Guide to Forex Trading in South Africa
See SA's Best Forex Brokers!

Retail Forex Trading involves speculating on the rise and fall of currencies with an aim to make a profit. 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. The daily turnover of forex trading in SA is estimated to be around $19.1 billion USD per day in 2017. Also, South African Rand (ZAR) is one of the top 20 most traded currency in the world with annual trading volume of almost $70 billion USD in 2016.

It is likely that you want to start trading forex as an investment instrument because of the higher market liquidity, 24/5 market hours & quick pace. But there are many risks are well associated with CFD trading. We will try to cover everything you must know before you can start trading & how much does it take to get started?

You likely want to get the answers to all your questions, but don’t know where to start? This guide will show you the basics on how to get started with forex trading as an absolute beginner.

If you are searching for regulated forex brokers in South Africa to trade with then see our table below:

  • Max. Leverage
  • Minimum Deposit
Name Regulator(s) Max. Leverage Minimum Deposit Forex Trading Platform(s) Broker Website
MetaTrader 4
Visit Tickmill Read Tickmill review
Tickmill is a FSCA authorized forex broker. Their spread is as low as 0 pips + $4/lot with Pro Account.
$5 (R70)
MT4, MT 5 platforms for desktop, web & mobile
Visit HotForex Read HotForex Review
HotForex is regulated with FSCA (South Africa). Their EUR/USD spread starts from 0.3 pips*.
MT4 & MT5
Visit Exness Read Exness Review
MT4, MT5 & cTrader
Visit FxPro Read FxPro Review
FxPro is a well regulated forex broker. Their overall fees is low with cTrader account.

Forex trading involves buying & selling of global currencies in the forex market for making a profit on the currency's fluctuations.

Simply put, you buy a currency when you believe its value is going to appreciate (go up) against the other currency or you sell a currency when you believe its value is going to decrease (go down) against the other currency. When you exit the trade, the difference between the trade's entry & exit price determines your profit or loss.

Sounds confusing? No worries. This guide will show you the entire math behind the trade. But first let’s know more about Forex markets.

What is Forex Trading?

What is Forex Market?

Forex refers to Foreign Exchange, or simply FX, sometimes even called Spot FX, where the global currencies are traded against each other.

You may have seen ticker symbols of currencies like USD/ZAR, EUR/ZAR etc. while visiting your bank. These are the rates of the currencies from the live Forex market.

Forex is the most liquid market in the world, operating 24 hours a day, nearly five and a half days in a week. The global daily average trading volume of this market is over $6.5 Trillion, making it the largest financial market in the world. The number is so big that a big Stock exchange like a New York Stock Exchange (NYSE) has to operate for about a month just to catch-up to the Forex market’s daily average volume.

The market participants in Forex include commercial banks, governments, central banks and institutional investors, currency speculators and even commercial corporations (wanting to hedge their risks or speculate).

Forex Trading: Real Life Example

Have you travelled abroad to another country?

If you been to a foreign country, then it is likely that you may have converted your local currency i.e. South African Rand (ZAR) to another currency like Euro or a US Dollar. If you exchanged your currency before, then you have already traded in the forex market.

Let's assume that you exchange R15,000 for $1000 through your bank or local regulated exchanger, for travelling abroad to US. In this example, you would be physically selling your home currency (South African Rand) for buying US Dollar. When you are exchanging your money for travelling abroad, you (through your bank) are making a forex transaction in the global forex market without even knowing.

Real Life example of Forex Trading

The rate at which you can exchange your currency to another is called the Exchange Rate. This rate is continuously fluctuating every second as the forces in Forex market determines the rate.

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. The difference of R0.30 (15.00 – 14.70) between the rate given to you by the bank & the actual market rate, is the profit margin for the bank/exchanger.

In theory, Retail forex trading through an online broker is similar to currency exchange, but still there is more to it. Don't worry, we will be explaining everything in the next chapters of this guide!

In a Forex market, any transaction involves simultaneous buying and selling of one currency for another, hence these are called the ‘currency pairs’.

For example: USD/ZAR (US Dollar & the South African Rand), EUR/USD (European Euro & the US Dollar) etc.

Globally, there are over 100+ currency pairs (every country has their own currency), including 7 Majors, 50+ minors & many exotic pairs. It is highly important to learn about the currency pairs, what they are, how they can impact your trading, and more, so that you can decide which pairs you should be trading & which ones to stay away from!

This chapter will explain everything you must know about currency pairs. Let's begin!

Currency Pairs

What are Currency Pairs?

Currency Pair is the quote of one currency relative to the other currency. In the Forex market, all currency are traded against each other, therefore being called 'currency pairs'. So when you are trading in the forex market you are actually trading 2 currencies simutaneously.

For example: USD/ZAR is a currency pair where US Dollar is being traded again the South African Rand (ZAR). When the price of USD/ZAR currency pair is rising then it means that US Dollar is getting stronger against the South African Rand, and vice versa in case the USD/ZAR's pair is going down.

There are other terms like a Base Currency, Quote Currency, majors, minors etc. Let's get to them.

Currency Pairs Lingo

Here we will explain all the important terms that you must know before understanding more about forex trading. You will hear a lot of these terms commonly while trading, so let's start.

Currency Pair Terms:

1) Base & Quote Currency: In every currency pair like EUR/USD, USD/ZAR, the first currency mentioned is the ‘Base Currency’ which is being compared to the second currency called ‘Quote Currency’.

