How Much Money Do You Need To Start FX Trading in South Africa?
Financial trading is a great way to start generating additional income for yourself, a stream of income that can be big or small depends on your preference, your time, and what is your initial capital. The Foreign exchange market (Forex) is probably the most popular financial market someone can participate and trade, traders can make a lot of money buying and selling currency pairs, it requires time to learn how to it works, and the capital to kick off your trading journey
Expectedly, you will need to have some starting capital to begin trading, it is not something like free money, that you can start doing anytime and expect to succeed at, rather, it requires some monetary commitment, you will need to put some funds into your trading account to grow the money bigger.
Looking at it, it might mean that the more money you add to your capital, means you will earn more money, well that might be true, however, then you are exposed to a higher risk, therefore, someone needs to find the right goldilocks that secures reasonable returns with minimum risk.
How Much Money Do You Need To Start?
There are two things you need to consider to know how much money do you need to start trading forex in South Africa, what is your financial readiness? and what is the minimum required by the broker?
A trader needs to decide the amount of money they are willing to put in the starting capital, and the monetary commitment they are going to put. It is common for someone to start with as minimum as possible to avoid the risk of losing money, however, that sounds illogical because you cannot expect to grow a huge amount of money with almost zero capital, and the more money you trade with, the higher the chances are to earn higher returns. However, for a starter, you can start off small, and grow as you learn more.
Another thing you need to consider is the minimum amount of capital required by the broker, known as the minimum deposit, this is the minimum amount that a broker asks you to have in your trading account before starting your trade.
Different brokers have different requirements, but the vast majority of them will ask for 3,000 ZAR or around 200 USD to start your forex trading, however, since the expected returns are highly dependent on the amount of your deposit, the majority of the traders go beyond this minimum to improve their trading position and to forecast for more gains on their trades.
Can I Make Small Deposit And Big Gains?
This is one of the ways traders start making some income from trading, by starting with the minimum amount of money for forex trading, which can grant you fair returns if you have the right prediction skills to make the right decisions.
However, brokers usually help out the trader by providing what is called “Leverage” which is basically a multiplier tool, it multiplies the amount deposited by the trader by a specific ratio, for example, if your initial deposit is 1,000 ZAR, and the broker offers a leverage of a 1:1000, it will increase the traded capital to 1,000,000 ZAR.
Brokers use the leverage to put traders in improved trading positions, which shall bring out higher returns than the original capital if the trade was successful.
Going with the previous example, after using the leverage, if the traded capital is 1,000,000 ZAR and considering the average forex profit margin is 2-3%, you can potentially make around 20,000-30,000 ZAR, however, it is not always guaranteed to have successful trades with exactly the same profit margin, and not al the brokers provide such kind of leverage.
Can I Trade Forex For Free in South Africa?
One of the ways you can start forex trading in South Africa, for example, no deposit bonus, which is quite challenging since here you do not have any financial support from the broker, rather you are all on your own in terms of the invested capital. In addition, some broker put limitations on the withdrawals, which mean that you need to trade quite hard to meet the requirements of a withdrawal.
Another way is by taking the bonus on deposit option, many brokers offer a starting deposit bonus, which is mainly an amount of money the trader receives when they deposit for the first time, this one is not totally for free, but it is a very helpful tool to start with and to grow your capital until you can be totally independent of the broker’s help.
Traders can also use the demo account option, which is totally for free, but in this one, you are not trading with your real money, you are using virtual money provided on the demo account giving you the freedom to try around different trades and options if it is your first time trading and you want to see how it looks, it is also useful to test out a new strategy for free.
How To Start Trading If I Have The Money?
Once you have the money for forex trading, there are some things you need to look out for, in order to guarantee yourself secured trading with a trustworthy broker in South Africa, to start generating your money from trading in currencies.
Step 1: Find a good broker
This is probably the most important step because the last thing a trader would need is to fall victim to a fraudulent broker, there are many unreliable and scam brokerage that claim their credibility and call themselves brokers, but you can never get your money from them.
To find a reliable forex broker in South Africa, it is important to start reading the reviews on the broker beforehand, checking the background of this broker if they have any history with scam or illicit activities, search for the legal registration of the company or the license and check by whom is it approved.
There are some licenses that a legitimate broker shall acquire in order to perform a trading activity such as FCA, ASIC, CySEC and etc. and if a broker fails to provide such documents there is a chance that the broker is unregulated and cannot be trusted.
Step 2: Get educated about the market
It is very important to explore and read more about the market, and what are you going to trade with, regardless of how trustworthy is the broker, you need to know where are you putting your money, and what are options are used for trade.
The more you educate yourself on how to start forex trading in South Africa, the better you understand how to read the trading platform, how to navigate there, and potentially watch out for any suspicious activity in the trading
Education is part of the investment that you put, similar to putting the money for the trading capital in your trading account, you are investing in yourself to learn more to be secured.
This will also give you the chance to explore other markets besides the foreign exchange market, what are other markets exist and which one might be appealing for you, and what are the worldwide events and their effect on the global economy.
Step 3: Grab a good bonus
Forex trading brokers in South Africa offer different types of bonuses to attract traders to their platform, these bonuses can be in the form of discounts on deposits, discounts on commission fees taken by the broker, or it can be an amount of money as a gift that is given for new traders upon their first deposit.
Bonuses are attractive tools for traders, based on which they choose prior to selecting the broker. The most form of bonuses can be an amount of money that is gifted on the first deposit, which can be used for the first trade, so it is a good thing to consider while searching for the right forex broker in South Africa
Step 4: Start Trading
Once you are all set, you have found a reliable broker and made sure they are licensed and regulated, you learned a lot about the financial markets and how does forex market works, and got a generous bonus that can help you in your first trade.
You are ready to go, start trading, select the currency pairs that you find the most profitable. The majority of traders go for the historical USD/EUR pair because these two currencies represent the biggest two economies and they are highly associated with global events, so any news whether political, economic, or technological, will definitely affect how this pair will fluctuate.