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5 Useful Tips For Selecting A Forex Broker

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The foreign exchange market is booming in South Africa and the interest in trading, in general, is at an all-time high. And even though Forex trading is something I recommend that everyone with an interest gives a try, there are certain risks involved that you need to be aware of.

Besides the risk of losing the money you deposit and trade for, the biggest risk is untrustworthy brokers and, unfortunately, they’re plentiful.

Forex Trading in South Africa
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Luckily, finding a regulated and safe broker is quite easy as long as you follow my tips. In the post below, I’ve listed the 5 things that you have to consider when looking for a South Africa Forex broker.

Note that it’s not all about safety and that I also provide other useful tips that can help you find the perfect broker for your specific needs.

1. Regulation and Safety

Obviously, the number one thing to consider when picking a broker in South Africa is safety and the only way to make sure that a broker can be considered safe is to check the broker’s licenses.

In South Africa, it’s the Financial Sector Conduct Authority (FSCA) that’s responsible for regulating and auditing Forex brokers. In turn, this means you should only rely on brokers that have been issued an FSCA license.

However, there are also other well-established regulatory bodies in the rest of the world and the more licenses a broker has, the better.

The following are considered the most serious regulatory bodies for Forex brokers:

  • Financial Conduct Authority (FCA) in the UK
  • Cyprus Securities and Exchange Commission (CySEC) in the EU
  • Australian Securities and Investment Commission (ASIC) in Australia

With that said, instead of researching brokers and their licenses on your own, you can use other’s recommendations. For example, in this guide about Forex trading In South Africa, you’ll find a complete list of all the top regulated Forex and CFD brokers that operate in the region.

2. Platforms and Gadgets

After you’ve located a few licensed brokers that you think could be a good fit, you should research the platforms and tools they offer. Using a broker with a platform that you don’t feel comfortable with is a recipe for disaster and not something I can recommend since it will lower your ability to make a profit.

Certain platforms are considered better than others while some are designed for beginners and some for professional day traders. To start with, the third-party platform called MetaTrader 4 is a good option because it’s one of the best and most used Forex platforms in the world. It’s also a platform that a majority of Forex brokers in South Africa offers.

As a complete beginner, it can be difficult to know which tools are good and what you should expect from a broker, so I suggest you rely on others’ recommendations and reviews to learn more.

3. Available Assets

Naturally, you also want to make sure that the assets you’re planning to trade with are offered. Most top brokers offer a range of major, minor, and exotic currency pairs including ZAR.

Moreover, online Forex brokers also tend to offer Contract For Difference (CFDs) on assets such as stocks, commodities, cryptocurrencies, etc. Therefore, I suggest you double-check all the assets offered to see if there are some that might interest you.

4. Fees and Charges

Brokers make money by charging their customers different fees for their services. The main one is a spread or the difference in the ask and bid price. But there are also non-trading fees for things such as inactivity, overnight trading, and more. 

Your goal is to find a broker with as low fees as possible since you don’t want to be wasting your money unnecessarily.

5. Demo Accounts and Testing

At this point, you might be wondering how you’re supposed to check all this before you register an account. Fortunately, there is an easy solution.

All top Forex brokers in South Africa provide demo accounts which are completely free to use and oftentimes unlimited. These demo accounts are replicas of regular trading accounts with the difference being that you trade using virtual money, meaning you don’t have to risk your own.

Besides being great tools for practice and strategy development, demo accounts can be used to test a broker and all it’s tools and features, before deciding if you want to register a regular trading account or not.

In other words, I suggest you open a demo account with a few regulated brokers and then try them out to see which one suits you better.

Watch this space for updates in the Hacks category on Running Wolf’s Rant.

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