For example, in EUR/USD, Euro is the Base Currency and the US Dollars is the Quote Currency.

Forex Bid, Ask & Quote for a currency pair

If you hear the local business news or a trader talks about the currencies like: "The South African (ZAR) edged higher againt the Dollar today, reaching a two-week high of 14.454"

It simply means that the South African Rand has appreciated in value against the US Dollar, where it’s valued currently at 1 USD at 14.454 ZAR.

2) Bid & Ask prices: 'Bid price' is the market price at which you can sell the base currency. And 'Ask price' is the price at which you can buy the base currency in the pair. For ex: If you want to trade USD/ZAR then the forex broker will quote you 2 prices, one will be the bid price & the other will be the ask price. Bid price is always lower than the ask price.

3) Spread: Spread is the difference between the ask and the bid price. This is the fees charged by the forex brokers for each trade trade, and it depends on the market liquidity, and the currency pair that you are trading. The lower the spread, the better it is for you.

4) Pips: Pip stands for Percentage in Point, and it is the most common term in forex trading. Simply put, 1 pip is the smallest measure at which the market moves. It is normally the change/fluctuation in points of the last decimal for a currency pair.

For example, if the EUR/USD moves from 1.3456 to 1.3459 it moved by 0.0003 points, which will be equivalent to 3 Pips. For the currency pairs that are quoted to 4 decimals like EUR/USD, USD/ZAR, the movement in the last decimal is 1 pip (1.1000 to 1.1001).

The brokers quote their spread in Pips, and your trading profit/loss would also be in pips. It is important to select a broker that charges the lowest spread in pips. We will explain this more in the chapters below. So, don't worry if you don't understand this now.

Majors, Minors & Exotic Currency Pairs

Major, Minor & Exotic currency pairs in forex

1) Major Currency Pairs: The major pairs are most highly traded currency pairs in terms of global trading volume, and they account for a volume of around 70%.

The are are 7 major currency pairs, and these are generally the currencies of most stable and well-developed economies. The major currency pairs include: EUR/USD (Euro Dollar against the US Dollar), USD/JPY (US Dollar against the Japanese Yen), GBP/USD (Great Britain Pound against the US Dollar), USD/CHF (US Dollar against the Swiss Franc), AUD/USD (Australian Dollar against the US Dollar), USD/CAD (US Dollar against the Canadian Dollar), NZD/USD (New Zealand Dollar against the US Dollar).

It is important to note that majors are the most liquid currency pairs. What this means is these are most traded, with highest volume of bids & asks, so you will get the lowest spreads. It is common to have spreads lower than 1 pip for majors.

2) Minor Currency Pairs/Cross Pairs: Cross currency pairs are the crosses of currencies in the majors but doesn't include USD. They are typical less liquid and more volatile than the Major pairs.

The minor/cross currency pairs account for almost 15% of global forex trading volume. The important cross pairs are: EUR/GBP (Euro against the Great Britain Pound), EUR/JPY (Euro against the Japanese Yen), GBP/JPY (Great Britain Pound against the Japanese Yen), NZD/JPY (New Zealand Dollar against the Japanese Yen), CAD/CHF (Canadian Dollar against the Swiss Franc), AUD/JPY (Australian Dollar against the Japanese Yen).

Crosses of majors are less liquid than majors. But pairs like EURJPY, EURGBP, USDZAR etc. still have high liquidity.

3. Exotic Pairs: Exotics are generally major paired against a currency of emerging economy. The examples include: USD/ZAR – (US Dollar against the South African Rand), GBP/NOK (Great Britain Pound against the Norwegian Krone) etc. In South Africa, USD/ZAR is an important currency pair.

If you are trading an Exotic currency, the spreads will be wider & there can also be large fluctuations in pricing.

The average trading range of less traded pairs are also larger. There is a higher intraday, weekly & monthly volatility.

For example, the average monthly range of ZAR currecy pairs can be 6% or higher, as shown in the chart screenshot below.

Volatility of Currency Pairs & their Ranges

If you are an active trader who specifically trades ZAR against majors like USD, EUR & GBP, then you need to have a strategy that understands these movements & adjust your risk (position sizing & margin) accordingly.

Legally trading forex is now possible for all individuals in South Africa. You just need a laptop/device, fast internet connection, some starting capital (we advise you to trade with atleast R7500), and a good strategy with proper risk management to start trading online.

For trading forex, you have to signup with a regulated Forex broker to place your real trades in the market. There are over 100+ brokers that accept South African traders. We have only listed the 'FSCA & FCA regulated brokers' that you can safely trade with.

After you have learned how to open your trading account, we will explain to you the exact dynamics of the forex trades, and how to calculate the profit/loss.

Let's begin this chapter!

Start forex trading

1) Open Trading Account with a Regulated Forex Broker

The first step to start trading forex is to choose a reputed & regulated forex broker, and then open an account with it. Choosing a 'good' broker is an important step because the broker plays a pivotal role in your trade.

There are many regulated forex brokers that accept South African traders: Hotforex (FSCA Regulated), XM Trading, Exness, Forextime, Avatrade, FxPro, and so many others.

You should also decide on the Account Base Currency that you want to choose. Some SA forex brokers offer ZAR Base Currency Account & this is useful in some cases. Also, your forex broker should accept deposits & withdrawals in ZAR via Bank Transfers & EFT.

