The global forex market is one of the biggest and most lucrative entities of its type in the financial realm, and one that boasts a cumulative value of $2.409 quadrillion.
It’s also becoming increasingly popular in developing regions such as Africa, with various brokers reporting a 100% rise in forex market participation in South Africa and similar nations.
But how can you get started as a forex trader, and why is it important to choose the right broker?
What is Forex and Who Can Trade?
In simple terms, the forex market (or foreign exchange) facilitates the exchange of international currencies, which can be traded in pairs and as derivatives that don’t require you to assume ownership of the underlying financial instrument.
As a result, you can speculate on price movements and profit even in a depreciating market, while the highly leveraged nature of the space enables you to open and control positions that are up to 100-times larger than your initial deposit.
In the digital age, this market has become accessible to everyone, including those in developing economies such as Africa.
Certainly, the number of Internet users in South Africa has risen exponentially to 38.14 million of late, with a whopping 36 million regularly utilising mobile browsers to get online and trade forex seamlessly in real-time.
How to Start Trading
In terms of getting started, there are a few simple but universally important steps that you’ll need to keep in mind. For example:
- Choose the Right Broker: As a South African broker, you’ll need to identify a reputable broker that has been both regulated and officially accredited by the region’s Financial Services Board (FSCA). Additionally, we’d recommend that you identify online brokerage sites that support an MT4 download, with this software specifically designed for the purpose of forex trading and capable of offering a customisable and efficient trading experience.
- Test and Hone Your Strategy: You should also prioritise platforms that offer you access to a demo account, ideally for a period of six months. This will afford you ongoing access to a simulated, real-time marketplace, in which you can test and hone your strategies without risking your hard-earned capital. Make no mistake; this provides the ideal vehicle through which you can leverage your theoretical market knowledge, while gaining practical experience of a fast-paced marketplace.
- Start Slow and Scale Your Efforts: Whenever you first enter the forex market, it’s important that you start small and look to scale your efforts over time (ideally in line with experience and profitability). So, while you may start out trading just one or two major currency pairs (such as the EUR/USD), you can expand your portfolio over time while even diversifying into new markets and asset classes in the future.