Strong regulation and its relative economic power give South Africans confidence to trade forex. The rand has remained within the top 20 currencies since 2004. And it’s the African currency to achieve this ranking in the forex market.
Ready to trade forex in South Africa? Get started now with our guide to forex trading in South Africa.
- South Africa Forex Trading Strategies
- Forex Trading Example in South Africa
- Making Money with Forex in South Africa
- The Best Forex Brokers in South Africa
- What to Look for in a Forex Broker
- Get Started with Forex in South Africa
- Open New Financial Doors
South Africa Forex Trading Strategies
When it comes to the forex market, failing to plan is planning to fail. The more strategies you master, the more likely you are to consistently profit. Start your journey with some vetted gameplans.
If you like reading and interpreting charts, you should enjoy trading off of price action. Predict the next move, strike while the iron is hot and take profits quickly. The price action trader is more concerned with a currency pair’s pattern of movement.
Large macroeconomic conditions and long-term trends don’t matter as much because these trades aren’t meant to be long — sometimes only a few seconds (if that).
Day trading is a specific kind of price action trading that closes all trades by the end of the day. Placing a time limit on the action protects a trader from big overnight moves. Although forex trades 24 hours a day, weekend moves can be somewhat surprising.
Day traders exercise many of the same techniques as price action traders and are opportunistic. This kind of trading is also usually higher frequency than position trading, range trading or trend trading.
Range traders may hold a trade for minutes, hours or days. This kind of trading tries to take advantage of larger patterns based on support and resistance levels.
Range trading works when a currency pair has no definite direction — it is moving within a range that can be predicted. Successful traders buy at the low points of the range and sell at the high points over and over.
Trend trading usually takes place over the same time frame as range trading. The major difference is the behavior of the currency pair — it’s moving in a direction rather than within a range.
The successful trader will identify the trend (usually just up or down) and trade accordingly. You will usually ignore small pullbacks and wait for bigger profits as well.
Forex Trading Example in South Africa
Let’s say ZAR/USD is trading at 0.05780/0.05790, and you think the price will rise. The margin rate of this currency pair is 3.17% and you want to purchase R150,000.
You will only need $275.08 in your account — the broker will let you borrow the rest.
The ZAR/USD price moves up according to plan. After 3 hours, it’s trading at 0.06020/0.06040.
This is a move of 23 points (0.06020-0.05790), and your profit is (R150,000*0.06020)-(R150,000*0.05790) or $345.
Making Money with Forex in South Africa
There are many ways to make money in the forex market outside of the traditional “buy low, sell high” mantra (which works just fine as well). The more you know, the more likely you are to see opportunities as they come.
- Carry trading: You can make money on the directional movement of a currency pair, but you can also make movement on the interbank interest rate of a currency. When you hold a currency in forex, that’s just like holding it in a bank. You gain interest on your holdings. Carry traders try to profit from the difference in interest rates of various currencies.
- Binary options: Instead of taking profit or loss based on the real time movement of a currency pair, you can participate in all or nothing options. If a currency is at a certain price on a certain date, you win money. If it is lower than the pre-established price on that date, you lose your investment.
- Shorting: If you think the value of a currency will decrease in the future, you can borrow that currency and sell it at a high price to buy it back cheaper later. This is known as shorting a currency.
The Best Forex Brokers in South Africa
When seeking a decent online forex broker to trade through from South Africa, the list of well-regulated brokers shown below provide a good place to start. These include online brokers or banks with a South African presence like FxPro, FXTM, FXCM and Saxo Bank, in addition to well-regulated foreign brokers that accept South African clients, such as FOREX.com, for example.
If you prefer to do business in a language other than English, you might want to choose a broker with a website that translates into your preferred language. The broker should also have a customer service staff member fluent in that language.
Select a broker that has established a South African office and is regulated by the FSCA because these brokers tend to act more responsibly toward locals since they can be sued in South Africa. Litigating against a foreign company can be a challenge, and it can easily involve extra time and cost to pursue justice if you feel that it’s necessary. Finding the best forex broker for your needs usually depends on your particular situation.
South African residents can open up an account with each top forex broker below, so review what your trading requirements are and check out the various options before you choose a broker.
CMTrading is your local international broker, serving traders throughout Africa. You can get up to 200:1 leverage on your CFD, currencies, forex, crypto or indices, with the platform offering over 150 assets.
You can download the mobile app or trade on the CMTrading website. Additionally, you get 24/7 support, 4 account types and fast transactions.
If you’re new to trading, there is a massive education section that will take you from a novice to an experienced and confident trader. When you’re ready, you can use MT4, Sirix, CopyKat, Expert Advisors (for automated trading) and a selection of additional trading apps.
Founded in 2012, South Africa-based online broker CMTrading gives clients award-winning access to more than 150 tradable assets, including the foreign exchange market (forex), contracts for difference (CFDs), commodities, indices and cryptocurrencies.