We have compared & listed the best forex brokers for South African traders. We have only selected the brokers that are regulated (with atleast 2 regulators including FSCA, FCA, ASIC, CySEC), have competitive trading fees, and transparent record for fair dealing practice in the past.

Hotforex is our #1 recommended broker for Forex trading in South Africa.

Hotfoprex is our recommended Forex Broker in South Africa

  • 1.2 pips spread on average for EUR/USD with Premium Account (no deposits & withdrawals fees). 0.3 pips on average for EUR/USD with Zero account.
  • A Free demo Trading account is available at Hotforex
  • Fast Order Execution & 100% STP broker
  • 53 Currency Pairs, CFDs on Commodities, Indices, Metals & 1000s of global Stocks
  • MT4 & MT5 platforms for mobile, web & desktop
  • Deposits & Withdrawals are available via Internet Banking transfers.
  • ZAR Accounts are available.
  • Quick Withdrawals & excellent 24/5 chat support without any hold time.
  • Funds safety – Hotforex is regulated with South Africa's FSCA (FSP No. 46632), UK's FCA (Financial Conduct Authority) & CySEC (Cyprus's Securities and Exchange Commission).

Start Trading at Hotforex Important: Forex Trading involves high risk, and your capital is at stake. Almost 75% of the traders lose money, so have a solid trading strategy that you have tested on demo account before trading with real money.

Note: Before you open your trading account with any forex broker, make sure to check that it is licensed or authorized by the FSCA for offering derivative instruments. FSCA have a public search on their website where you can find all the licensed & authorized brokers. Some brokers may claim to be authorized but may actually be unlicensed.

Also, it is important to note that some fake forex brokers may use the license number of an authorized broker on their website, claiming that they are authorized, which may not be a true claim. So, always make sure to ask the broker for their 'FSP Number' & then verify the number on FSCA's public search. Check the products for which the broker is licensed. And verify that you are opening account on the website actually licensed by the Regulator, avoiding any clones.

For example, Tickmill South Africa is authorized by FSCA under FSP No. 49464. They are approved under CATEGORY I for offering Derivative instruments, Shares & Forex Investment as an Intermediary.

Forex Trading FSCA License Example

Trading with a licensed & reputed broker will ensure the safety of your funds, comliance by the broker, and redressal of issues in case of any dispute.

After you have made your choice on the broker, you then need to open your trading account with that broker. Almost all regulated brokers offer a demo account, we recommend you to practice first on a demo account & build your trading strategy before moving to live.

Note: All the regulated forex brokers require that you submit your ID proof & Address proof for verification (KYC). For ID proof, you can normally submit your Driver's License, and a Home Utility Bill of your Residence for the Address proof. You must verify your account before you can start trading live on any broker's platform. Opening a demo account does not require KYC, but it will be required when you are opening a Live Account.

An important question is how much money is required to start forex trading in South Africa? The minimum deposit required for account opening at some of the regulated forex brokers is as low as $1. In ZAR the minimum is R70 at Hotforex. But it is advised to start with a capital that is not too low, otherwise you are likely to use very high leverage in order to gain more profits. And this puts your entire trading capital are huge risk with every trade.

2) Understanding Forex trade

We will first dive into some important terms that you would need to know while placing your trade.

1. Lot Sizes: In Forex, you either buy or sell a currency pair in ‘Lots’. The Lots are simply united of currency that you are trading & have different names based on the number of units.

There are mainly lot sizes i.e. the Standard lot, Mini lot & Micro Lot. 1 'Standard Lot' means 100,000 units of Base Currency. 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.

The Profit & Loss will depend on the lot size. For example, you are trading EUR/USD, then with 1 Mini Lot, the movement of 1 pip is 1 USD.

Similarly, if you are placing trade for 2 Standard Lots (200,000 units), on GBP/USD, then the pip value will be $20/pip.

It is important to note that sizing up your trading position & only placing order for the right number of lots according to your risk is really important. Otherwise you risk losing your total capital in a single trade. Let's understand this with an example.

Let's say you have $1000 account balance, and you are placing order of 1 Standard lot on EUR/USD using leverage (explained below), then you are are risking too much on your forex trade.

If the trade goes against you by just 100 pips, which is less than 1% in case EUR/USD is currently at 1.1100. You risk losing your entire account balance on a single trade.

So, your position sizing (total lots) should be calculated according to your risk.

2. Leverage: Leverage, by definition, essentially involves borrowing a certain amount of money to invest in something. In Forex, if you are using leverage then it means, you are borrowing some money from your broker to place order for a bigger position than your actual capital. Sounds confusing? Don't worry, and follow through the following example.

Let's say that you want to place buy order for 1 standard lot (100,000 units) on EUR/USD. To trade this positive you would need $100,000 capital in your account. But what if you can lend money from your broker, and place the order. Let's say you use 1:20 leverage, then you would now need 1/20th of the capital to place that trade, and can now place the order with $5000 capital.

But Leverage is kind of a double-edged sword which has the potential to increase your profits if you are right, but also increases the risk of a bigger loss to you if you are wrong. A leverage of 100:1 allows the trader to take a position that is 100 times the amount of initial margin. If the trader is not careful in setting up the stop-loss, it could quickly deplete your trading account. We’ll see leverage in action with an example shortly.

