Forex trading: Are you looking to trade FX in South Africa?
The most trusted and responsible Forex brokers are regulated by the Financial Services Conduct Authority (FSCA), and employ advanced trading platforms including MetaTrader4 and MetaTrader5 made by MetaQuotes.
The FSCA or FSB
Regulation with the FSCA tends to be the most important criterion when it comes to choosing the right broker for your investments. The FSCA is also sometimes referred to as the FSB (Financial Service Board), and traders should note that these names are interchangeable. The FSB does work involving the protection of South African investors, with the inclusion of Forex traders, enforcing policies. The FSB will also work alongside the Ombudsman, when it comes to customers concerns.
Although some may argue that other criteria are just as important if not more so, it’s important to note that brokers that are not regulated under the FSCA and FSB will feature lower down in the best broker charts.
Comparison sites such as www.compareforexbrokers.com encourage traders to compare the Forex platforms offered by the different brokers prior to arriving at a decision. These platforms engage with different interfaces, features and integrations. There is further information available comparing the various webpages, deciphering the differences between the platforms, highlighting that MetaTrader4 (MT4) is offered by most brokers, enhancing a trader’s ability to seamlessly transition from trader to trader if this platform is readily available. Some brokers offer proprietary platforms that employ unique features.
Forex brokers’ fees
When determining what FX broker to trade with, many will look to the spreads and commission fees. Some brokers will only offer spreads, whereas others will offer narrower spreads, but charge a commission. Fees might be added pertaining to advanced features, including guaranteed spreads or an overnight holding of a position. If a trader uses a South African Rand ZAR account, it is likely that their fees will decrease.
Another factor that is integral when it comes to brokers in South Africa is the leverage that is offered. Although the market movement in South Africa is modest relative to other markets, the leverage offered determines a trader’s maximum profit, or in some cases can cause major losses. Traders should understand that when exercising trades with leverage there is a high level of risk involved. When employing leverage, traders should take into consideration their trading strategy, risk profile and trading goals to ensure they are not engaging in a transaction that is higher risk than desired.
Forex trading and the risks involved
Risks are inherent when dealing in currency markets, perhaps the most important point when a trader enters the industry. Those who engage in the FX market aim to maximise profit and minimise loss, and for this simple reason, the most important factor in choosing a broker may come down to the risk management features included in the broker’s offering. Risk features take into consideration the notion that trading with CFDs is complex. You can read a good guide on Forex risk management features at www.babypips.com/learn/forex/what-is-risk-management
The most common risk management tools are guaranteed stops which essentially determines when a trade will exit a trade, by inserting a sell mechanism at a certain price. Negative balance protection prevents a trader from not only losing their money but also from going into negative funds. Connected to risk management is the initial deposit a trader invests when entering the industry. Some brokers offer minimum deposits, enabling traders to test the waters before they begin investing large amounts of money. Alternatively, traders can also register for a demo account with many of the most popular brokers allowing them to ‘live trade’ before depositing any money. This way traders can employ strategies, determining what works best for them prior to plying their trade in the real FX world.
It’s a combination of all these factors as well as the goals a trader sets for themselves that will point the direction towards the right FX broker.