In addition to the globally recognized MetaTrader 4 (MT4) trading platform, CMTrading also supports the Sirix Web Trader platform and a social trading platform called CopyKat. The broker provides a wide range of trading tools on its website as well as mobile trading apps for the Sirix and MT4 platforms. CMTrading offers extensive educational resources for less-experienced traders that include live seminars, webinars, e-books and training videos. While CMTrading services clients in more than 190 countries, the broker does not currently accept U.S.-based customers.
- New traders
- Experienced traders
- CFD traders
- Active traders
- Premium analytics
- Extensive educational resources
- Multiple trading platforms
- Research platform
- Social trading
- Not available to U.S. based traders
- High minimum deposit
FOREX.com is the leading U.S. forex broker based on client assets and is well-regulated by the NFA and CFTC in the United States. It is also regulated in the U.K., Japan, Australia, Singapore, Hong Kong, Canada, and the Cayman Islands.
Opening a trading account at FOREX.com requires just $250, and you can trade micro lots through this broker if you wish to deal in smaller trading sizes. The broker keeps client funds segregated from its own and it also offers an Islamic account option for clients.
FOREX.com has several desktop, web-based and mobile trading platforms that include the highly popular MetaTrader 4 and 5 platforms from MetaQuotes, as well as NinjaTrader. Traders can also access its proprietary Advanced Trading Platform for desktop computers and its Web Trading platform that lets you trade using an Internet browser.
FOREX.com has a rather low (though safe) maximum leverage ratio of just 50:1 for forex clients.
FOREX.com is a one-stop shop for forex traders. With a massive range of tradable currencies, low account minimums and an impressive trading platform, FOREX.com is an excellent choice for brokers searching for a home base for their currency trading. New traders and seasoned veterans alike will love FOREX.com’s extensive education and research center that provides free, informative forex trading courses at multiple skill levels. While FOREX.com is impressive, remember that it isn’t a standard broker.
- MetaTrader 4 users
- Beginner forex traders
- Active forex traders
- Impressive, easy-to-navigate platform
- Wide range of education and research tools
- Access to over 80 currencies to buy and sell
- Leverage available up to 50:1
- Cannot buy and sell other securities (like stocks and bonds)
eToro is a social trading platform that provides forex products and more to retail clients for over 10 years. They have 10 million account holders worldwide, and this allows users to be a part of their own trading community.
eToro’s most popular trading features that set them apart from the competition are CopyTrader, CopyPortfolios, and the Social News Feed.
With CopyTrader and CopyPortfolio, you locate a successful trader and copy their strategy. You can copy up to 100 traders, and this feature is easy to acess and set up.
The Social News Feed gives you access to a Twitter-like feed to trader updates. Traders discuss the markets, their strategies, and are able to get alerts based on certain market factors.
Though Australian and British traders might know eToro for its easy stock and mobile trading, the broker is now expanding into the United States with cryptocurrency trading. U.S. traders can begin buying and selling both major cryptocurrencies (like Bitcoin and Ethereum) as well as smaller names (like Tron Coin and Stellar Lumens).
eToro offers traders the opportunity to invest their assets into premade portfolios or cryptocurrencies, similar to services offered by robo-advisors through traditional brokers. Though eToro isn’t a one-stop-shop for everything an investor needs, its easy-to-use platform and low spreads is a great way to enter the cryptocurrency market.
- International Forex/CFD Traders
- New cryptocurrency traders looking for an easy-to-use platform
- Traders who want to buy and sell cryptocurrencies on-the-go
- Simple platform that is easy to master
- CopyTrader feature that allows new traders to copy the same strategies used by professionals
- Virtual dummy account that gives you $100,000 to practice trades
- U.S. traders currently limited to cryptocurrencies
- Only 15 major coins available to trade
Investing with Pepperstone gives you access to many different markets around the world, including South Africa. You can trade in:
Building a diverse portfolio is the easiest way to build wealth, and you will find that it is easy to create a portfolio in South Africa with a leading platform like Pepperstone. You also get 24/7 customer service, educational tools, and several platforms from which you can trade.
Pepperstone is an Australian broker focused on providing international forex, CFD and cryptocurrency trading. Though U.S. traders currently cannot open an account with Pepperstone, the broker remains an affordable and comprehensive option for international traders.
Pepperstone offers traders access to over 61 forex markets, over 60 CFDs for index funds and stocks and 5 cryptocurrencies. Leverage options with Pepperstone are extensive; you may qualify for up to 500:1 leverage when trading currencies and up to 5:1 leverage when trading cryptocurrencies, for example.
There are a few areas where Pepperstone can afford to improve. We’d love to see Pepperstone add its own trading platform in the future instead of relying entirely on 3rd-party platforms. We’d also love to see direct stock and fund purchase options in the future. Despite these flaws, Pepperstone remains a very strong choice for international traders.
