeling for the spreads applicable per instruments available.

Forex Deposit Bonus

The Forex deposit bonus is one of the most prevalent types of promotional incentives that brokerage firms use to encourage new clients to sign up for their services. Khwezi Trade likes to offer experienced traders a deposit bonus which varies between 20-50% depending on the promotion at the time.

The principle behind this is that investors will receive either a predetermined sum of money or a particular percentage of the money they initially deposited into their trading account in exchange for making the original financial commitment.

A first time deposit or welcome bonus is, in the vast majority of circumstances, only given out once, and it is restricted to new customers.

However, it is important to note that in this context, there are also some Forex deposit bonus brokers who offer their customers this kind of benefit each time they deposit money on their trading account. This is to the discretion of the broker and can be applied to clients depending on their trading style and history.

It is worth adding that there are Forex deposit bonus brokers. These are also referred to as reload deposits in some instances.

Many market participants find the deposit bonus offers to be appealing since it enables them to enhance the amount of trading capital they have at their disposal by a specified amount and then use that additional cash to create new positions.

Additional Forex Bonus Types

When traders make additional deposits of money into their trading accounts, certain brokerage firms reward them with bonuses. In some circles, these are sometimes referred to as “reload bonuses.”

It is important to note that in most circumstances, the percentage amount of the bonus can be less than what is often offered for welcome bonuses. This is something that should be kept in mind moving forward.

This makes perfect sense when one considers that the consistent payments that are associated with reload bonuses constitute a significantly greater amount of long-term expenditure when compared to the circumstances in which welcome bonuses are involved.

Despite this, it should come as no surprise that a sizable proportion of traders find these kinds of bonuses to be appealing.

Participants in this market have the opportunity, as a result of these reload bonuses, to significantly grow the size of their trading capital, as opposed to simply earning a single bonus payment.

In this scenario, the traders not only gain incentives for opening a new account but also for each and every time that they make a deposit into their existing account.

All traders should read the terms and conditions issues and available on the broker’s website to understand the offering and what it entails. For example, some brokers require traders to trade or meet a certain amount of volume traded in order to qualify for the withdrawal of their credit or bonus.

Understanding how leverage works

The foreign exchange market makes extensive use of the idea of leverage. Investors can take larger stakes in a currency by borrowing money from a broker and using that money to trade.

As a consequence of this, leverage amplifies the rewards obtained from advantageous shifts in the exchange rate of a currency.

Leverage is a tool offered by brokers like Khwezi Trade that investors use to potentially boost their profits from currency trading. The foreign exchange market provides investors with one of the highest levels of leverage that is currently available.

The broker will essentially extend credit in the form of a loan to the investor in the form of leverage. Establishing a forex trading account for the trader is necessary in order to engage in margin trading or trading using borrowed money.

When dealing with inexperienced traders, certain brokers may initially restrict the amount of leverage that can be utilized. In the vast majority of instances, traders have the ability to customize the amount or size of the deal based on the leverage that they desire.

However, the broker will require that an initial margin, which is a percentage of the trade’s notional amount that must be held in cash in the account, be paid before the trade can be executed.

How a Forex Bonus affects leverage

Forex bonuses increase the amount of money in your account, and therefore it will increase the amount of leverage that is available to you. Below is a detailed explanation of this process.

Your deposit amount affects your trade size

Let’s assume your minimum trade size is 0.01 lots. On the currency market, the typical contract size that is used is called a lot. Because one lot is equivalent to 100,000 units of a base currency, one hundredth of a lot is equal to one thousand units of the base currency.

If your leverage is 1:1000 and you make a purchase of 0.01 lots of EUR/USD, you will be required to put up a margin of R16 for the trade.

If you have a micro account and deposit R80 your deposit will cover this margin, and you will be allowed to open three more transactions of the same value. Every point that the price moves in either direction will net you or cost you R16.

If you have a larger deposit size in your account, you will also be able to open a larger position with the leverage ratio made available to you.

The great thing about increasing leverage by means of a Forex bonus is that you are not increasing the risk of losses occurred to your own capital, as the bonus amount is money awarded to you by your broker.

How to minimize the overall risk of using leverage

Once you understand how to keep your leverage under control, you no longer have any need to be afraid of it. The one and only circumstance in which you should never employ leverage is when you approach your trades in a hands-off manner.

