5 reasons for the popularity of forex trading in south africa
Posted on 17th Nov 2017
In recent times forex trading has gained widespread popularity in South Africa and many have even turned it into a full-time profession. Online trading offers immediate access to different currency markets worldwide and generates the quickest returns on investments. Besides, it affords total freedom from the boring 9-5 drudgery while promising greater earnings than any ordinary day job. Many South Africans keenly follow the fluctuations in rates between the US Dollar (USD) and the South African Rand(ZAR). However, forex is not a get-rich-quick scheme & there are many scammers and sharks even in the SA forex industry like elsewhere who prey on people's gullibility. The Financial Services Board(FSB) is an institution for the non-banking financial sector that safeguards the interests of South Africans who park their money in non-banking financial avenues such as the forex markets. Let's take a look at 5 topmost reasons for the popularity of forex trading in the rainbow nation.
Popularity of the Rand:
The Rand is an oft-used currency pair and can be used against a number of other currency pairs like the USD/ZAR and the GBP/ZAR. It is a popular choice due to the fluctuations and options it offers. The South African economy is an emerging one and reaps better profits on official currencies as compared to other markets. In SA the Rand is stabilised against other currencies to some extent by the Reserve Bank which renders it some leeway that can be exploited to score gains. Otherwise it fluctuates more erratically against other more-steady currencies.
Leverage:
The concept of margin and leverage has made forex trading accessible to one and all. CFD Trading allows investors to trade in much larger positions at a fraction of the cost. In SA Forex brokers are not restricted by regulators to restrict leverage and hence there is no limit to the amount of leverage that they can offer. Most brokerages offer a standard leverage of up to 400:1 or 500:1. However, it is noteworthy that leverage is a two-edged sword and can accelerate losses as well as gains. Thus, it is to be used judiciously.
Ease of entry:
Forex Trading in SA dates back to the mining era. However, at that time trading was the exclusive preserve of the affluent lot or large financial institutions and not the retail investor. But with the prevalence of forex trading online nowadays anybody can make money through currency trades from as low as R5000 or even lesser. Forex Trading in South Africa has thus grown by leaps & bounds and not yet reached saturation.
Trading on the go:
Online trading affords the freedom of trading on the go. So, one can trade anytime, anywhere without being straitjacketed by geographical boundaries and easily follow all market movements. Everything can be managed smoothly online no matter wherever you reside.
Free education and training:
Most forex brokerages give free educational materials where beginners can learn all about how the currency markets work and its nuances. Tenured traders can also refer to charts and technical indicators before placing their trades. Free seminars, webinars and demo trading accounts that most brokerage firms offer enable traders to practice their strategies in a simulated environment.
Forex Trading works in much the same way in South Africa as in other leading economies of the world, only with slightly different regulations. One just needs to weigh the pros and cons carefully before taking the plunge. As the saying goes," Wisdom yields wealth".