For example, let;s say a trader has a capital of $1000 in his trading account. He deciced to place a buy order on EUR/USD at 1.1100 for 1 Standard lot by using 1:100 leverage offered by his broker.

If the EUR/USD price goes down by just 100 pips, which is less than 1%, then the trader would lose entire trading capital of $1000. But if the trader is right in his trade, then he can gain from the trade.

But as you can understand from this example, the risks of using excessive leverage to trade forex is very risky. You must never use more than 1:10 leverage.

Another concept related to leverage is margin, which we will explain below.

3. Margin: Margin is the amount needed in your trading account to place an forex trade. Forex brokers set margin requirements to open a trade, and this is the money set aside with the broker when your position is open.

Let's say that you are placing an order for $10,000, with a leverage of 1:100. This would mean that you can place $10,000 order with $100 capital. Your broker would now set that $100 aside as 'margin' from your trading account. If margin goes down below a threshold required by the broker, you will receive a notice from the broker to fill it up to the required levels.

4. Stop Loss: Stop loss is the level that you can set, at your desired price where you decide to exit a losing trade. Losses are inevitable, but how you manage that loss is important. So always remember to set a stop loss whenever you are placing a trade.

Some brokers also offer GSLO (Guaranteed Stop Loss), which guarantees that your position will be closed at the price limit set in your order.

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. Let's understand it using a real trade example.

If your account equity (basically your balance if you don't have any active positions) is let's say R100,000, the 2% of that would be R2000. You can set the stop loss such that you don't lose more than R2000 on that trade. But it is important to adjust your position sizing accordingly to set your stop loss such that it is an important level where you want to set the actual stop, but also, it must ensure that you don't lose more than 2% on the given trade.

If your account size it smaller (less than $5000), then it is natural to risk more per trade. But still, you must avoid risking more than 10% on a single position, and set your stop loss accordingly.

Now let’s take a real-world example of a trade to better understand all these terms & the dynamics of an actual trade.

5. Order Types: There are different order types which you can use to place your order in the market through your broker. The most common types are 'Market Order', 'Limit Order' & 'Stop Loss Order'.

With the market order, you are instructing your forex broker to get you the fill immediately. Your buy or sell order will be executed at the nearest bid or ask price available. When you place a buy or a sell order directly (not pending) from your MetaTrader, it is a market order.

With a Limit order, you are instructing your forex broker to get you the fill at a particular price, which could be higher or lower than the currenct exchange rates.

For example, if the EURUSD is trading at 1.1059 Bid, you can place a limit order, to sell EUR/USD at 1.1100, which is higher than the current market price. Your broker will try to fill your order at that price when the exchange rate goes there.

Stop loss order basically helps to limit your loss on a particular trade. For example, let's say you have placed a Buy order on EUR/USD at 1.1045, and you feel that the right place for your Stop loss would be 45 pips lower at 1.1000. You can use Stop Loss order via your MetaTrader to instruct your broker to close your active position once the Ask price goes at or below 1.1000

Below screenshot from MetaTrader 4 of the various order types which you can place during placing a trade.

Order Types in MetaTrader for Forex

3) How to place a trade in forex market? – Real world example:

We will now take example of actual trading positions, and how you can place the trade in Forex market.

Suppose you have a trading capital of $10,000, and you decide to trade EUR/USD. Let's say the EUR/USD is quoted as 1.4400. You think the EUR is likely to go up against the US Dollar in the next 3 months, so you decided to place a buy order on EUR/USD.

Case 1 – Buy order 1:10 leverage: You want to buy 1 Mini Lot of EUR/USD thinking the EUR might rise in value against the USD. So you’re buying the EUR/USD currency pair, which means you are buying EUR and selling the USD simultaneously. If you buy 1 mini lot, you need to use 10:1 leverage (10*1000 =10,000 units of USD).

Profit case: Let's say that over time, EUR/USD moved up from 1.4400 to 1.7000 i.e. 2600 Pips. Assuming the value of 1 Pip is $1 for 1 mini lot, you stand to gain $2600.

Loss Case: But if the market goes against you, let's say to 1.2600, then the market would have gone 1800 pips against you, so you would have lost $1800.

Below is the example of a Long/Buy Order in Forex.

Long Order in Forex

Case 2 – Sell Order with 1:10 leverage: Now, let suppose that you think that EUR has peaked against the USD, and so you decided to sell the EUR/USD. Assume that you have a trading capital of $10,000, and the current price of EUR/USD is 1.4400. You decide to place a sell order on EUR/USD.

Profit case: Let's assume that EUR/USD goes down from 1.4400 to 1.1500 over period of 3 months, about 2900 Pips. If you had placed sell order for 1 Mini lot, then you would stand to gain $2900 for the trade.

Loss Case: In case the market goes up, from 1.4400 to 1.7000, then you would have lost 2600 pips, that is almost $2600 in case of 1 mini lot.

Below is an example of how a Sell Order works in Forex trading. Short Order in Forex

Both the above cases highlight how you can lose or gain from a forex trade, depending on your position, position size (lots), leverage etc. It is best to fully understand all these dynamics on demo, and then only trade live when you have a proper strategy in place. And always remember to use a Stop-loss for every trade.

Before entering any trade, have a pre-defined risk based off of your strategy. For example, if you are a counter-trend trader, then you should have very small stop-loss.