In any other case, leverage can be used successfully and financially provided that it is managed properly. Leverage, like any other potentially dangerous tool, requires careful manipulation; nevertheless, once you’ve mastered this skill, there’s no need for concern on your part.

Smaller amounts of real leverage applied to each trade allow for more breathing room, which can be achieved by setting a stop that is both wider and more acceptable, so reducing the risk of suffering a greater loss of cash.

If the deal goes against you and you are using a high level of leverage, your trading account might be depleted very rapidly because you will rack up greater losses due to the larger lot sizes. Bear in mind that leverage can be adjusted in accordance with the specific requirements of each individual trader.

Final Thoughts

A Forex bonus is often awarded by brokers to new traders when opening an account, and can also be awarded on subsequent deposits made by existing traders, depending on the bonus schemes provided by individual brokers.

The use of a Forex bonus allows you to boost your leverage ratio, and therefore increase the size of your position, without placing any risk of loss on your own investment capital.

Other Resources

SA’s best FSCA-regulated Forex Brokers

How do interest rates affect traders

Calculating Forex lot sizes

How to trade while working full-time

How is Forex income taxed in South Africa

Forex Chart Patterns

Forex Chart Patterns

Profits (or losses) can be made through trading financial assets on the foreign exchange market by speculating on the fluctuations in the prices of different currency pairs.

Typically, price changes are depicted using candlesticks. After a succession of time periods have passed, candlestick patterns appear on a chart, and these patterns reflect the price action story of the underlying asset.

Traders can get a better sense of the market’s mood and sentiment with the use of chart patterns, which are strong tools for performing technical analysis since they show raw price movement and help traders get a sense of how the market is feeling.

They simply make it possible for traders to ride the wave of the market, and when properly understood and read, they may assist in identifying opportunities for profitable trading with a minimum of exposure to risk.

How chart patterns can be used to improve your Forex trading

Chart patterns are a graphical representation of the demand and supply in the market as it exists at the current moment in time. Traders with Khwezi Trade are able to improve their trading by making use of chart patterns on the Metatrader 4 platform in the following ways:

Allows you to respond in time to market developments

Using chart patterns in trading entails following the raw price action of the asset being traded, as was previously indicated. When unexpected changes occur in the market conditions, chart patterns make it easy to determine or validate those changes.

If traders are able to anticipate shifts in market circumstances in a timely manner, they may be able to increase their profits or reduce their losses. Traders may also benefit from this because it makes it possible for them to initiate trade positions that are consistent with the new trend much earlier.

Chart patterns ensure that changes in market conditions are a source of enormous potential, despite the fact that changes in market conditions are a natural source of market danger.

Chart patterns allow you to open positions based on the best price action

Price action traders watch the market, analyse and interpret the raw price action, and look for chances to trade when they arise.

Although it is still considered a type of technical analysis, price action involves the use of clean charts, which do not include any indicators.

This constitutes the most advanced kind of price action research, and it enables traders to watch trends and identify precise support and resistance zones. Chart patterns are genuinely leading and enable traders to time market opportunities in a way that is both effective and efficient.

This is in contrast to the nature of many technical analysis indicators, which is to say that they are fundamentally trailing. This indicates that market participants are able to place buy and sell orders in the market at the appropriate times and at prices that are optimal.

Chart patterns allow you to set the best price targets

Forex traders can place conditional orders, which are a specialized sort of order that attaches specific requirements that need to be satisfied before the order can be executed in the market.

Limit orders, stop orders, and stop-limit orders are the three types of conditional orders that are the most prevalent and fundamental.

Conditional orders are those that contain predetermined price goals, and they assist traders in risk management, opening and closing positions, and securing profits. When they emerge, chart patterns are typically governed by certain rules and have predetermined price targets.

Because of this, chart patterns are the best sort of analysis to use when trading conditional orders, which include targeting specific price levels.

More on setting best price targets

Forex traders can place conditional orders, which are a specialized sort of order that attaches specific requirements that need to be satisfied before the order can be executed in the market.

Limit orders, stop orders, and stop-limit orders are the three types of conditional orders that are the most prevalent and fundamental.

Because of this, chart patterns are the best sort of analysis to use when trading conditional orders, which include targeting specific price levels.

