When you consider Forex trading, the first countries that spring to mind are the USA, UK, and Canada. However, Forex trading can take place wherever you may be located. This type of buying and selling may involve trillions of dollars, but it takes place in the virtual world. There is no physical location where the transactions take place. The ZAR/Rand is not the most popular currency on the Forex market, but the number of Forex traders in South Africa has rapidly increased over recent years.
Before you start trading on the Forex market in South Africa there is one important step to take. Finding the best South African Forex broker to work with. It’s vital to choose a broker that has been registered and is regulated by the South African Financial Services Board. You’ll find it much easier to sleep at night is your broker is locally registered. There is nothing wrong with choosing a broker that is registered and regulated in another country. The choice is yours.
How are Forex brokers in South Africa regulated?
Financial institutions in South Africa, as in many other countries, fall under the direction of a regulatory body. The Financial Services Board is there to ensure and monitor operations of Forex brokers in South Africa. The board makes sure that monetary transactions undertaken in the Forex market are safe and run smoothly. The overall activities of Forex brokers in South Africa are watched over by the Financial Advisory and Intermediary Services. Both these bodies make use of strict and reliable regulations. As yet there are still few South African based Forex brokers, but more enter the market regularly.
Choosing the best Forex broker in South Africa
Choosing the best broker in South Africa for Forex trading is a vital first step. They will form a vital part of your trading equation and essentially be your business partner. The broker you choose should install a feeling of trust and meet your individual needs as a trader. There are some important factors to take into consideration.
Trustful Forex Brokers in South Africa
Here are just a few of them:
Is the broker regulated?
This may seem like an obvious question, but you’d be surprised how many unregulated Forex brokers there are out there. The most reliable Forex brokers in South Africa will be regulated and supervised by a local or international body. A broker that isn’t regulated can do just as they please, which isn’t likely to work in your favor. It’s much safer to go with a broker that can be trusted. A broker that sticks to the rules and meets certain standards is the most positive sign they take their business very seriously.
Does the broker offer low spreads?
The spread is the difference between the bid and ask price of a particular currency pair. If a particular broker is offering high spreads this should be seen as a red flag. High spreads are a way for brokers to make a profit, but it’s at your expense. A better option will be to pick a broker offering low spreads.
Is high leverage on offer?
Leverage allows a trader to trade large amounts of currency with a smaller deposit. Thereby increasing a trader’s buying power. It is usually expressed as a ratio. A ratio of 1:500 means buying power is increased 500 times. Say for example, you make a deposit of $1,000, the broker will match it to make $500,000 of buying power. If a broker is offering high leverage more opportunities will be opened up for making a profitable trade. If you have a small amount of capital then taking advantage of high leverage could maximize profits. But on the flip side, just as profits can be maximized, so can loses. Which is why it’s important to handle leverage carefully and not become dependant on it and use it continuously. Especially if you don’t really need to.
Speed of execution
The Forex market is a fast paced world, where split second decisions sometimes need to be actioned quickly. It’s vital that the Forex broker you choose can act in a fast, efficient manner on your behalf. The slightest delay has the potential for far reaching results, and ultimately loss of profit.
A variety of accounts to choose from
If a broker has a variety of account types to choose from, this should be considered a bonus. All traders are different and a broker who offers a wide range of accounts can cater to the needs of traders with varying financial abilities, aspirations and needs. If a broker is offering a free demo account, then get in there and start practicing. Run a mile in the other direction if this isn’t an option. Using a demo account is the best way to learn the ins and outs of trading and to develop and then hone your own strategy.
Reliable trading platform
A reliable platform will allow quick access to fundamental and technical analysis, be very secure, offer automated trading, along with visual features such as charts and graphs. The best brokers also use platforms that are very user-friendly. Big names in the Forex trading world are MetaTrader 4 and MetaTrader 5.