Retail Forex Trading entails speculating on the rise and fall of currencies with an aim to generate a profit. South Africans can lawfully trade in the foreign exchange market via any FSCA registered forex broker allowed for supplying Derivative instruments to traders in South Africa, such as Khwezi Trade.
Forex traders in South Africa are drawn to Forex trading as an investment tool due to the better market liquidity, 24/5 market hours and fast paced nature of currency speculation.
But there are numerous hazards to trading on the largest and most volatile financial market, and in this article we break down the most important aspects of trading safely on the Forex market in South Africa.
1. Identify the best trading times
Part of being able to take advantage of Forex market activity is understanding the best time to trade in South Africa.
Trading in South Africa is most successful when key market sessions are in sync, which is between ten o’clock and six o’clock in the afternoon. This period comes after the Tokyo session has ended and moves over to the London and U.S. markets, which begin trading at roughly the same time.
There is a lot of trading activity during the London and US sessions since all market participants have an impact on the currency market. Important economic statistics and news are frequently provided during these sessions, which can have a significant effect on currency exchange rates.
2. Educate yourself on the Forex trading basics
It is vital that new Forex traders acquire a basic understanding of the macroeconomic drivers of market fluctuation. Part of trading successfully is to learn how to gain steady profits over time, which will also prevent new traders from making large unnecessary losses.
A steady approach to earning Forex profits will be greatly bolstered by gaining a fundamental understanding of the drivers of currency market movements.
3. Make use of stop-losses
If you don’t have the time to monitor the markets around the clock, you’d be better off using stop and limit orders to minimize your risk and protect possible winnings. Stop and limit orders will take you out of the market at the price you choose.
Trailing stops are particularly useful since they keep track of your position at a specified distance as the market moves, so assisting you in protecting profits in the event of a market reversal.
4. Don’t risk all of your capital
Discover how to effectively manage your risks. Your deposit is your trading workhorse, and if you lose it, you’re out of a job completely. Due to this, you should never deal with money that is worth more than 5% of your initial deposit in any given trade.
Always bear in mind your money management ratio, often known as the risk/reward ratio, when you are making trades. Everyone has setbacks; it is unavoidable. However, even with a 50% success rate and a healthy money management ratio, your account will continue to expand over time.
Watch this space for updates in the Hacks category on Running Wolf’s Rant.