It is really important to have a defined stop loss for risk management. For example, an easy way would be to set stop loss at 2% of you equity per trade. There are mainly lot sizes i.e. the Standard lot, Mini lot & Micro Lot. 1 ‘Mini Lot’ means 10,000 units of Base currency while 1 ‘Micro Lot’ involves 1000 units of Base currency. The number of lots that you can trade will depend on factors like leverage, margin, your risk threshold etc. If the ZAR’s exchange rate in the live market is R14.70 per USD, then your exchanger/bank would probably give you a rate of R15 per USD, or maybe even higher.

  • South Africans can legally trade in the foreign exchange market via any FSCA regulated forex broker authorized for offering Derivative instruments to traders in South Africa.
  • With numerous brokers available in the market, choosing one that suits your trading needs is crucial.
  • This type of trading is great for people who don’t like fast trading like scalping but still prefer short-term trading methods.
  • It offers more features such as timeframes, order types, and advanced charting tools.

Read our forex guides, see unbaised broker reviews, and our best South African forex brokers listing before getting started. Legally trading forex is now possible for all individuals in South Africa. Some forex brokers offer their own proprietary trading platforms, and may or may not offer 3rd party platforms like MetaTrader. The FSCA issues ODP licensing to financial entities that want to act as brokers for retail forex traders. Under this license, brokers are allowed to offer CFD instruments for trading forex.

First, we will place a buy order for 1 standard lot (100,000 units of the base currency). To place a buy order of 1 standard lot in EUR/USD, the following will be the calculation of the required account balance. Before registering with a forex broker, as a South African trader, you must always verify whether the broker has been licensed by the FSCA. In terms of daily trading volume, South Africa is the largest trader in the forex market among African countries. The forex market in South Africa is governed by the FSCA (or the Financial Sector Conduct Authority). There are three different ways for a trader to participate in the forex market.

How Does the Forex Market Work?

With its simple interface, even new traders can quickly learn how to use it effectively. Choosing the right platform is very important when you’re starting out in forex trading. A good platform should have a Forex trading for beginners user-friendly interface and helpful features. It should provide clear tutorials, easy access to customer service, tools that benefit your trades, a demo account, and educational resources. It operates similarly to the forward market, but the contracts are standardized and traded on exchanges.

The market’s size and global reach mean prices can change rapidly, influenced by economic indicators, policy decisions, and unexpected events. A solid understanding of these factors is crucial for anyone looking to start trading forex successfully. The key to successful trading in the forex market is to develop a trading strategy or trading style that works for the long term. There are lots of ways to do that, and each successful trader has different strategies. So, in this article, we’ll cover everything you need to know about forex trading. An important question is how much money is required to start forex trading in South Africa?

Monitor your trade

The aim of technical analysis is to interpret patterns seen in charts that will help you find the right time and price level to both enter and exit the market. News and Economic Data Investors and banks look for strong economies to place their funds, in the expectation that their capital will appreciate. This is because the currency of that country will be in demand as the outlook for the economy encourages more investment. Any news and economic reports which back this up will in turn see traders want to buy that country’s currency. When you’re ready to go live, begin with a small investment and use leverage with caution. The power of leverage can amplify profits, but it can also magnify losses.

What are forex CFDs

  • It’s the other side of the paired in nine of the world’s 10 most traded currency pairs.
  • Breakout trading focuses on entering the market when a currency pair breaks out of a predefined range or pattern, such as a triangle or horizontal channel.
  • These can be third-party apps or proprietary trading apps developed by the broker itself.
  • Generally, the MA is an excellent method to get an indication of the next price movement of a certain financial asset.

For example, at Switch Markets, we have a detailed page of all the swap rates for taking a long or short position. Furthermore, to help our traders understand ahead of time their costs for holding a position overnight, we also provide a Forex Swap calculator. In forex trading, there are three types of FX currency pairs – majors, minors, and exotic. Major currency pairs account for around 80% of the total volume in the forex market and include the EUR/USD, GBP/USD, USD/JPY, USD/CAD, USD/CHF, AUD/USD, and NZD/USD.