- International traders interested in trading CFDs from foreign markets and currencies
- Traders who are already familiar with the MetaTrader or cTrader platforms
- Traders who are looking for leverage when trading cryptocurrencies
- Access to over 61 forex pairs and over 60 stock CFDs
- Leverage available for both forex and cryptocurrency trading
- Wide range of educational tools and courses that both beginners and experts can use
- 24/7 customer service
- Not currently available to U.S. traders
- No option to purchase stocks, bonds or mutual funds directly; only CFDs are available
What to Look for in a Forex Broker
No matter where a forex broker is based, the best forex brokers will demonstrate the following traits:
- Will open an account for you
- Have a good reputation
- Offer the currency pairs and assets you want to trade
- Require an affordable minimum deposit
- Make prices with decent dealing spreads
- Have minimal order slippage
- Allow enough leverage for your preferred trading strategy to work
- Provide negative balance protection
- Segregate client accounts from its own
- Support the deposit and withdrawal procedures you wish to use
Keep in mind that the type of trading software a broker supports is vitally important as well. Many online brokers have their own proprietary trading platforms they let clients use, and some also support third-party platforms like the popular MetaTrader 4 and 5 platforms from MetaQuotes.
Get Started with Forex in South Africa
Anyone who knows how to trade forex will tell you the game is 90% preparation. Your infrastructure needs to be solid or even the best laid plans will fall flat. As the biggest financial market in the world, forex is a global competition that takes no prisoners. Here’s how you can get started.
- Connect online. You can connect to the world of forex and trade currencies across the world from anywhere in South Africa. Make sure you have a solid Internet connection with no built-in latency. Forex trades are all about timing, and you don’t need a delayed system reaction messing up a perfectly good strategy.
- Search for the best online forex broker. You can connect to forex brokers across the world. Take note of the regulatory bodies that govern your chosen brokers. South Africa has relatively strong protections, but those protections may not apply if the broker you choose is offshore.
- Open the account. Your broker will have a process for you to follow to open an account. Make sure you follow the directions closely. You must properly identify yourself and connect your bank account.
- Fund your account. You can begin your trading career using virtual (not real) money. When you want to start making money, you will need to fund your account. This should be a relatively simple process if you have connected your bank account. Certain brokers will also allow funding through a check, debit card or credit card.
- Download your trading platform. Most reputable brokers have proprietary trading platforms. This is the user interface you will use to make your investments into the forex market.
- Trade. Now that your infrastructure is set, you can begin trading in the forex market.
The South African national currency is the South African Rand (ZAR), which is further divided into 100 smaller denominations known as cents. Although the International Monetary Fund (IMF) does not consider the ZAR a common Central Bank reserve currency, according to data compiled by the Bank for International Settlements (BIS), the South African currency ranked as the 20th most-traded of 2016, accounting for one percent of overall forex market activity that year.
With respect to the South African financial sector regulation, South Africa has employed a so-called “Twin Peaks” regulatory system since 2017. Since that time, regulation of online forex and contract for difference (CFD) brokers has come under the responsibility of the Financial Sector Conduct Authority (FSCA), an entity that was created to take the place of the Financial Services Board (FSB).
Financial institutions need to be authorized by the FSCA before starting to operate in South Africa. The FSCA has been authorized to ensure that regulated entities obey relevant laws and fulfill capital adequacy requirements to support their financial soundness and protect traders and investors. Brokers with local licenses must keep all client funds segregated and in a recognized bank in South Africa.
When it comes to forex trading, South Africa is an increasingly popular locale for forex brokers due to its rapidly growing economy as one of the most developed countries in Africa, as well as strong demand for financial services and less strict regulation.
South Africa has a few locally-based online brokers licensed by the FSCA, such as BlackStone Futures and Khwezi Trade, although the more reputable international forex brokers who have opened offices in South Africa will typically offer a better service.
Remember that if you do want to trade via a foreign forex broker, it should be reputable and overseen by one or more regulators where its main operations are situated.
Open New Financial Doors
You can use forex to open new financial doors in South Africa. Many brokers offer stocks of educational content, and there are online courses to teach you more about forex investment. Start with our guide to learn to succeed in the forex market.
Get a Forex Pro on Your Side
FOREX.com, registered with the Commodity Futures Trading Commission (CFTC), lets you trade a wide range of forex markets plus spot metals with low pricing and fast, quality execution on every trade.
You can also tap into:
- EUR/USD as low as 0.2 with fixed $5 commissions per 100,000
- Powerful, purpose-built currency trading platforms
- Monthly cash rebates of up to $9 per million dollars traded with FOREX.com’s Active Trader Program
Learn more about FOREX.com’s low pricing and how you can get started trading with FOREX.com.