Botswana was once known as the 2nd poorest country in the world. Today the southern African country is 1 of the few middle-income countries in sub-Saharan Africa. A rising middle class income has spurred retail interest in the financial markets and greater interest in forex trading.
Forex traders in Botswana have an important advantage over many other countries on the African continent. According to Transparency International’s Corruption Perception Index, Botswana is ranked as the least corrupt country in Africa. The ability to trade forex is difficult in some parts of the continent, but investors in Botswana have an inside track and government support. If you’re ready to begin forex trading in Botswana, here are a few steps to be sure you’re prepared.
Get Started with Forex in Botswana
Here are the initial steps to lay your foundation for forex trading:
- Choose a device and connect to the Internet. You have the option of using a desktop, laptop, mobile smart phone or tablet. Once you have chosen your preferred device, check your internet speed. The faster your connection, the faster you can execute your trades. Success in forex depends on timing, and you don’t want to deal with downtime, latency, buffering or slowdown in the middle of a trade.
- Choose a verified forex broker. Choosing your forex broker is an important decision. Take your time to research the best forex broker for you. Test out the platform using virtual money first to see if the broker is a good fit for you.
- Open your forex account. Follow the proper steps to open your account provided by your broker. Identify yourself and ensure you have given the proper bank information.
- Fund your new forex account. When you are ready, transfer real money into your new forex account. Many brokers will allow various forms of deposit including checks, debit cards or bank transfers.
- Download your preferred trading platform. The broker of your choice will connect you to a platform or provide a platform directly connected to them. Trades should be easy for you, and you should not be confused about the user interface.
- Trade. If you have used the virtual account to practice your trading strategy you will feel much more comfortable conducting your first trade. Take your time to prepare and execute when you are ready.
Botswana Forex Trading Strategies
Take a look at the high level strategies that most traders use to form a successful forex career.
Day traders look for fast profits. These profits are usually not very big, but the high frequency of this strategy makes up for that. You’ll need a great Internet connection as well — some day trades are held for seconds only, if that. This is the playground of some of the best traders in the world, complete with automated software and sophisticated setups.
You need to be extremely fast in order to be successful as a forex day trader. Having a strategy is important, but so is the correct reaction to events. You need to know how to manipulate the spread to your advantage and use important indicators as signals.
Trend trading may send you into a trade for days or weeks before closing. Trends take a bit longer to form than day trades, and the profits are usually larger. Having a reputable broker is essential because you need to trust the financial entity that holds your trades. This is especially true if you plan on using margin in your account.
In order to be a successful trend trader, you should know about support and resistance levels for range trading. These are signals that tell you when to buy and sell. A trending currency is moving in a discernible direction, and you should be able to time your entry and exit profitably.
Positional traders follow the larger economic and political conditions that rule the larger forex market. You may be in a trade for years as a position trader. You must be extremely patient and confident in your research. Short-term news cycles don’t mean much except to provide opportunities for the positional trader to profit from trader emotion.
If you enjoy logically assessing the market, then positional trading may be for you. In the long term, currencies tend to return to their true value in the marketplace. This is what the position trader is counting on.
Forex Trading Example in Botswana
Let’s say BWP/ZAR is trading at 0.07501/0.07823 and you think the price will rise. The margin rate of the currency pair is 2.45% and you want to purchase 15,000 P. You will need R28.75 in your account.
In 2 hours, the BWP/ZAR pair does move up. The currency pair is now trading at 0.08215/0.08322. This is a move of 39 points. Your total profit would be (15,000 P*0.08215) – (15,000 P*0.07823) = R58.8.
Making Money with Forex in Botswana
Finding a trading strategy that matches your personality is the best way to make money in the forex market. There are many trading strategies to choose from:
- Carry trading: a currency may offer a high or low yield in the forex market. Carry trading involves capturing the difference between the high yield and low yield currency.
- Short trading: a common phrase in trading is to buy low and sell high. Shorting does this in reverse. When you short, you are selling high first and buying back low.
- Binary options: this is a simpler investment choice for people who want a yes or no proposition instead of profit and loss based on direct price tracking.
Best Online Forex Brokers in Botswana
One of the most important decisions you will make is the forex broker you choose. Let your research guide you in finding the right fit.
A basic knowledge of forex vocabulary will help you enter trading with confidence. Take a look at the definitions below:
Pip: the smallest gain or loss you can make in forex, also known as a basis point.
Lot size: a standard lot represents 100,000 units of currency. A mini lot is 10,000 units of currency; a micro lot equals 1,000 units and a nano lot represents less than 1,000 units of currency.
Orders: you have the option to use various types of orders for forex trading. An order refers to the way you enter or exit trades in the market.
Calls: if you buy a call, you are purchasing a currency pair contract to control a certain lot size until or before a specific date at a predetermined strike price.
New Ways to Make Money
The forex market gives individual investors in Botswana new opportunities to stabilize their personal finances and those of the country. As 1 of the promising emerging economies of the world, Botswana should continue to offer an expansive selection of financial tools, including forex, to retail investors.
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