In South Africa, forex trading is gaining ground with each passing day and helping traders gain immense profit using various financial instruments, for example, stocks and bonds. The beauty of trading forex in the country is that traders generally gain higher profits and confront lesser risks. That said, apart from local traders, but also traders from several global locations are choosing South Africa as their ultimate destination for forex trading.
The South African Rand (ZAR) is the official currency of South Africa. While the South African Rand is a rapidly emerging currency on a global scale, it provides investors with a bang-up opportunity to earn monumental gains in forex trading. This is because people are more likely to buy this currency due to its low value, which makes it a good investment option for the future.
If you have the cherished desire to start trading forex but are on the fence about executing it due to certain misconceptions and myths surrounding it, then it is important to know the truth. And the truth is that when you start trading forex, which is rife with huge volatility or liquidity, the right way and responsibly, you can generate sizable ROI.
In any case, mentioned below are some misconceptions out there that need to be debunked and cleared up first: Thankfully, none of these misconceptions are true and valid. By gaining an understanding of how the market works and implementing the right strategies, it doesn’t take much experience or money at all to begin being profitable.
Myth #1: Forex Trading is a Get-Rich-Quick Scheme
The growing prominence and popularity of Forex trading seem to have been largely buttressed by certain Hollywood movies, for example, ‘The Italian Job’ and the ‘Ocean’s’ series. As a matter of fact, it is not virtually as overwhelming as Hollywood would have you believe. To gain a full understanding of the forex market, spending plenty of time learning about it, exploring charts, and practicing your skills is every inch worth considering.
It is impossible to get a good grasp of such things overnight, and forex should not be compared to gambling or any other similar risky activities because the risks are high for any wrong step you take knowingly or unknowingly. Therefore, it is important that you prepare yourself for the long haul. Also, many forex experts prefer to refer to themselves as traders instead of gamblers. Although this term has a number of legal implications, a trader is still making an investment fraught with risk and should not be expected to earn consistent profits.
In general, these specious get-rich-quick schemes easily appear fascinating; it is a wise idea to stay away from them at all times. Many investors who fall into such specious get-rich-quick schemes typically run across a variety of problems, for example, having their funds transferred to other entities, not being able to close their accounts, or reclaiming their investment capital.
Analysis of Myth
Forex trading entails traders investing a substantial amount in any form, for example, gold, currencies, etc., and trading against other assets, for example, stocks or bonds. Because forex trading involves risk, taking a wrong step is most likely to cause traders to incur losses more than what they had invested.
In general, losses are commonplace in forex trading, and they often take place when you do not have substantial knowledge of the market and do not know how to get the most out of it effectively. Also, let’s not forget that trading is fundamentally a game of probabilities, and as such, any long-term success comes from mastering the process and learning how to capitalize on the odds. With this in mind, it should come as no surprise that trading forex is not a get-rich-quick scheme.
You can follow in the footsteps of some top forex traders who have made a mark in the South African forex market with their virtuoso performance. Here are a few names of the most successful forex traders in South Africa:
- Jabulani Ngcobo
- Shaun Benjamin
- Ref Wayne
- George Van Der Riet
- Louis Tshakoane
- Nelisiwe Masango
- Paballo Nkwe
- Danielle Lester
Myth #2: Forex Trading is Only for the Wealthy
Because forex trading is all about the buying and selling of foreign currencies, most people take for granted that it requires millions of dollars to get started. However, this is a mere fallacy, and there is no underlying truth involved in it. The truth is that even a small amount can work wonders for you. Although you may not be able to get high returns in the preliminary stages of trading, any amount you can affordably invest will earn you a decent amount as the US dollar appreciates and depreciates over time.
Besides this, the more money you are able to invest in trading, the improved your ROI will be. No one can accurately predict how long a currency will remain in a specific range, and if it moves too far beyond or below where you have invested, you are very likely to lose a great amount of money.
Also, since forex trading, like stock tracking, is fraught with a very high level of risk, it should come as no surprise if you are the only one who takes a risk and incurs loss while doing so. Interestingly and thankfully, there is no minimum amount required to start trading forex on a monthly basis—simply choose a dependable forex platform, and with basic knowledge and minimum funds, you can get the trading off the ground. In general, it will cost about $50 – $300, depending on the forex broker you have chosen.
Analysis of Myth
A newbie is wise to start off with a minimum of $1000. This can be done by trading the currency pairs on an online forex trading platform. It is important to remember that forex trading is not a get-rich-quick scheme at all. You have a long time horizon for currency trades. Unless you are blessed with a lot of capital and have built up a large position, it’s best to take slow but steady gains. See Forex Trading and Fundamental Analysis for some basic tips on getting started in this market.
Accessibility of Forex Trading in South Africa
The best part about forex trading in South Africa is that you don’t need to be a local. That’s because you can trade forex without having to visit any local broker in South Africa. You can trade online and take advantage of the best forex platforms like eToro. This puts anyone with an internet connection on an equal playing field as experienced traders who may have worked in the industry for years.
Myth #3: Forex Trading is Illegal in South Africa
Since forex trading is not centralized, this implies that there is no central location for this type of trading to take place. Putting it simply, you can start trading forex from any location of the world, provided that your computer or mobile device has a stable internet connection. Therefore, for example, if you are looking to start trading forex in South Africa, it does not mean you cannot enter the trading without confronting any issues.
South Africans are legally allowed to enter the foreign currency exchange market and start buying and selling foreign currencies. However, it is important to note that they cannot do so as simply residents. The South African government does not allow them to start depositing forex into their personal bank accounts, considering the various legal obligations issued by non-South African authorities.