Chart patterns allow you to evaluate an effective risk-reward ratio

Chart patterns have a certain formation that can be followed to derive an expectation of how prices may behave in the future. This means that when a chart pattern appears, the subsequent price action defines whether or not it is a real chance to trade or maintain a position.

If it isn’t valid, then it isn’t an opportunity at all. As noted before, every chart pattern adheres to a set of predetermined rules, which makes it possible to calculate the risk-to-reward ratio in advance.

For instance, when a head and shoulders pattern emerges in the context of an uptrend, the beginning objective for the predicted downward movement is a pip amount that is comparable to the distance between the “neckline” and the top of the “head.” Just above the “shoulders” is an ideal location for a stop-loss order.

Traders are able to determine whether or not each trading opportunity that presents itself is worthwhile to trade when they have this knowledge before it occurs.

The best chart patterns for beginner traders

Even though there are several chart patterns of differing degrees of intricacy, there are two typical chart patterns that occur frequently and offer a trading strategy that is quite easy to understand and implement.

Head and Shoulders

After an uptrend or a downturn, the Head and Shoulders pattern can either be a topping formation or a bottoming formation depending on the circumstances.

A price high is followed by retracement, a greater price high is followed by retracement, and then a lower low is seen after the topping pattern.

The bottoming pattern consists of a low price (the “shoulder”), a retracement, followed by an even lower price (the “head”), and a retracement, followed by an even lower price (the second “shoulder”) after that.

When the trendline (also known as the “neckline”) that connects the two highs (in the case of a topping pattern) or two lows (in the case of a bottoming pattern) of the formation is broken, the pattern is said to have been completed.

Triangles

Triangles are extremely prevalent, particularly in time frames with a short-term perspective. Triangles occur when prices converge with the highs and lows narrowing into a tighter and tighter price area.

They can be symmetric, ascending, or descending; nevertheless, the distinction between the three is negligible from a trading perspective.

How to use chart patterns in your Forex trading

When it comes to trading chart patterns, timing is an essential component to keep in mind. Because of this, using conditional orders to take advantage of trading opportunities provided by chart patterns is the most effective way to do so.

Make use of conditional orders

Some examples of conditional orders include stop orders and limit orders. Traders can place buy stop orders that will be filled when there is a breakout in the direction of the trend, for instance when the price is consolidating in a bullish flag pattern during an uptrend (a continuation pattern).

These orders will be filled when the price breaks out in the direction of the trend. Traders will be able to capitalize on the upward trend as soon as it gets back on track thanks to this strategy.

Include the use of technical orders

Chart patterns do not lag behind price movement; while this may seem like a positive quality, it also poses a risk because it increases the likelihood that early price action signals may be quite choppy.

The majority of technical analysis indicators are behind price movement; nevertheless, when paired with chart pattern analysis, these indicators can validate strong signals that traders in the market can trade aggressively on.

For example, traders are able to take aggressive trade positions when the price breaks out of a symmetrical triangle and an indicator confirms that there is sufficient momentum to back up the directional move.

Traders can also take such positions when there is sufficient momentum to back up the move in either direction.

Use candlestick patterns to confirm signals

Candlestick patterns are another helpful tool for analysing the raw price movement of the market, and chart patterns are an excellent price action strategy. The indications that chart patterns provide can be further qualified by using candlestick patterns.

If there is a convergence between a chart pattern and a candlestick pattern, such as pin bars, Marubozu, spinning tops, or Doji, then the chart pattern will be considered more qualified.

Candlestick patterns can take as little as one or two time periods to form, in contrast to the longer amount of time required for the formation of chart patterns. Candlestick patterns can assist chart pattern traders in identifying high-quality, early entry and exit trade opportunities in the market.

Include line charts

Chart patterns have the potential to offer valuable trading signals, but in order to benefit from them, you must first be able to identify them. This may not be a particularly difficult task, but it is essential to establish a method for detecting the formation of chart patterns at an early enough stage.

Failing to do so could result in outcomes that are less favourable than those sought. When ZA traders want to confirm that a chart pattern is formed, they might consider switching to line charts instead than candlestick charts.

Line charts can be helpful in this regard because they smooth out and simplify the price action, as well as make it easy to validate a chart pattern in sufficient time for appropriate trading.

For more on forex news, charts and education follow through to FX Explained.