How to Get Started With Forex Trading in South Africa? Is it possible to make money with Forex in South Africa? Of course, it’s not impossible, but it’s not that simple either. Find out how to start investing in currencies and protect your money in South Africa.
ALSO READ: Forex Trading SA: How Forex Works in SA (South Africa)
Those new to online trading often approach forex with this question: how to make money? You may already know how the stock market works, but the currency market has a slightly different mechanism.
To win with forex, you won’t have to buy and sell stocks, but swap one currency for another in search of the cheapest exchange rate. You will need a little patience and a lot of practice: you cannot expect to get everything right away.
Don’t expect forex to be a sure win, either. How much does a forex trader really earn from his business in South Africa? It depends on his skills, the time he devotes to trading and the forex broker chosen to trade the currencies.
This beginner’s guide on how to make money with forex will answer all of these questions and provide you with some operational tips to start investing with currencies gradually.
Forex Broker
To do forex trading online in South Africa, you will need to open a trading account with a regulated Forex broker in South Africa that will allow you to invest in currencies with CFDs. It is very important to choose the best CFD broker in order to start trading online.
What is forex?
Forex (acronym for foreign exchange, abbreviated FX) is the financial market in which buyers and sellers trade currencies. In the past, it was only reserved for institutional entities, such as banks, governments and multinationals, while individual investors can now participate, investing for speculative purposes (foreign exchange gain).
The forex market is “over the counter” (OTC), meaning that it is not located in a physical location. Exchanges are only carried out electronically, from Sunday to Friday evening, continuously.
How does a forex trader make money in South Africa?
Due to continuous events across the world, the value of one currency suddenly changes relative to others. All trade in goods and services between countries must necessarily involve the buying and selling of currencies, which makes forex one of the most fermented financial markets.
Not just that. The value of currency is also influenced by geopolitical events, the choices of central banks, financial crises and the speculative transactions of millions of traders.
In this context, to win, a forex trader must anticipate these changes, with the simultaneous purchase of one currency and the sale of another.
How much can you earn in forex trading?
The volume of forex gains is an issue that plagues many novice traders. The correct answer is that there are no income limits: potentially those who invest in the currency market can pocket billions of dollars.
Although the gains are theoretically unlimited, investing in the currency market can also lead to big losses. Forex, like the stock market, is characterized by high price volatility, which can generate profit opportunities but also expose invested capital to risks.
Remember: Forex doesn’t mean secure income, let alone monthly income.
The vast majority of forex trading accounts turn out negative in the first few months of business. The reason? A novice trader does not have the right experience to trade the currency market easily with CFDs.
An investor can be considered an expert if he manages to obtain on the foreign exchange market a monthly gain of 3 to 5% of his capital, which can mean in the year an increase of about 40 to 60%. But even then, there is no fixed or secure income.
Winning with Forex Trading in South Africa: 4 Practical Tips
To be successful with forex trading, there is no real secret recipe. Everyone has their own strategy, goals and operates in a market full of surprises and unexpected events.
However, there are 4 good rules of conduct to follow in order to gradually enter the forex market and try to win:
- Erase the illusions: the forex brings real gains, but dangerous;
- Proceed with patience, first practicing a lot on the demo account;
- Know the forex: study, take courses, read;
- Start forex trading from the most traded pairs.
1. Forex is not safe money
We have said it before, but it bears repeating: there is no certain income. Beware of anyone who tells you otherwise, it takes patience and study to get results.
In forex you can earn big sums, it is not impossible, but only after really learning its secrets. And even after many years of activity, it doesn’t say that you will still be able to get profit.
2. Start from the forex demo account
Winning with forex first means minimizing losses, especially if you’ve just approached the world of online investing. A forex demo account is the best choice to practice without burning your savings.
Choose one of the forex demo platforms, register for free and use virtual funds for your simulations. These brokers allow you to earn in the currency market through CFDs, so you can also operate with leverage or downside.
3. Study and train
By doing your tests by buying and selling currencies, you cannot expect to learn automatically. Of course, demo simulations help, but they are much more effective when combined with good financial education.
For example, have you ever thought about taking a beginner’s forex trading course? You will quickly learn how the currency market works, how much and how to earn with forex, but also how to set up your own investment strategy and not only.
4. Know the most traded currency pairs
Ready to earn as a forex trader? A good advice is to start with the most traded currency pairs: these are those from the most stable countries, with low inflation and with less risk of sudden devaluations.
Try to start for example by swapping the EUR / USD exchange rate. Keep an eye on the chart in real time, follow the trend of markets and news, use technical tools and your knowledge of technical analysis.
So when you deem it appropriate, open a buy (long) or sell (short) position. CFD brokers also allow you to trade with leverage, increase the volume of your investment, or invest on the short, i.e. bet on the fall of the euro against the dollar. .
Forex and taxes
Finally, to calculate how much you earn with forex, you will also need to factor in taxes. In South Africa, the law provides for a rate of a specific percentage on the proceeds of any financial investment, and therefore also on currencies.
These forex gains must be reported in the income model year by year and paid out as income.
Haven’t you gotten real gains from forex? You are then not required to pay any tax, but if you have a trading account opened with a foreign broker (eToro, Plus500 or IQ Option), you will still need to declare that you have amounts owing. foreigner.
Forex Trading FAQs
- How much can you earn with CFDs on forex? Gains in Forex depend on market trends and have no limits in theory. Moreover, if you trade with a CFD broker, you can also invest on the downside and operate with leverage, increasing the scope of your investment up to 30 times.
- Is it possible to make money with forex? Millions of investors invest every day in making currencies and losing money. However, in order to earn real money you need to follow certain rules, choose the best broker, and practice a lot.
- What are the strategies for making money with forex? Forex traders use technical and fundamental analysis to analyze the most traded currency pairs and speculate on variations. Take courses and training for beginners to increase your chances of making money with forex.
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