South Africa has the largest trading volumes on the continent. In 2019, residents bought and sold $20.3 worth of currencies. Forex is more than a fad — for some, it is a lifelong career. In 2021, online Forex trading is a way to earn a living when employment systems are in shambles. But how exactly does this system work?
Reasons for PopularityUntil the 1990s, Forex trading was restricted to institutional activities. Only banks and hedge funds bought and sold currencies in this market. Then, individuals gained access. Today, over 15 million people are engaged in online trading worldwide. Forex is the most popular domain, as it is also the most liquid and straightforward.
1. Anyone Can AccessAccessibility is a major selling point for brokers. Currency pros work wherever they are. All they need is a device with trading software and a stable internet connection. Mobile apps, web-based terminals and desktop platforms offer the same level of versatility on any machine.
Some companies provide VPS — virtual private servers. They keep your trading system running regardless of glitches or power outages. Its exact copy is stored on the broker’s servers. It receives signals and makes automated trades around the clock.
Finally, education is free. Since the 1990s, experts have created plenty of strategies and tricks. Brokers provide ample guidance, and their clients may find a plethora of sources by themselves. Articles, books, podcasts, tutorials, and other sources are scattered around the Internet. Even YouTube has dozens of channels for the financial community.
While trading has its intricacies, you do not need a PhD to master it. With so much learning material, what really matters is determination. Big brokers open free demo accounts, so users practice safely. Most beginners spend between two and three months in demo mode before working with real money.
3. Multiple Styles of WorkDifferent styles suit different needs. For example, scalpers monitor rates for hours on end. They place multiple trades within the same day, which is the most demanding fashion. Meanwhile, swing traders may keep positions open for days. Position traders are even more patient. They seek out the most persistent trends. Such users may be happy with only a few trades during the year.
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In the currency market, you buy low and sell high. This fundamental logic applies to any other instrument. As the rates are always changing, you make a profit with a well-timed transaction. Traders open long positions to buy and short positions to sell. Execution may be instant or automatic (once a particular price is reached).
Following the collapse of the Bretton Woods Agreement, most currencies started to float. Their value is no longer pegged to precious metals or the US dollar. It is changing all the time due to economic and political factors.
A trading terminal is an all-in-one system. It has price charts and financial news, so you can analyze the market at a glance. Users can fine-tune positions by calibrating a range of parameters, including Stop Loss. Your trades may be executed automatically: just set the price and let the system do the job.
Provision of Forex BrokerageIn South Africa, the brokerage is rendered by international companies and local firms. Big brands have undeniable strengths. First, companies like Forextime are officially licensed by one or more monitoring organizations. These include the FSCA (Financial Sector Conduct Authority) in the country, the FCA in the United Kingdom and the CySEC in Cyprus. Secondly, they offer 24/5 support and cutting-edge software like the FXTM Trader app.
For analytical minds, finding a regulated broker is quite easy. However, fraud is not uncommon. Forex is a magnet for all kinds of cybercriminals. Check brokerage websites for licensing details, and google customer feedback. Make sure the company delivers on its promises.
Overview of InstrumentsForward-thinking traders build broad portfolios across a spectrum of markets. The more instruments they manage — the lower the risks and the higher the returns. Brokers do not limit their offerings to currency pairs, and other assets follow similar logic. Today, you may tap into stocks, derivatives, and precious metals — often from the same account and platform:
- Major, minor, and exotic currency pairs;
- Spot metals like gold and silver;
- Stocks of the largest US-based corporations like Apple or Facebook;
- CFDs on different underlying instruments like stocks, commodities, cryptocurrencies, and indices.
In the coming years, Forex trading will only see more growth. Still, remember that financial markets are not fully predictable. A trader should learn to hedge risks before using real capital.