The only way to deposit them would be to open an offshore account, which is illegal in South Africa. Also, make sure you read your contracts properly because most forex brokers do not offer contracts with a “no loss” guarantee. There are some best forex brokers in South Africa who are legal, and that is a key factor to consider when deciding which one is right for you.
The Financial Sector Conduct Authority (FSCA) is responsible for regulating the South African financial services sector. The regulatory body takes care of all financial activities carried out by all financial service providers. These include individuals and companies dealing in payment protection, credit report generation, and debt counseling. The bottom line of the FSCA is to manage and promote a safe and sound financial sector in South Africa and forbid consumers from doing unjust practices by those who offer financial services.
The FSCA helps protect investors by demarcating the least standards levied on investment products and schemes. It also ensures that only competent, qualified, and well-thought-of individuals can serve as investment counselors in South Africa whilst protecting clients against unfair business practices.
Analysis of Myth
If you do not know much about the legality of trading forex in South Africa, then hire an attorney or professional to get a consultation from them. It is also important for you to be aware of the specific rules and regulations for forex brokers, stock brokers, and online brokerages. However, it is worth noting that you do extensive research before creating an account with a broker.
Regulatory Framework for Forex Trading in South Africa
The Financial Sector Conduct Authority (FSCA) is responsible for regulating the South African financial services sector. In simple terms, the regulatory body takes care of all financial activities carried out by all financial service providers. These include individuals and companies dealing in payment protection, credit report generation, and debt counseling.
The bottom line of the FSCA is to manage and promote a safe and sound financial sector in South Africa and forbid consumers from doing unjust practices by those who offer financial services. The FSCA helps protect investors by demarcating the least standards levied on investment products and schemes. It also ensures that only competent, qualified, and well-thought-of individuals can serve as investment counselors in South Africa whilst protecting clients against unfair business practices.
Myth #4: Forex Trading is too Risky
Believe it or not, mastering forex trading can really be a great way to gain substantial profits, provided that you play it right. Putting it simply, not only should you have substantial knowledge of the market, but also you should gain a sound understanding of the various rules and regulations implemented by the government of the country from where you are trading. With this in mind, there is no risk-free strategy since although forex traders often assume that they are taking more risks than other people; the matter of fact is that most of the time, they are doing things simply as well as others do.
The basic difference is that they are more centered and dedicated to achieving their goals than anyone else. They pay attention to the patterns and the history of their currencies, and that said, they have the potential to predict them more accurately. As a matter of fact, the ones who are often successful in forex trading and gain substantial gains most of the time are patient, and they do not get emotionally attached to specific trades. After all, this is the basic mantra of success.
In simple words, experienced traders exercise caution when investing in this market, considering the various challenges and risks involved. Do not expect to gain much at all times since expecting low in general and learning from different experienced traders will help enhance your odds in forex trading as long as you understand what your obligations are and how to properly manage your capital.
Analysis of Myth
The right mindset is the key to unleashing mammoth success in forex trading most of the time. Recall the proverb ‘there are many slips between cups and lips, which implies that there will be a lot of obstacles preventing you from achieving your goals but using certain strategies and ways, you can get on top of them as well. It’s not just about trading but about working with the markets as a whole in order to create a better life for yourself.
Risk Management Strategies for Forex Trading in South Africa
If you scout for forex strategy methods online or get in touch with a professional forex broker, you will find a lot of them that you can follow, but the best one is the one that you find easy to follow. The bottom line is that you need to be careful, sensible, and responsible when trading in the forex market. Set realistic goals and follow them until you achieve them. Then, set new ones and keep climbing higher each time.
Myth #5: Forex Trading is Gambling
This is another critical myth out there about forex trading, and especially rife among people who do not know anything much about forex trading and feel fear of investing in it. However, it is important to take note of the fact that gambling requires almost no skills, whereas forex trading does. In most gambling types, it entirely depends on pure luck, which is why many a lot of people steer clear of participating in certain casino games, for example, poker. In forex, you have the odds of making or losing hundreds of thousands, if not millions of dollars, in a single day.
One major difference that makes forex trading different from gambling is that you can get on top of the risks involved in the former one because you don’t play hands on a table. Unlike gambling, which showcases a lot of ads online, in forex, you do not see many of them making a promise to earn easy money, irrespective of the amount you deposit or the time you spend learning about it. Therefore, forex trading is not for those reluctant to put in their time and effort, as there will be no surety to getting ROI on your investment.
Analysis of Myth
In order to debunk the prevailing misconception, it is first important for individuals to learn what “gambling” is in the first place. Gambling is defined as an activity entailing players to place bets on activities with the probability of winning and earning money. In general, gambling is referred to as an activity in which gamblers are involved in playing in a casino for a few hours and hope to win money with luck.
Differences between forex trading and gambling:
Forex is a trading type involving buying and selling various global currencies such as USD, GBP, CAD, etc. Forex traders set buy and sell orders that are executed in the market according to each currency’s buying power. Forex traders anticipate price changes while managing risk and profit by betting on these changes by buying when the price drops or selling when it increases, thus generating profits when volatility increases.
Gambling is a game of chance, where roulette wheels are spun, for example, and bets are made on which number or combination of numbers will come up next during play. Gambling games include roulette, blackjack, etc.
The myths of Forex trading in South Africa are pervasive all around, especially among people with dubious natures. In general, these myths are multiple and confusing. In general, a lot of myths about Forex trading seem to be true, but many of the myths were not up to the mark. Therefore, it is time for traders in South Africa to get used to these new facts and become more knowledgeable about Forex trading.
Forex trading is a fast-thriving form of investment in South Africa. However, it is important to note that it can be both cost-effective and risky. Considering the latest findings on the potential implications of forex trading for South African traders, it is important to gain insight into what these implications refer to in order that traders can make well-informed decisions about their investments.