Best forex brokers for beginners in south africa
This is not an outright bad thing since traders do indeed need proper training, but it just goes to show how much interest there is in Forex trading. Besides the advertisements by Forex brokers, successful traders, a few successful traders are bragging about their earnings on social media, further fuelling the urge by young individuals to start trading.
Even so, one of the most important characters in the entire industry is the Forex brokers, who can either lead you toward the light or into a pit of losses and despair. So far, there are tens of Forex brokers who are soliciting South Africans to open accounts with them and start trading. Out of a large number of potential brokers, only a few are licensed to operate or sign up South Africans as clients. That requires that the broker first get a license from the FSB, but only a few so far have done so.
There are some who may be considered the best South African FX brokers, but I would never recommend them unless they had a local license from the FSB, even if they are licensed elsewhere. Therefore, we can only recommend choosing one broker from this FSB regulated Forex brokers list. All of these companies have active licenses from the FSB, making them trustworthy and advisable to deal with.
Most of them have already set up physical offices in South Africa, further making them more reliable. Before you even consider making your first trade, it is crucial to be aware of the laws and regulations that apply in the industry.
All countries will have a different set of laws concerning financial markets, and if you are a South African resident, these will be necessary to know. The first and most important has to do with regulation and licensing of top South African Forex brokers. Just like in all other regions of the world, all countries have a financial regulator whose role is to oversee the actions of financial institutions.
This is because the FSB was put in charge to ensure all financial institutions, including Forex brokers, adhere to the rules. Furthermore, they have the ability to pursue wrongdoers and impose penalties on them. Several scams have been conducted by Forex brokers just because they were not legitimate to start with. After the company had received client funds, though, the founder of the company disappeared and the funds were lost.
Regardless, it just goes to show how much legitimacy the license from the FSB provides. Beyond the first level, the institution can issue warnings and statements about any FSB regulated Forex broker. If, say, one of them has been fined for some wrongdoing, then the public shall be informed by the FSB. It is important to have this information, as it helps you decide whether you should keep working with them or not.
Besides the licensed entities, the FSB constantly issues warnings regarding unlicensed companies luring South Africans. DMD Capital was operating as Profit Trading and was at some point the top South African Forex broker with announcements in newspapers and over the radio. Finally, you can rely on the FSB to pursue a claim on your behalf whenever you have been wronged. They have the authority to pursue the company and either fine them or suspend their license, as they did with Profit Trading.
You can also get a refund from your losses if there were any, because the FSB requires the client funds be placed in a segregated account. That means, even in the case of bankruptcy, you never lose your capital. Beyond the laws on regulation, the South African Revenue Service SARS also has some conditions of its own regarding the amount of money you can take out of the country. You can only take out a maximum of 11 million rands in a year. You can trade forex on international markets with large sums of money and gain profits within a short period of time by opening an account with a foreign exchange broker.
This is possible through leverage. By offering leverage brokers provide their investor clients the chance to trade large amounts of money. If your broker extends a leverage of 1: Now, you may be wondering why your broker will allow this.
The answer is simple. The broker understands very well how slowly currency markets can move. For a trader to earn considerable amounts of profits within a short time frame is to trade a huge amount of money. If you buy 10, Euro through your broker at the current rate, and sell them after 48 hours at 1.
The 4 th decimal in the exchange rate is the pip. The broker is aware that while you earned a US dollar profit in a matter of 2 days, his risk is likewise limited to a 2-day time frame. Even if the trade goes south and he loses money, he will not lose a significant amount of money. If the worst thing happens and the loss wipes out you entire deposit, your broker will close the trade automatically, effectively limiting the loss only up to the extent of your deposit.
To sum it all up, leverage is offered by brokers to encourage traders to take on bigger risks with the potential of making much bigger profits within short time periods by trading a bigger amount of money. If you trade more, your broker potentially earns more as well. This is because of what is known as the spread. To explain in simple terms, a spread is the difference between the price to buy and sell a currency pair. The great thing about it is than in forex trading, spreads are extremely low.
This is because the spreads are forced down by the fierce competition among the many foreign exchange brokers. Simply put, low spreads are intended to lure many potential clients in. While there are, unfortunately, no reputable forex brokers in South Africa, traders still have a viable option to take advantage of the earning potentials offered by the forex market.
That is to make use of the services of a foreign-based or offshore forex broker. The good part is, there are numerous international brokers that are willing to work with South African traders. There are international brokers that allow you to open an online account in as fast as 5 minutes.