Let's say, that you have defined the criteria for your entry, and you are willing to risk 40 pips on your trade. One, the Reward on the trade must be higher than 1:2 (80 pips or higher) to consider that order. Two, your position sizing (number of lots you place on that order), must be adjusted such that you are not risking more than 1% of your account balance of one trade.

If you are risking too much of your account on an overleverage position, there is a high chance that you will lose very quickly. Forex Trading is about identifying your edge & managing your risk.

Successfull forex traders follow a sound trading strategy. Most forex day traders rely on 2 types of strategies which are broadly divided into 'Technical analysis' & the 'fundamental analysis'.

With technical analysis trading, you are basically relying on the price chart, and trading based on the chart patterns, technical tools like candlestics, moving averages etc. On the other hand, fundamental trading involves trading long term based on macro economic factors of a country like their employment data, Retail Sales, Central bank's interest rates etc.

We will give you brief idea of these 2 trading strategies in this chapter.

Forex Trading Strategies

1) Fundamental Analysis

Fundamental analysis mainly involved trading based on the news releases. Fundamental Analysts believe that a analysing a country’s economic indicators such as inflation, economic growth rates, interest rates and monetary policy & unemployment etc. would determine the price of currency and base the decisions of currency movement by analysing these factors.

There are plenty of online Forex news calendars available for free if you want to make it your sole trading strategy. Also, you can get an idea on how a particular information may effect the market movement upward or downward.

For example, the release of employment news data of a country is a major news because if the higher population is employed, it is a sign that the economy is improved and hence this would reflect in the overall currency value. Similarly, a bad news or policy change by the central bank of the country would likely affect the currency' price's exchange rate in the short term as well as long term.

Even if you consider yourself a Technical trader, it is really important to keep track of the Economy News as this would affect the direction of a currency. For ex. A weaker than expected Economic growth in the UK would affect the rates of GBP against other major currencies like US Dollar, Euro etc.

Similarly, an increased in interest rates by the Fed, and divergence in the Central Banks monetary policies can affect the currencies. So, it is really important to understand how ihis works, and use it to form a general bias on the currency's future price.

Two of the main fundamental reasons for the appreciation of US Dollar are the "Interest Rates" & the "Risk Off" or Risk Aversion environment during periods of low global growth (slowdown).

Let's understand Interest Rates first.

As mentioned above, interest rates differential is one of the major reasons for the appreciation or depreciation of a currency. For example, during 2022, the US Fed have aggresively tightened their monetary policy by increasing interest rates quickly to control rising inflation in the US, whereas Japan have kept their interest rates very low. This has caused their interest rates gap to widen a lot, and capital to move to the US, as well as speculators targeting JPY, which has caused USDJPY to increase sharply in 2022.

The second factor, which is Risk On & Risk Off has also been very important fundamental factor in the last decade.

For example, during periods of low growth & high risk, investors move their capital into safe haven, which is the US Dollar (being the global reserve currency). This causes the US Dollar to rise against all other currencies. One of the examples od this was during the March 2020 stock market crash.

Also, during Risk Off events, currency pairs like Japanese Yen (JPY) & Swiss Franc (CHF) rise against most other currency pairs.

There are many other factors at play, like the global growth, commodity prices, geopolitics etc. & you must take these into consideration. Let's take another example here, during inflationary cycles, currencies of commodity & energy exporters are more favoured over the importers.

Develop full understanding of what moves the currency pairs which you are trading. For example, USDJPY mostly moves in relation to the Interest rate differentials between the US & JPY. If the US Bond yields are rising & Japanese Bond Yields are stable, then USDJPY would rise.

Therefore, having an understanding of the fundamentals of a currency pair is important. The next step is to use technicals to identify good risk reward entry points.

2) Technical Analysis

Technical analysis is the most popular trading strategy & it basically involves trading off the charts. Learing this strategy is important for both short term day traders & long term swing traders. A technical trader focuses on the historical price of the assest to make his/her decision of the future market movement. According to technical analysis theory, the emotions of the market participants are reflected in the current & historical price that is visible through the charts. Technical traders also use various indicators & chart patterns to buy or sell currency pairs in the forex market.

One of the popular strategies in Technical analysis is 'Trend Following'. Under this strategy, you are basically identifying the underlying trend of the instrument that you are trading, and then entering on pullback.

Trend followers normally use moving averages. If you identify a trend that is moving along the 20 day EMA (Exponential Moving Average), then you can wait for the pullback to this EMA to go long/short (whatever the direction of the underlying trend is.

For example, let's say that you are a 'Position Trader' trading EURUSD, and you identify that the currency pair would be in a downtrend because of the rising interest rates in the US. You can use 20 Day EMA, 50 EMA, 100 EMA & 200 EMA to identify the points where you could enter the short trades.

You can use divergences from the EMA (if the trend has moved far away from the moving average), to identify exit points for your short entry.

Here is an example of a counter trend trade on EUR/USD currency pair.

Counter Trend Trade example on EUR/USD currency pair

In the screenshot above from MT4 platform, we used the 21 day moving average to identify the trend. We have added the Bolliger Band, with 21 EMA as the 'period' and 2 STD (deviations). The upper & the lower band are the 2 Standard deviations from the mean, which is the 21 day EMA.

Whenever the price moves fast i.e. it rises or falls from the 21 EMA, the bands give you a signal whether the price is overbought or oversold in the short term. You can use this signal to exit your existing trade positions, or enter in a counter trend trade.

