How to trade forex in south africa

Forex trading can be a daunting task, but it can be approached in several simple steps. First, decide on how you want to trade forex. This involves understanding the forex market and its workings, opening an account, building a trading plan, choosing a forex trading platform, and opening and closing your first position.

For those who don’t have the means to make billion-dollar forex trades, there are two main ways to get involved: forex CFDs or trading forex via a broker. A forex CFD is a contract where you agree to exchange the difference in price of a currency pair from when you open your position to when you close it. Open a long position, and if the forex position increases in price, you will make a profit. If it drops in price, you will make a loss. Open a short position, and the opposite is true.

Forex trading via a broker works similarly to CFD trading, but you won’t have access to other markets. The forex market operates differently than exchange-based systems like shares or futures, as it is bought and sold via a network of banks. These banks act as market makers, offering bid prices to buy a particular currency pair and quote prices to sell a forex pair.

For retail traders, forex trading providers deal with banks on your behalf, finding the best available prices and adding on their own market spread. Some providers allow you to interact directly with market makers’ order books, called direct market access (DMA), which allows advanced traders to buy and sell forex without the spread.

To trade forex via CFDs, you need an account with a leveraged trading provider, which can be opened in minutes. Building a trading plan is crucial for new traders, as it helps take emotion out of decision-making and provides structure for opening and closing positions.

Once you have chosen a forex trading strategy, use your preferred technical analysis tools to decide your first trade and pay attention to any developments that may cause volatility.

Forex trading platforms offer a smart and faster way to trade forex, with options available in web browsers, mobile apps, and advanced third-party platforms like MT4. Each platform can be personalized to suit your trading style and preferences, providing personalized alerts, interactive charts, and risk management tools.

Opening a deal ticket for your chosen market allows you to see buy and sell prices, decide the size of your position, add stops or limits, hit buy to open a long position, or sell to open a short position. You can monitor the profit/loss of your position in the ‘open positions’ section of the dealing platform.

Examples of forex trades include trading a GBP/EUR CFD, where the pound is trading at 1.1284 with a buy price of 1.1285 and a sell price of 1.1283, giving a spread of 2 points. If your prediction is correct, the pound rises against the euro, and GBP/EUR is now trading at 1.1309 with a buy price of 1.1310 and a sell price of 1.1308. Reversing your trade to close your position, you sell three contracts at 1.1308, making your £300,000 worth €339,240.

If your prediction is wrong, the pound falls against the euro, and GBP/EUR is trading at 1.1259 with a sell price of 1.1258. Your three contracts are now worth €337,740, €810 less than when you opened your position. You can offset a CFD loss against future profits for CGT purposes, but you will have to pay funding charges if you held the position overnight.