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Basic principles of Forex trading in South Africa

What Is Forex Trading?

Thanks to technological advances, humans can now earn profit from the comfort of their homes. While teleworking refers to traditional forms of employment, digital platforms give us access to global financial markets. With Forex trading, you can monetize your knowledge of currency prices and boost your personal income. Here is a brief guide to the basics of this activity.

currency

How Big Is the Market

Trading has swept in many countries. In fact, the Forex market is now the largest worldwide, with volumes of daily transactions reaching 5 trillion US dollars. This is much more impressive than the $84 billion volume of the global equity market.

However, there is one aspect shared by traders of currencies and stocks. Their profit depends on the correct timing of the transactions. The general rule of thumb (buy low and sell high) is applicable to both scenarios. With regard to currency exchange, a market participant aims to benefit from the changes in rates just like stockbroker gains from highs and lows in share prices.

The market itself is ever-vibrant, with transactions being conducted every single minute. Since trading has swept many countries, participants operate in different time zones, so trading never stops. Currencies are bought and sold by large entities (like banks or hedge funds) and individuals (this segment accounts for 5.5% of all trades).

How It Works

To access the marketplace, you need an intermediary. Reliable companies called brokers provide software and around-the-clock support. FXTM online broker, which has been operating since 2013, is gaining popularity in South Africa due to its reputation and lengthy experience in the realm of currency trades.

Since every trader's profit is gained from changes in currency values, success requires competence. A trustworthy Forex broker in Nigeria and South Africa will provide sample guidance and educational materials to facilitate this. Moreover, the demo mode of the platform enables you to practice trading with no actual risks involved.

On the other hand, certain features make foreign exchange trades special. First, the participants actually hold the assets they trade. Secondly, the marketplace works around the clock due to its global nature.

currency

Market Forces

Although success in trading depends on accurate forecasting, this knowledge may be gained with the help of expert guidance. A trustworthy broker provides ample educational content and expert guidance to help beginners grasp the workings of the market.

The shifts in currency rates are no random trends. They are determined by a large pool of factors, from finance to geopolitics. Here are some of the most common forces swaying the values of national currencies.

  • Growth of economies;
  • Interest rates;
  • Political systems;
  • Monetary policies;
  • Import and export.

    How It Looks

    Here is a simple example to help you comprehend the underlying logic of trades. All indicators are given for pairs of currencies, the most popular one being GBP/USD. Basically, the value determines how many US dollars a single pound is worth. For instance, this may be 1 dollar 28 cents, which looks like 1.2800.

    Each pair has two corresponding prices simultaneously. The "ask" value of GDP shows its price in US dollars in case of buying, while the "bid" indicator shows the same for selling. As all rates are constantly in flux, a carefully timed transaction brings profit to the selling or buying party.

    Convenience

    Although the activity may seem confusing to rookies, brokers are there to instruct and support their clients. FXTM is a well-established provider that supplies its clients with advanced software - MetaTrader 4 and 5. These platforms are jam-packed with forecasting tools and other aids.

    If a client has no time to follow the trends on their own, they could benefit from copy trading. This way, the job is essentially delegated to finance professionals, whose trades are replicated in the client's account.

    Finally, funds are easily transferred to and from one's trading account through a variety of means. From bank cards to Skrill, FXTM ensures safe and secure transactions. Finally, regular incentives and rewards make the activity even more beneficial and exciting.

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