When placing a counter trend trade, you should always keep your stop losses small (few pips above or below the previous day's high or low). Also, you should place lower position sizes than trend trades, because the rise of the trend continuing is always higher.

Technical Analysts trading forex use indicators like RSI, ADX, Bollinger Bands, Keltner Channel etc. to trade trends & mean reversion.

You should try to keep it simple, and not use too many indicators. Using basic moving averages to identify the trends or the Pivot points should be enough. If you use too many indicators, then it can cause you to lose focus of the actual price action on the chart.

Which Trading Strategy Should you choose?

You should use a combination of technical analysis & fundamental analysis. Even if you are trading based on chart patterns, you cannot ignore the news as the markets a generally affected in the short term & long term, based on factors that affect the country's economy.

In forex, the fundamentals drive the currency pairs. For example, USD/JPY currency pairs trades mostly based on the interest rate differentials of the US & the Japanese Bond yields. If the Bond yields in the US are rising & the Japanese Bond yields are flat, then USD/JPY would rise.

So having an understanding of what moves the prices of the currency pairs you are trading is important, as this will keep you in the direction of the trend.

Use technical analysis to identify good points of entry & exit in the trade.

It is wise to learn about both the strategies on demo, spend hours to analyse the charts, and also analyse how the currencies are affected during news hours, and only then trade based on the strategy that works for you.

Most Forex brokers offer multiple trading platforms for online forex trading. The most popular are the Metatrader, cTrader & Zulutrader.

In this chapter, first we will list for you all the popular trading platforms offered by different brokers. And then give you the comparison of all the best forex brokers based on their platforms.

After considering 12 factors in a broker, we have made a list of the brokers that are regulated with FSCA in South Africa & other Tier-1 regulators FCA, ASIC and also have the best forex trading app that support multiple devices including mobile, PC & web.

Let's go…

Forex Trading Platforms

2024's Best South African Forex Trading Accounts

Forex Broker Regulator(s) Max. Leverage Minimum Deposit Forex Trading Platform(s) Broker's Website
Tickmill South Africa FSCA, FCA, CySEC 1:500 $100 MetaTrader 4 for desktop, web & mobile Visit Tickmill
Hotforex FSCA, FCA, CySEC 1:1000 $5 MetaTrader 4, MetaTrader 5 for web & mobile Visit Hotforex
XM Trading FCA(UK), CySEC, ASIC, FSCA(application pending) 1:888 $5 MetaTrader 4, MetaTrader 5, for PC, Mobile(including iOS, Android) Visit XM
Exness FCA(UK), CySEC 1:2000 $1 MetaTrader 4, MetaTrader 5 for web & mobile Visit Exness
FXTM South Africa FSCA, FCA and CySEC 1:1000 $10 MT4 & MT5 for PC, mobile, and Webtrader Visit FXTM

Below is a list of the popular trading platforms offered by most brokers:

1. MetaTrader (MT4 & MT5): MetaTrader is the most popular Forex trading platform that comes with support for PC, Mobile & Web. It is highly used by forex & CFD traders, because of its advanced charting, multiple time frames & automation features.

Metatrader gives traders the ability to perform advanced trading operations, run Expert Advisors and copy trades of other traders. This platform is owned by MetaQuotes Software Company. The best feature with MT4 also offers the flexibility to write your own code and create your own custom indicators and 'Expert Advisors' or EAs. Most of the brokers offer MT4 (or the latest MT5) for free. We advise you to go for a broker that offers Metatrader.

2. cTrader: CTrader Platform is offered by some of the regulated forex brokers like FXPro. Their fees with cTrader platform is lower than their fees with MT4 platform.

3. Web Trader: Numerous brokers including Exness, HotForex, Tickmill etc. offer their Web Based Trading platform where you can just open the chart in a browser instead of downloading the software. For a start, you may want to consider trading off a WebTrader.

4. Copy Trading Apps: Some brokers offer their Copy Trading Apps where you can check & track the performance of other traders & follow their positions. You can see the performace of the available copy traders over a period, risk ratio etc. You also must note that copy trading carries singinificant risks, so you must carefully check if you want to follow the strategy of a trader or not.

5. Proprietary Platforms Some forex brokers offer their own platform. For example, eToro & Plus500 offer their own platforms, and no other platforms like MetaTrader. But there are disadvantages of choosing such brokers, as you will not get the flexibility of third-party platforms. Like MetaTraders allows you to build EAs & run them, but you cannot run them on Plus500.

Forex Trading is risky, and it is said that almost close to 78% retail traders lose their money. Even the best of traders have bad days, but with good money management you can minimize your risk.

As for the pros, trading in the forex market offers opportunity to gain income. But for this you must have a sound understanding of the markets & a working trading strategy.

But there are many risks also. A single losing trade with no stop loss, or without proper money management would likely cause loss of your capital, as well as mental & emotional stress. So it is important to know about the risks & properly manage them.

We will now list down for you some of the opportunities & the risks of forex trading.

