Forex Trading has become one of the ways for many South Africans to escape poverty. However, we all know that trading isn’t for everyone and is done with caution as one can lose thousands of rands if done without knowledge and risk management.
Many South Africans have been using JP Markets which at the time of this publication was filed to be liquidated and the firm opposed the bid, there is still an ongoing investigation. However, that’s beside the point, we are talking forex and how it’s done and all the complexity involved, well at least a portion of it.
The beginner’s locker (What is Forex?)
The term forex, as explained in the articles ‘What is forex trading‘ and ‘Forex trading Facts‘, it is derived from the words Foreign Exchange. Forex is often abbreviated as FX. Forex is regarded as OTC which is an Over-the-counter trading platform directly between two parties without any supervision of the exchange and makes it the biggest market in the globe.
Forex trading is all about the speculation of one currency compared to another. Traders’ number one goal is to make a profit.
Forex is traded in pairs, the base currency and the quote currency e.g EUR/USD (EUR being the base and USD being the quote currency), and the base currency is worth one, and one unit of the base currency is worth the quoted price on the term currency.
Trading for the first time
Before you can trade for the very time, iBusiness recommends opening a demo forex account which doesn’t require much. All you will need to do is to download the MT4 / MT5 trading platform on your app store, or the web version for PCs. Once downloaded, the demo account is usually always the first suggested.
But to successfully open a real trading account, you will need to find a broker. A forex broker opens a pathway to currency traders allowing them access to a trading platform that allows buying and selling of the Foreign Exchange.
It is the trader’s responsibility to find a trusted and reliable broker. There are thousands of brokers around the world, both regulated and non-regulated brokers. It is advisable to trade with a local broker, that’s regulated locally. A regulated broker simply means it is bound to abide by the rules and regulations that control the forex market. Forex Brokers in South Africa are regulated by FSCA (Financial Sector Conduct Authority).
The reason to choose a regulated broker is so that your capital, money invested can be protected as well as the broker’s promise to utilize your funds solely for the correct purpose and not manipulate the system in any way.
Unregulated brokers can disappear with your money without a trace. As a trader, when choosing a broker you must ensure the broker is regulated or not.
- Find a broker
- Register with the broker of your choice
- You will be required to verify your identity by also providing the broker with a copy of your ID, Bank Statement, and Proof of residence.
You don’t want to be sending your personal details to an unregulated broker. Choosing the right broker also means you should check out if their trading platform is easy to navigate and has the tools you need, advanced charts, and exceptional speed.
- The broker will verify your details
- Typically takes 1/3 days
- You will then have a live account once approved
Now that you have a live account, a deposit will be required to start trading. Some brokers have a specific minimum deposit required for the specific type of account you open.
- Minimum deposit may range from $1
- Some brokers may require a minimum of $100, whereas some brokers do not have a minimum deposit.
- Once you deposit the little you have, the big step now begins
Okay now, your account is live what’s next?
Placing an order for the first time
I wrote a massive article on how to make your very first trade in forex, but now we want to focus on executing your first trade ever!
When you have successfully been accepted by a broker, you will be able to navigate through their dashboard and create real account MT4/MT5 login credentials, Your username is usually just numbers – known as your account number, and the password is a mix of numbers, letters and sometimes characters – can be really hard to type them in one by one.
When you have successfully logged in, you can start trading forex.