Can you make money online in South Africa by trading Forex?

Can you make money online in South Africa by trading Forex?

Currency trading is becoming increasingly popular in South Africa. Forex, also known as FX or Foreign Exchange, attracts investors and speculators from around the world. The FX market is the largest financial market in the world, with daily trading volumes over 5 trillion US dollars, making it a potentially lucrative opportunity for traders. 

Forex trading in South Africa is regulated by the Financial Sector Conduct Authority (FSCA). Before opening a trading account, it is important to make sure that the broker is regulated by reputable financial institutions. Residents of South Africa can open trading accounts with the FSCA regulated broker, or find a globally regulated one. Regulations are in place to protect the interests of regular investors.

In South Africa, there are many educational resources available for traders to advance their skills and knowledge, such as online courses, webinars, seminars and trading forums. It is worth noting that there are many false and low quality trading guidance offered, and traders need to learn as much as they can to be able to differentiate high quality information from the bad one. 

Forex trading can be profitable for many. However, it should be mentioned that many people lose their savings while trying to trade profitably. To make money currency trading South Africa, traders work hard on building and upgrading their strategies and skills. 

Benefits of trading Forex

To begin with, we should mention the benefits of trading currency pairs, as it helps create proper understanding of the market. Traders need to have a good understanding of how online trading works, which will help build realistic trading goals. The main benefits of FX markets include:

  • Easy to access: Forex trading has become highly popular globally, as a result many companies were founded that offer financial services. Increased competition brings low trading fees and low barriers to entry. Opening live trading accounts, registration, making deposits and withdrawals are fully digital. In addition, minimum initial deposit requirements are very low. 
  • High liquidity: Because the liquidity is high, the difference between the bid and ask prices is very low, as a result, traders that trade currency pairs are charged with low trading fees. Low fees to trade Forex to make money South Africa, is critical for success. 
  • Leverage: Forex traders are offered high leverage. Some brokers even offer unlimited leverage to their clients to trade currency pairs. 
  • Trading hours: Forex traders have the opportunity to trade 24/5, while for stock traders available trading hours are much more limited. 
  • Access to information: The Internet is full of quality information on currency trading. Traders can use the information to learn about trading and to conduct market research and make predictions.  

Drawbacks of trading Forex

While Forex trading offers many opportunities to make money trading Forex South Africa, there are some disadvantages to take into account, including:

  • High competition: The FX market is highly competitive, with retail and institutional traders competing from around the world. Big investment firms have access to huge capital to create sophisticated trading robots and infrastructure. Human traders are facing increasing competition from trading algorithms. While Artificial Intelligence (AI) is not there to trade against you yet, large financial institutions are using machine learning and pattern recognition robots in trading. Most high frequency trading is done by trading robots. The main advantage of these trading algorithms is that they don’t have human feelings such as fear and greed, they don’t take vacations or get sick. On the other hand, algorithms are not good at reading the economic and political news yet. 
  • High risks: Forex trading can be highly risky for many individuals. Currency markets are highly volatile. In addition, traders are using leverage (borrowed funds from their broker) to increase their purchasing power, which can further increase their potential for high losses. In South Africa make money Forex trading involves good risk management. On the downside, profits may feel small, but risk management helps attract investors. Trading using increased balance can increase your profits as well. 
  • Emotional trading: humans have emotions such as greed, fear of making a trade, hope that the trade will bring profits, and so on. Emotions shadow logic and are considered to be disadvantageous in financial trading. 

On the other hand, every mistake is an opportunity to learn and progress as a trader. It’s important to create a profitable trading system, manage risks and emotions for successful trading. 

How to make money trading currency pairs

As already mentioned, your competitors in the market are professional traders and institutional traders that have access to advanced tools and latest technology. On the other hand, there are FX market participants that are not aiming for profits, they simply want to exchange currencies, such as big corporations that have global employees, governments, banks, and traders of consumer goods. 

Institutional traders have to trade all the time, while as a retail trader, you do not have such an obligation and can only trade when a great trading opportunity presents itself. In addition, you don’t have to trade against big investors that move the market. In trading it’s more important to make money consistently than it is to be a genius and guess exactly when the price will reverse. 