Pros & Risks of Forex Trading

Forex Trading Pros

Pros of Forex Trading
  1. Start with low minimum deposit & also low trading fees: So many forex & CFD brokers offer very low minimum deposit requirements & you can start trading with as low as R70 ($5), some offer even lower minimum deposit. But it is advised to start with atleast R15,000 (1000 USD) capital & not use more than 1:20 leverage. Also, you should not risk over 2% of your trading capital on a trade. Moreover, the trading & non-trading fees these days is also very competitive with almost all the regulated forex brokers. Note: Some forex brokers charge high trading fees, so you must make sure to compare the spreads of major CFD instruments at different forex brokers before choosing. For example, if you trade GBP/USD mostly, then you should look for a forex broker that has near 0 spread on forex & lowest commission of not more than $6/lot (round turn).
  2. Huge Liquidity: Forex market has a daily trading volume of $6.6 trillion USD, making it the biggest financial market in the world (bigger than Stock Exchanges). This is the reason that it is highly liquid, so you can easily open and close trade on most of the currency pairs, and you never have to worry about a particular pair not being available for trading, especially for the Major currency pairs. Regardless of the execution model of your forex broker, you should get the fill of your order in micro-seconds, if your broker is good. Most forex brokers now have quick order execution.
  3. Buy & Sell Orders: In forex markets, you can make profits both ways, wither by buying or selling. You can place a buy order on a currency pair if you believe that the base currency is stronger. Alternatively, if you think that the currency is not going to do well for some reason, then you can place a sell order. For ex: If you think that the price of Euro is going to go up against the US Dollars, then you can buy Euro (by selling USD).
  4. You can trade 24 hours: Forex markets are open 24 hours a day, 5 days in a week, from Monday to Friday. So you can even trade according to your time zone, but the liquidty may be higher during certain time of the day or week. South African timezone allows traders to trade during 2 most active trading sessions i.e. London session & New York sessions. This is one of the big advantages of trading in the forex market for traders because they can exit positions at any time. This helps when you have new facts or data which changes your underlying view. Compared to other markets, for example, if you are an equities only trader, then you have to wait for market open hours to exit a position.
  5. Leverage: One benefit & also a con of trading forex is the availability of high leverage. With leverage you can trade on a margin that allows you to trade with more money than your actual capital. A leverage of 1:100 & higher is very common with most brokers. While leverage is a double-edged sword, it can help you gain massive profits, if you are winning your trade. But we advise you to never use more than 1:5 leverage. Using high leverage is very risky & can cause you to lose your entire capital if you are not managing risk properly.
  6. Little gapping (on weekdays): Gapping refers to the assets abrupt changes in the price leading especially due to lack of trading activity. Gapping is common in stock markets, but the forex market is so liquid, that you see little gapping atleast in case of major currency pairs. You may see some gapping during week opens on Monday after the weekend, but on week days it is very uncommon for major pairs to experience gapping.

Risks of Trading in Forex Markets

Forex trading involves certain risks, and you can lose your capital trading in the market. So you must know about all the risks to trade successfully. Risks of Forex Trading
  1. High Risk that comes with Leverage: 1:500 & even more leverage is very common with many forex brokers (some brokers offer even higher leverage). With 1:1000 leverage you can place order/trade worth $10,000 with just $10 capital. If you are using very high leverage then you can even lose most of your trading capital on a single losing trade. Take an example: Assume that you make a deposit of $500 to fund your Live trading account, and you use 1:200 leverage to place a 1 standard lot buy order on EUR/USD. You could make approx. $200 profit if the market goes up by 20 pips in your direction, but you also risk losing $200 of your capital if the market goes 20 pips against you i.e. 40% of your trading capital in 1 trade. So you can notice how the amount/capital at risk is increased exponentially with leverage. Hence it is important to not use more than 1:10 leverage for forex trading & never risk more than 2% on a trade. The leverage should be much lower if you are trading CFDs on other volatile instruments. For example, if you are trading CFDs on cryptos, you should avoid using any leverage. If you are trading indices, then you should not use more than 1:2 leverage. Most brokers don't have any restrictions of leverage, so you must self-regulate.
  2. Unregulated Brokers: Many unregulated forex brokers have come up recently, most of them are running ponzi schemes & similar scams. There are cases where the unauthorised brokers lure people into scams by way of false promises is common and any broker promising high returns or high income from forex should always be avoided. Before choosing any broker, you should always check if your broker is regulated by ateast 1 of the top tier regulators i.e. FSCA (South Africa), FCA (UK), CySec etc. Also, if you have checked that the broker is regulated, then the next point should be to check their reviews, transparency in dealing with issues in the past etc. Also, verify that the broker you are choosing is actually regulated. There are many fake brokers that claim to be regulated & create websites cloning actual licensed brokers & targeting customers of genenuine brokers. So you should check that the website where you are signing up is the actual Regulated broker's website.
  3. Forex Markets are very Volatile: Every market comes with a degree of risk associated with uncertain volatility. There are a number of factors which affect the currect/future value of a currency, including political, micro/macro economy & other factors. Unfortunately, most of these factors are not in control of a trader. Hence, it is advised that before opening or closing any trade, you should always check if there is upcoming some news that can impact the volatility. Also, make sure to always have a stop loss in place in case the market goes against you. You should avoid heavily leveraged positions during periods of excessive volatility because you can get spikes in prices in both directions. For example, during events like Central Meetings or CPI data etc. you can get high volatility in both directions. Even major pairs like EUR/USD can move up & down by 100-200 pips in few minutes. If you are heavily leveraged into such events, there is a risk that you can lose your capital.
  4. Risk of Capital Loss: With Forex trading there are risks involved just like with every other capital markets. A positive outcome of your trade is not always guaranteed, and that is why you must follow strict risk management rules. For example, even following basic rule like only taking a trade with 1:5 Risk to Reward can reduce your risk a lot. With this, you have a high probability of not losing money, even if your win rate is 20%. But following this strategy means that you only take on trades with very good reward compared to the risk, so you only take quality trades & not just be a hobby trader.
  5. Mental & emotional Stress: Forex trading (or any markets for that matter) involves high risks. And this can cause you lots of mental & emotional stress that comes after any losses. Hence it is really important to be wise with your money management & never risk any money that you cannot afford to lose.

