For those who are in the dark, forex trading might seem to be a complicated way of making money. But young millionaires like Sandile Shezi and Simz D' Mandla paint a different picture altogether. Forex trading has exploded over the past few years in South Africa due to a number of reasons and we will try to answer some key questions surrounding this meteoric rise.
What Is Forex Trading and Why Do South Africans Do It?
Let’s understand the science behind forex in a very simple way. Forex essentially means foreign exchange. It is a decentralized market where one can trade various currencies. All transactions occur over computer networks that connect traders around the world. South Africans mostly invest in the mighty US dollar, and since they can enter the system with as little as 5000 ZAR, everyone seems to have grown an interest towards it.
What Are the Main Motivations?
There a number of motivations. Let’s go through some important ones:
In layman terms, leverage essentially means that you can trade more than your initial deposit. To put this into perspective, not only can you enter the market with a small investment, you can also trade big with that money.
As long you possess a computer, smartphone or a tablet, you are good to trade from anywhere you want. The ease of use and accessibility is a major motivator for people in South Africa and worldwide.
3. Learning to Trade Is Easier Than Ever
A small research on social media is enough to locate plenty of traders offering free courses. The trading community is trying to expand itself rapidly in South Africa. When the money making science is being freely distributed, who doesn’t want to give it a shot? Durban and Cape Town already are home to a large community of forex traders.
What Are Advantages and Disadvantages?
As with every investment, even forex trades are subject to market fluctuations and risk. However, there are plenty of advantages too. For instance, the forex market is one of the largest financial markets in the world. It is very liquid and transactions run into millions of dollars every day.
Unfortunately, the market is fast and volatile. Which means that you can lose your money as quickly as you can make it. Most of the times, traders end up losing money. But with a smart strategy, there is money to be made.
Rules and Regulations
The South African foreign market is pretty similar to markets around the world. In fact, the shift in the government's policies about 7 years ago has made it easier for traders to operate. However, there are certain limits on how you can move money offshore. There is a limit of 20,000 Rand per transaction if you are using credit cards. Although there is no threat to the legality of forex trading, it would be wise to hire a broker who is an expert and can help manage your funds wisely rather than doing it all by yourself.
Why Is Training Important?
A recent survey revealed that over 90% of all traders end up losing money on their first trade. So it is quite evident that proper planning and research is of the essence. It is impossible to just land in the market, make some urgent moves and then become rich. Trading is an art that has to be learned the hard way, just like everything else in life.
While there are plenty of heartwarming success stories to choose from, nothing motivates traders and investors more than the story of Sandile Shezi. From selling clothes door to door to becoming a millionaire is a no mean feat. Shezi actually admits that this is a risky game. However, he is clear to point out that he wasn’t trying to play Russian roulette with forex. He had a strategy that he worked on and perfected with each trade, soon enough, the cash started to flow.
Are you looking to jump in the forex South Africa bandwagon too? For most of you out there, trading might play out as a secondary stream of income. Find a local trader who offers lessons and start learning today. If that is too much work, you can always find a broker who will be willing to place trades for you. Either way, there’s definitely money to be made!