South African Forex Market Drivers
Forex Trading (CFD) in South Africa has grown into a massive market over the last decade. The ease of access to this market is the main driver. The currency market (foreign exchange or forex for short) gives traders access to trading the price move in different currencies across the globe. Many South Africans are particularly interested in the exchange rate between the US Dollar (USD) and the South African Rand (ZAR).
There are various Forex trading markets in South Africa. Let’s have a look at the 5 most alluring elements of the Forex Market for South Africans.
Low Entry Cost
Traditionally it was expensive to trade the stock market and this led to the perception that trading is limited to rich people and large companies only. Although this has changed dramatically over the last 5 years, forex was seen as a more affordable access point to the online markets. Forex trading South Africa gave people an opportunity to trade often from as little as R5000 and even less. When first introduced this seemed very affordable compared to the other markets and many people jumped at the opportunity. The forex CFD market has grown exponentially since it was introduced and it has not yet reached its peak.
Leverage in the Currency Market
Although currency fluctuations are often dwarfed by that of the stock market, the use of CFDs (Contracts For Difference) allowed the addition of leverage in the forex market. This can get rather complex, but in simple terms, you can trade a larger amount of money than just your deposit. For a more detailed explanation of leverage you can read: How does leverage work in the forex market?
This means that not only is it more affordable to enter the market, you can also trade large positions. It is very important to note that although this does present the opportunity to make more profit it also increases the risk of loss. Leverage is often referred to as a double-edged sword. Make sure you research the concept of leverage thoroughly before you start to trade forex.
Forex Trading South Africa – Trade from Anywhere
As long as you have a device i.e PC, Laptop, Tablet, or Smartphone, and an internet connection, you can trade. This means that you are not limited geographically. You can travel the world without missing a trade. This is one of the most alluring aspects of the currency market. Previously, people in remote areas were limited to very few opportunities. With the internet becoming more and more accessible every day so is the forex market. You do not have to live in a city to trade or even have to travel to the brokerage to open your trading account. You simply fill out an online form and submit the required documents and voila, you can start your trading journey.
Free Forex Trading Courses
There are many education providers in the currency markets. You get everything from expensive expert courses to free online courses. A lot of free information is available. Especially for the Metatrader 4 platform, which we discuss in detail here: Metatrader 4 – Why is it so Popular?
One of the most popular courses for forex trading is found at BabyPips.com. This course is free and starts off with the basics and delves into complex theories like Elliot Waves and other trading strategies. Unlike other markets, you can get tons of information for free and educate yourself without spending a cent.
Analyzing Financial Markets and Events
Human beings, as part of our nature, love to analyze. Traders enjoy analyzing different economic events and data to try and predict movements in the market. Access to free research, tools, and reports, makes it possible for traders to come up with complex strategies. The strategy is a huge part in forex trading South Africa, and the development of that strategy is often a huge thrill for the participants in the market.
All these reasons combined make for a very attractive offering. It is very important to be aware of all the risks in forex trading. You should never use money that you cannot afford to lose when trading the forex market.