How to open a Forex trading account in South Africa

It’s as if the majority of brokers are looking down on the region, expanding very slowly and carefully. This leads to the appearance of scammers or predatory local brokers who are free to set their conditions.

Luckily, there are still are ways to start trading on Forex in South Africa without paying an arm and a leg in commissions and spreads.

With this guide you are going to learn:

• How to find a decent broker in South Africa
• How to determine your trading style and strategy
• How to pick the best account type for you
• How to make money on Forex in South Africa.

How to find a good Forex broker in South Africa

A lot of South African Forex brokers do not offer the best conditions. They act as if the market is niche and they are already doing you a favour by working with you.

Luckily, some international players started to catch on and have entered the region. The best one is JustForex company – a UK-based broker with pretty tight spreads and rather reliable support. Since they are still entering the market, the level of service for South Africa is noticeably better than for the other countries. There is no guarantee that it will last, but right now they are the best.

How to choose a trading style and strategy

There is a percent of Forex traders that trade for fun; however, the majority of them are doing it for profits. Profit on Forex is more often than not connected to a lot of risks. So, to determine your trading style, you need to determine how much risk you want to take.

Basically, as a newcomer, you have two options: scalping and Price Action. There are other strategies too, but they are more advanced and require experience.

Scalping

Scalping is a highly demanding strategy that depends on making dozens — if not hundreds — of trades each day. It is also extremely risky and tends to cause a lot of emotional stress. Overall, it is the most profitable strategy, but most people can’t handle it for long periods.

Scalping is based on making a minimum profit from each trade but compensating with their overall number. The scalpers take advantage of the newly released economic reports, momentary market trends and sudden price surges. They need tight spreads — or, ideally, no spreads at all. They also need a good connection to the brokers’ servers, since even the slightest slippage in scalping can decide the profitability of the order.

If you want to try your hand in scalping, start with the “lazy river” strategy – it is slower and less profitable than the others but allows for some downtime and is easier on your psyche.

Price Action

Price Action is a slower but more systematic approach that prioritizes stability before the profit. It is based on recognizing the patterns formed by the candlesticks and moving averages, and trading by them.

Since this is a slower strategy, Price Action traders often prioritize good leverage options and reliable analytic reports before the good connection and tighter spreads. However, if you have enough starting capital to cover the minimal trades and can analyze the market yourself, the 0-pips spreads definitely won’t hurt.

Leverage is an ability to trade with larger amounts than your investing capital allows. It increases risks but also increases the profits. Most Forex brokers offer leverage up to 1:3000.

There are dozens of Price Action patterns and even more guides. However, you can start by learning about pin-bars, inside/outside bars and false breakouts. They are more common and often are the only ones that you will see for quite a while.

How to open a Forex account in South Africa

Before you open an account, you need to understand which account you need. In South Africa, Forex brokers offer five account types:

• Practice (demo) accounts are funded with virtual money and are commonly used for training or testing new ideas and strategies. Every Forex trader should start with a practice account.
• Cent accounts multiply all your investments by 100 and divide all payments by the same amount. If you want to trade without leverage and don’t have 100 000 USD — Cent accounts are the best choice.
• Mini accounts have no starting capital limits and are often used for high-leverage trading. Mini accounts are a good choice for beginner Price Action traders, but less favorable to scalpers due to rather loose spreads.
• Standard accounts have a 100 USD minimum starting capital, provide better trading conditions. are used by the majority of traders. A lot of scalpers start with the Standard accounts because they have tighter spreads.
• ECN Zero accounts have a 500 USD minimum starting capital, provide 0-pips spreads in exchange for a transaction fee, and are used by the experienced traders with sizable assets. While some scalpers might be tempted to start on ECN Zero, it is not recommended.

Once you have picked an account type, you need to sign up at Forex broker’s website. For example Forex broker JustForex. Then, verify your identity by providing support with a scan of your passport or another government-issued document. From that point on, you can start trading on a demo account. To trade on the real-money one, you’ll have to top it up first.