In the Forex market, when we trade we exchange one currency unit for another currency unit. You need the best Forex training for beginners that is currently available. Leverage makes it possible for Forex traders to open much bigger positions than they can afford on paper 2. We introduce people to the world of trading currencies, both fiat and crypto, through our non-drowsy educational content and tools. We’re also a community of traders that support each other on our daily trading journey. There are also various trading styles that depend on the time frame and holding period of every trade.

What is the Forex Market?

To sum up, there are many reasons why the forex market has gained such popularity over the last two decades. Additionally, over the last few years, regulations have improved, and notable regulators in the industry have quickly removed scammy brokers. If you’ve read this far, there’s a high chance you’re interested in technical analysis. If that’s the case, then you need to know how to read forex trading charts. In forex trading, fundamental analysis examines economic conditions influencing a country’s currency value.

On the plus side, if the cards fall your way then a limit order allows you enter at a ‘cheaper’ price. For example, if the EUR/USD is consistently moving upwards, a trend trader would buy, anticipating further upward movement. Switch Markets Pty Ltd is an authorised representative of Royal ETP LLC.

Fundamental analysis

The minor currency pairs are also commonly referred to as cross-currency pairs or simply “crosses”. Minor currency pairs are known to have slightly wider spreads and are not as liquid as the majors but still sufficiently liquid markets. During this transaction, the money you used to buy the product, which is in your local currency, would need to be exchanged to the equivalent value of the foreign country’s local currency. This exchange could be between U.S. dollars (USD) and euros (EUR) or any other currency pairs found across the globe. You participate in the market by trading currency pairs, such as EUR/USD (Euro/US Dollar). The essence of Forex trading is to buy one currency and sell another to make a profit.

Traders use these price levels to identify trade opportunities and manage their trades. However, CFDs, which are a popular form of trading derivative products, provide an ideal way to get access to forex trading. At the basic level, the swap rate, also known as a rollover swap fee, rollover swap, or swap rate, is the interest payment that a trader may receive or pay when holding a position overnight. While a bar chart is commonly used to identify the contraction and expansion of price ranges, a line chart is the simplest of all charts and mostly used by beginners. The chart displays the high-to-low range with a vertical line and opening and closing prices. The difference to the bar charts is in the ‘body’ which covers the opening and closing prices, while the candle ‘wicks’ show the high and low.

Welcome to Switch Markets

To use any of the electronic trading applications, traders need to open an account with a regulated forex broker. Clients must check and compare every aspect of the broker before opening their accounts. The safety, fees, trading instruments, deposits, withdrawals, tools, and trading conditions must be compared. For example, if the spread at Broker A is 1 pip for GBP/USD, and 2 pips at Broker B, then it means that Broker A has lower trading fees. There may be some other fees that the broker charges, but usually, the tighter the spread, the less money the broker is charging from you.

What is an Expert Advisor (Expert Advisor, EA) ? Forex Beginner’s Guide

These reviews can prove to be helpful during your journey in the field of forex trading; you can learn a lot of things from other people’s experiences and mistakes. The “bid” for the currency pair will tell you the amount of quote currency you’ll need in order to obtain the base currency. In this pairing, the first listed currency (USD) is referred to as the base currency, while the second currency (EUR) is referred to as the quote currency. The currency pair will indicate the amount of the quote currency you’ll need in order to purchase one unit of the base currency. There are several trading strategies you can use when it comes to forex trading. With this, even if the trading day in the U.S. ends, the forex market in Tokyo or Hong Kong begins anew.

This report has an extremely strong impact in the U.S Dollar prices so for Forex traders the NFP is one of the top moments of each month. Margin in Forex is the required amount of funds to open and to maintain open a trade. In order to calculate the margin in forex you need to take the total value of your investment and divide it by your leverage. Traditionally leverage is all about trading with money that is not yours which your broker borrows you at a premium interest rate per night (called the overnight fee). A PIP (point in percentage, price interest point) in forex is the smallest price measurement change in currency trading. As we said before a currency pair is a combination of two different currencies measured against each other.