Trade Forex South Africa

Want to trade Forex online in South Africa? TradeForexSA answers questions for those starting to trade Forex.  We give honest and balanced reviews of the Forex brokers available online.  Trading Forex can be a lot of fun, but it does come with a great deal of risk.  If we help you choose the best broker, by weighing every pro with a con, we have then succeeded in our goal.

The Best Forex Trading Brokers For South African Traders

How do you trade forex?

Forex trading is the buying and selling of currencies on this single global currency market. Everyone from the smallest retail forex traders to the biggest of banks is buying and selling currencies for profit.  

In Forex trading, currencies are traded in pairs as the value of a currency is always relative to the value of another currency. So as you are buying one currency, you are selling the other currency in the pair.   One of the most popular pairs to trade is the USDEUR (or Euro and USD).

The biggest difference between Forex trading and stock trading is that the trader never takes ownership of the currencies they are trading. Instead, a Forex trader is only speculating on the value of the currency either increasing or decreasing.  

A forex trader makes a profit by purchasing a currency and then selling after the price has increased in value.  Should the trader assume wrongly, a trade can make a loss should the value of the currency decrease.

How Does Forex Trading Work?
A Forex trader buys and sells currency pairs, with the hopes that the value of the currency changes and they make a profit.  If you feel you need a little more information and example,  keep reading about Forex Trading here

Learn To Trade Forex

Learning to trade forex can be hard.  We have put together a set of articles to get you started and take that first step into trading. Much of Forex trading is learning by doing so once you understand the basics, you can choose a broker, start using tools, and doing your own analysis.   I suggest reading the following articles to get you started.

Featured Sections

Demo Accounts

Demo accounts are a good way for a new trader to try a broker without risking any capital.  Demo accounts often have all of the features you would expect from the broker, and it gives the trader a good feel for what trading would be like with MT4 or with the broker’s own software or apps.  Read more.

Cryptocurrency Trading

Looking to trade Cryptocurrencies like Bitcoin and Etherium? They have become very popular and are good trading for those who enjoy technical analysis and charts.  Here are the best brokers who offer these assets.  Read more.

Forex Trading Apps

Some Forex trading apps are high quality and can be used in trading, price quotes, currency comparisons, and analysis.  Here is a list of brokers with great mobile apps so you are ready to trade on the move.  Read more.

How to compare forex brokers?

There are a lot of Forex brokers available to traders, but these tips should help you find the best ones.

  • Regulation – Make sure the broker is regulated by a respectable regulator.  Read more here about this.
  • Tight spreads – Spreads are the way most brokers make their money.  It is the difference between the buy and the sell price.  A good broker will have the buy/sell prices closer together, meaning that it is easier for you to make a profit on your trades.
  • Platform – Does the broker have a connection with a software platform you like.  An example is if the broker supports MetaTrader.
  • Access to your money – Check the conditions by which you can withdraw your money.  A good broker will process your withdrawal request on the same business day.

What is not important in comparing brokers?

As controversial as it may sound, I don’t see the minimum deposit required to start an account as something important to consider when evaluating a broker.  Now you are thinking – I don’t have 3000 Rand to put into an account – and that may be valid and true.  But we can not say that a broker is bad because they require that amount to open an account.

A trading account needs to have some money in it in order to invest.  And because Forex trading is CFD trading that uses leverage, we need to have an amount of capital in the account as collateral in case our leverage trade goes against our position.

So as hard as it sounds, don’t judge a good broker from a bad one based off of the minimum deposit required to start an account.

What is like to Trade Forex?

Forex traders spend much of their time looking at the way the currencies value changes over time.  This is always done by comparing a currency against another in a process called pairing.  Below is an example of the USD/ZAR pair being traded, and an outcome of the trade.

How can I trade forex successfully?

Forex Trading can be profitable or unprofitable depending on what at trader invests in, how the trader makes the investment, and the market conditions during the time they hold the investment.  These aspects working together will determine if the trade is profitable.  Forex traders will always lose a portion of their trades, so it is important for all traders to set a win-loss ratio that you should target.  As a general rule, a trader should not invest more than 2% of their total capital into one trade, and never trade any money that you can not afford to lose.

What Are The Risks of Trading Forex?

