This article explores the world of Forex trading.
We will seek to demystify Forex by explaining what is Forex trading and how does it work.
We will also take a look at trading in South Africa.
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In this article, you will find Forex trading explained.
Forex Trading is the buying and selling of two currencies in the anticipation that the price will change.
It is a form of CFD Trading, where CFD is speculation on the value of an asset.
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It is important to note that the trader here does not take ownership of the asset.
Unlike stocks, you could easily make money when prices are rising and falling.
Read on to get to know how this is possible.
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Forex also trades in commodities.
These commodities include gold and oil.
Cryptocurrencies are also traded as they are just another form of currency.
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Using FSCA regulated brokers is not a legal requirement, but other recognized organizations should regulate the brokers used.
Avoiding mistakes is key in learning any new craft.
The video below talks about avoiding common pitfalls encountered by beginner South African traders.
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This is a law set that banks and other financial institutions use to curb anonymity in money laundering.
One way of Transferring funds offshore is by applying for a discretionary foreign currency allowance valued at R1 Million.
you’ve got the option to start this process here.
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This means that 1 US Dollar can be exchanged for 14.6971 South African Rands.
The first currency (USD) is known as the Base Currency, whose value is always 1.
The second currency is called the Quote/Counter currency.
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When buying, you oughta pay R 14.6971 to get one US Dollar.
When selling, it means youll get R14.6971 for selling 1 Dollar.
How do you make money?
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Forex has a bunch of terms that could make us ask, how does Forex work?
Below we define the commonly used terms.
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Forex quotes have two prices, the bid and the asking price.
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Rebates - sometimes, brokers reward their customers with a fraction of the spreads.
They can also offer rebates to persons who referred to someone as a reward.
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Size of trade
Micro lot-1000 units of currency.
Generally shown as 0.01 as the Volume in Metatrader.
In the US, for example, 10 pips at this lot size represent 1 Dollar.
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Mini lot- 10,000 units of currency.
Shown as 0.1 in the Volume section.
1 pip is worth a dollar.
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If you trade 5 mini-lots, you make $5 with every pip
Standard lot- 100,000 units of currency.
Quoted as a 1.0 trade size/volume.
It is $10 per pip.
Pip is a small measurement change in currency pair prices.
Usually, 1 pip is 0.0001.
It also gives an explanation on pips.
The additional funds come from the brokerage or a connected 3rd party.
High leverage can give you high profits as well as high losses.
Example:
Lets say your account balance is $100 with a leverage of 1:500.
With $20 you place a trade of 1 mini lot(10,000 units) valued at $10,000.
This allows you to learn about how the Forex market behaves.
Forex trading can be very lucrative for those who work to understand it.
Many forex traders in South Africa have moved from rags to riches.
One of them is Forex Broker Killer, who has a reality show on YouTube.
The video below shows him as well as other successful South African Forex traders.
Check out Episode 1 below.
Before joining the team in 2018, Lynn wrote for Kenyan media platforms and several other websites.
She graduated from the University of Nairobi in 2019 with honours after pursuing a BSc.
She is currently studying for a Master’s degree in the same field.
Lynn specialises in writing celebrity biographies, listicles and teasers for popular TV shows.
Contacts; +254707596322, lynnkandie27@gmail.com
