Both locally and internationally, the Forex market is just emerging from being a risky unregulated market to something that may be a viable long-term investment plan. With more regulated markets, legitimate Forex brokers are stepping forward and making this mode of the investment mainstream.
Although, in the case of South Africa, there is no specific regulation for Forex exchanges specifically. Instead, transactions going in or out of the country are regulated by the South African Reserve Bank (SARB). Of course, you may want to use an overseas broker, which will then be under a different set of rules in the hosted country.
The biggest advantage of being a trader from South Africa is that there are legal restrictions on leverage. You can easily find a broker offering a standard rate of 500:1 or higher. Trading with high leverage without experience in the market isn’t a good way to start, though.
Is the ZAR a regularly traded currency?
The Rand is one of the cornerstone currencies in the continent as is commonly paired with GBP and USD, among others. This countries role in international trade, both overseas and neighboring countries, is why Forex trading in South Africa has always been relatively popular.
As for why the Rand is a hot item for Forex traders isn’t about stability or market capitalization. The wild fluctuation the rand has to more stable currencies allows for a wide gap in profit margins for day traders. It is within the same league as the Hong Kong dollar in that respect.
Isn’t Forex Risky?
Some may see forex trading as a form of gambling, but that same logic can be applied to any other form of investment. Just like stocks or cryptocurrencies, it is about supply and demand. If you are well-versed in the current state of the market, you can make money by correctly predicting where the market sways.
Trading very unstable currencies would be the riskiest bit of Forex, with expected losses, unpredictable results or unreliable brokers for a certain currency pair. Sticking to stable currencies would be the safest way to play, but with very marginal gains or losses.
When comparing to the stock markets, Forex trading goes at a very fast speed while having fewer trade costs and limitations. USD trading makes up the bulk of the current market and trillions are traded daily.
With more niche markets, like the Rand, the cash flow is slower but the profit potential is high for those that know the local market. In particular, it is having recent strong growth against the Australian Dollar and New Zealand Dollar.
Day trading with Forex isn’t something that will make you rich, but you can expect some amazing long-term gains if you are a smart trader. It isn’t unreasonable to expect around 10% gains on your capital while trading the ZAR with other stable currency pairs. It would be best to start with small sums of money and to avoid leverage to learn the ropes before diving in with your savings.