Trading Forex carries significant risk.  A risk that includes losing all the money in your trading account over a very short period.  Central to our education we have a piece on risk management and developing a trading plan.  The main risks of trading:

  • Risk 1:  The Forex market is extremely volatile at times.  It is, after all, because of this volatility that we can profit from trades.  But the market can move very swiftly, and this can mean a trade going against you in a very short time span.  If you are trading, you must be active in watching your trades all the time.
  • Risk 2:  The Forex market is not something you can predict. There are just too many factors and actors on the market for it to be fully predictable.  Traders need to set a win-loss target ratio where you account for some losses and set a strategy to minimize them.
  • Risk 3:  Forex trading requires the use of leverage.  Leverage is a tool used in trading to apply your profits, but it also amplifies your losses which are automatically deducted from your trading account.  Your account balance can be wiped out with a single bad trade.
  • Risk 4:  In some cases, interest can be charged on your trades.  This is when you carry them overnight where a tom-next adjustment is made, and this could mean that your broker will take funds from your account to pay this fee.
Trading Forex and CFDs is not suitable for all investors and comes with a high risk of losing money rapidly due to leverage. 75-90% of retail investors lose money trading these products. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

An example of Trading Forex

An example is often best to help beginners understand what trading forex is like and how traders approach their work.

Every two months, the South African Monetary Policy Committee of the SA Reserve Bank (SARB) meets to set and adjust the monetary policy.  As a trader, you expect changes to be made to the policy.  You expect that the press release has been scheduled for 2 pm, will drop interest rates.  This rate change has been expected for the past 2 quarters but has never been made.

Right before 2 pm, you place a trade for 170 USD with 1:50 leverage which gets a trader $8500 (170 USD * leverage) to invest.  For argument’s sake, we can say this is 1 standard lot.  You buy in at 11.6927 and watch the market.

At press release time, MPC reduces interest rates as you expect and the market starts to move.  You monitor your trade for 15 minutes when you decide to sell at 11.7685.  The outcome of this trade  – you make a profit of 641 USD.

Trade Forex Example

The USDZAR moves following a Monetary Policy Committee Meeting of the SA Reserve Bank in March 2018

Do Traders have Tools to Trade Forex?

There are a great number of tools to help with Forex trading.  Most of them are already included in the platform that you use when you sign up with the broker, but there are other good stand-alone pieces of software that can be a real help give you an additional edge in your trading.

We feature these kinds of software because we believe they have great value for the readers. Examples of tools are FormationSeeker that helps traders identify harmonic patterns in the trading and highlights opportunities for profit, and PitView that gives full transparency to how the banks are trading making it much easier to predict the market.  For a full review of all Forex analysis tools, you can read our article here.

Do forex traders pay tax in South Africa?

Forex gains are not tax-free income, and all gains from your Forex trading are taxable even if your brokage and capital are overseas.  South Africans are expected to declare taxes just as with any other income either as an individual or a company.  For more on this read our taxation article for forex traders who reside in South Africa.

FSCA (formerly FSB) Regulation in Forex Trading

South Africa’s investment regulatory body is called the FSCA (Financial Sector Conduct Authority) – formerly known as the FSB. It is their job to regulate all non-banking service providers in South Africa.  Regulators like the FSCA are there protect the public from financial crimes and irregularities.  Today, in addition to regulating trading on the JSE, the FSCA regulates Forex trading brokers.

Is Forex Trading Right For Me?

Above is a fairly good overview of what you can expect with Forex trading.  By now you should know that it is high risk, that you need to find a broker that you feel suits you best, you should know the amount you want to put into that account with a broker.  Forex trading takes commitment to learning, and you should be ready to:

  1. Compare brokers to find one that suits you.
  2. Read our education section and learn everything you can.
  3. Understand the way the FX market and CFD trading works.
  4. Learn the software and tools that will power your trading.
  5. Be ready to lose all the money you place in an account. Don’t deposit any money you can not afford to lose.

Why TradeForexSA?

With TradeForexSA you can learn to trade forex with the best forex brokers for you.  On TradeForexSA you can:

✔ Find regulated brokers with a focus on local FSCA (South African) regulation.
✔ Read brutally honest broker reviews with expert opinions for free.
✔ Compare reliable and trusted brokers and learn how to trade.
✔ Enjoy our education first approach to trading.
✔ Be the best trader you can become by starting off on the right foot.

Trading Forex and CFDs is not suitable for all investors and comes with a high risk of losing money rapidly due to leverage. 75-90% of retail investors lose money trading these products. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.