For traders who’ve just heard about online forex trading, it’s important to know what it is before putting time, effort, and money into it. Online forex trading is the art of trading currencies through your forex broker.
This means to buy and sell a currency pair such as ZAR/USD, USD/JPY, and EUR/GBP with the goal of earning a profit when the price moves. Profits in Forex trading are made from change in exchange rates.
The trading happens electronically over-the-counter on our desktop or mobile app as there is no central market for forex. You can trade at any time of the day and 5 1/2 days a week.
There are many benefits to trading Forex in the digital age, you can read about it in the benefits of online trading post.
How does online forex trading work?
There are a variety of different ways that you can trade forex. Basically, they all work the same way: by simultaneously buying one currency while selling another. The first listed currency of a currency pair is called the base currency, and the second currency is called the quote currency. Currency pairs compare the value of one currency to another—the base currency (or the first one) versus the second or the quote currency.
Traditionally, a lot of forex transactions are made via a forex broker, but with the rise of online trading, you can take advantage of forex price movements using derivatives like CFD trading.
CFDs are leveraged products, which enable you to open a position for a just a fraction of the full value of the trade. Unlike non-leveraged products, you don’t take ownership of the asset, but take a position on whether you think the market will rise or fall in value, i.e. price movement.
Although leveraged products can magnify your profits, they can also magnify losses if the market moves against you.
Why trade with a trusted South African Broker?
To trade forex, you need an online broker. Trading with a trusted forex broker is crucial for success in international currency markets.
As a forex trader, you may have specific needs related to which platform, tool, or research requirements you have. Understanding your investment style can help determine which fx broker will be best for you.
Getting Started with online Forex trading in South Africa
Fx trading in South Africa remains the largest segment in Africa with a slight edge over Nigeria. The South African Rand is one of the most traded currencies today and has been for over 15 years.
The Bank of International Settlements (BIS) ranks the South African rand as the 18th most traded currency in the world. According to the BIS 2019 triennial report, the rand has remained within the top 20 currencies since 2004. And it is the only currency on the continent of Africa to achieve this ranking in the forex market.
Strong regulation in the financial sector and the relative strength of the economy gives Forex traders in South Africa the confidence to trade in forex at a rate roughly equal to Nigeria. Local experts give Forex trading South Africa a slight edge in total volume, average account size, and the number of traders.
Anyone who knows how to trade forex will tell you the game is 90% preparation. Your infrastructure needs to be solid or even the best-laid plans will fall flat. As the biggest financial market in the world, forex is a global competition that takes no prisoners.
If you’re new to online trading, have a read through the Trading Basics page to help you with your understanding.
Ready to Start Trading
Please watch the videos on this page to familiarise yourself with the process.
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