Can the risks associated with forex trading be managed? Yes, it is possible. Most of the traders who lose money either don't have a working trading strategy & start trading live without practising first on demo, or they are bad at money management & risk too much on a single trade.

As a rule of thumb, make sure to have a working tranding strategy (fully tested on demo for 3 months atleast), never use more than 1:50 leverage, never risk more than 2% of your trading capital on a trade. All these are sound money management practices that will ensure that you have a better chance of being a successful forex trader.

Forex Trading in South Africa: FAQs

How much money do you need to start forex trading in South Africa?

All brokers have different minimum deposit requirements. The lowest minimum deposit requestment for South African traders we have found is R76 with ZAR account brokers or $5 USD with Hotforex Micro account & XM's Micro Account.

We advise beginner traders to use minimum leverage of not more than 1:10 for keeping your risk low. South African traders should start with the right balance, so that you won't be overtrading or risking a lot of your capital for each trade with very high leverage.

How can I start Forex Trading in South Africa?

You can follow these 4 steps to start trading Forex in South Africa:

  1. Learn Forex trading: If you are a beginner, you should start by learing the basics of forex trading, including 'what is forex trading', 'the risks of leverage', its basics, strategies etc.
  2. Choose a Regulated Forex Broker: South African traders should choose a FSCA regulated forex broker as they are licensed & have regulatory oversight.
  3. Open Trading account & Fund It: Once you have decided on the forex broker that you want to choose, the next step is to open account with that broker. Depending on your requirements, you can open ZAR trading account as many brokers offer it. You would need to submit your KYC documents to open a live account, and then you can fund it.
  4. Start Trading Forex: Once your account is open, you can download the broker's trading platform. Most brokers these days offer MT4 platform with mobile support.

Is Forex Trading legal in South Africa?

Yes, forex trading is legal for traders in South Africa. Traders need to ensure that they don't violate any anti-money laundering laws in South Africa and deposit & withdraw funds through legal banking channels and report their earnings to South African Revenue Service (SARS).

Although, it is not mandatory for traders to trade with a locally regulated forex broker but it is advised for South African traders to choose a FSCA regulated broker or a any top tier 1 regulated broker like FCA, ASIC broker for safety of your capital and fair trading conditions.

How can I learn Forex Trading?

You can learn the basics of forex trading like what forex trading is, how does it work, spreads, currency pairs & other beginner concepts through free resources like our guide

But actually being profitable from forex trading requires lot of discipline. You would need to spends hours to build a strategy that has an edge in the Forex market, and then actively trade it.

Do note that any strategy would have an edge over a series of trades. You must manage your risk such that you are never risking more than 1% of your equity on a single trade, which will give you chance to make atleast 100 trades.

There is not easy way to learn forex trading, and most traders lose money. You must observe the market behaviours, spend hours to learn to patterns, cross currency relations etc. Most importantly, please avoid giving your money to anyone who claims they can teach you forex trading or trade for you. Such schemes are a scam.

Where can I trade forex in South Africa?

You can trade forex & CFDs by opening a trading account with any FSCA or Tier 1 Forex Broker like - FXTM, HotForex, Avatrade, XM, Exness.

It is advised to trade with FSCA regulated brokers for traders in South Africa, as this would offer you grievance addressal in case of any dispute with the broker rather than in case of a foreign broker. Also, check if the broker offers ZAR trading accounts & offers local deposit/withdrawal options.

What is the Commission to Trade Forex in South Africa?

Your broker will charge you a fees to allow you to access their platform. This fees is the commission that the forex broker receives to faciliate your trade.

In the forex market, the primary source of income for the brokers are the spreads. Typically, it is around 0.8 pips for EUR/USD with Professional accounts. This means for every 100,000 USD traded, the broker will charge you 8 USD or 0.008% of your traded volume.

Compared to other markets, the commission is low in forex markets, but the volumes traded by traders is high, so the brokers make much is commissions.

Is Forex Trading Profitable?

There is no guarantee of profits in forex trading. Trading forex can be profitable for professional currency traders, but for most retail day traders it can bring big losses.

According to industry statistics, more than 75% of retail forex & CFD traders lose their money. Hence, forex trading is not for inexperienced traders. It requires years of experience & sound risk management strategy.

How many forex traders are there in South Africa?

As per some reports there are 200,000 forex traders in South Africa. The numbers may be even higher as this is growing.

This is the highest number of traders anywhere in Africa. The average monthly deposit size of South African traders is estimated to be $742 USD or around R12,900.

How does help you? aims to help South African traders get started with regulated Forex Trading. We have compared over 50+ forex brokers based on 12 factors & then selected the best ones that are regulated with FSCA, FCA, ASIC, so you can safely trade with trusted brokers.

Moreover, we have researched & written comprehensive trading guides for beginners where you can learn the basics of forex trading. Read our forex guides, see unbaised broker reviews, and our best South African forex brokers listing before getting started.

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