Here are some of the steps you can take to increase your chances to make money trading currency South Africa:

  • Understand what trading is and how the trading edge works. There are many ways to make money in the markets. There are day traders, scalpers, trend traders, news traders, swing traders, position traders and so on. For success it’s important to try different strategies and find the one that fits your personality best. 
  • Develop a trading strategy. Successful traders plan their trades carefully and trade their plans. Traders should create a trading strategy that includes a set of rules and strategies for entering and exiting trades, managing risk, and achieving consistent profitability. Having a trading strategy makes decision-making easier, as a result, traders experience less stress and everything is more structured and predictable. 
  • Learn more about currency pairs you wish to trade. For successful trading it’s critical to learn what influences the valuation of certain currency pairs. For instance, there are pairs that are impacted by certain commodity prices and such currencies are called commodity currencies. The Canadian Dollar is highly correlated with the oil price as Canada is an exporter of oil. In addition, values of some currencies are highly correlated with each other. For instance, Euro and British Pound sterling are positively correlated as both areas are located closely and have strong economic ties. 
  • Analyze the markets: market analysis helps predict future prices. Traders use technical and fundamental analysis for this purpose. Technical analysis involves technical indicators, trendlines and chart patterns. Fundamental analysis is conducted by analyzing economic and political events such as inflation (consumer price index CPI), interest rate decisions, manufacturing, trade deficit, etc. There’s no need to analyze everything. In many cases when traders use various indicators simultaneously, they get paralyzed by the vastness of information. To become a successful trader, try different things, find out what works and do what works more. 
  • Manage your risks: risk management is crucial in long term success. Without proper risk management even a single bad day can wipe out an entire trading account. Risk management rules should be applied individually, based on a trading system. 
  • Prepare financially: retail trading is not like having a stable job and you should never treat it as such. If you plan on paying bills from the profits made by trading, you should change your plans. Traders should place orders when the best trading opportunities present themselves, not when they need money. In addition, you should never trade with borrowed money or using money that you cannot afford to lose. Trading currencies carries high risks, especially for beginners. 
  • Prepare technically: in case you are planning to trade from home, you will need a proper home office space. It’s best to have a place where you can focus on trading properly. You don’t have to purchase 6 screens or expensive hardware to trade Forex markets. A single computer monitor with good screen size is enough. Most brokers are offering MetaTrader platforms, and those platforms can easily run on even low budget computers. 
  • Aim for consistency: Consistency and profitability is the key to attracting investors. When you have a working trading system and can manage drawdown periods well, you can attract investors or become a signal provider for other traders. Managing more money can bring you more profits. However, it should be mentioned that trading with increased position sizes can be difficult for many traders. Traders that can use the same strategy on 10,000 USD accounts and 100,000 USD accounts successfully, think in terms of percentage points and not in terms of sheer numbers. Using FX trading make money South Africa is linked to the size of an account. It’s very dufficult to feel motovated to sit infront of a computer screen if you don’t have a sufficient amount of capital. 

Key takeaways

To sum everything up, trading currency pairs comes with both benefits and drawbacks. And traders from South Africa can create a stream of income from Forex trading. South Africa make money trading FX involves understanding how markets work, developing strategies, analyzing markets, managing risks, preparation financially and technically, and having proper goals. The main benefits of Forex trading are: low barriers to entry, high liquidity, access to leverage, and availability of information. On the downside, currency markets are highly competitive, and there are risks related to human emotions and technical risks such as position sizing and finding the right setup. 

FAQs on how to make money online in South Africa by trading Forex

Is the South Africa Forex market profitable?

When it comes to FX profitability South Africa, it should be mentioned that currency trading is not profitable for many individuals. However, many people turn trading int profitable endeavor. South Africa offers many opportunities to successful traders, as there are many trading and investment firms located in the country. In addition, retail trading can also be profitable for many. 

How much money can you make when trading Forex in South Africa?

Income from currency trading depends on many factors. In order to make money FX trading South Africa, you need to have a working trading strategy, be able to manage your risks and emotions, and work hard on improving your trading skills, as markets are constantly evolving. 

How to increase Forex trading profits in South Africa?

Making money trading FX South Africa comes with many challenges, traders need upfront capital to set up trading space and make a deposit. In addition, they require quality education and a good amount of practice. There are various ways to increase your trading profits. Most common method is compounding. Compounding implies reinvesting profits back into trading, and therefore, while risk reward ratio stays the same, the sheer amount of profits gets increased. 

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