WATCH: Navigating Forex Markets and choosing the right FX broker
Is it legal to trade Forex in South Africa? The answer is yes and the regulatory body that governs forex trading is the Financial Sector Conduct Authority (FSCA). While the Reserve Bank's Exchange Control Regulations and Rulings control the flow of money in and out of the country and are applicable to all transactions, forex trading uses a forex broker and not foreign exchange flows occur.
To be a successful SA forex trader it’s important to use a trusted forex broker and make sure you understand to declare your taxes when a profit of loss is made from trading. The FSCA’s website shows a list of South African Forex Brokers but does not provide the finer details of each broker.
Choosing the right forex broker
The best way to find the best forex broker is to look at replicable comparison sites that show FSCA-regulated brokers such as this list of forex brokers in South Africa, the Wikipedia foreign exchange page or by visiting each forex brokers website such as Pepperstone which are in the process of receiving FSCA regulation or FxPro which are currency regulated.
It’s important to note that while forex traders can trade with a regulated or unregulated broker the risks of choosing a forex broker that has no regulation with the FSCA or overseas bodies such as Australian Securities and Investments Commission (ASIC) or the Financial Conduct Authority (FCA) greatly increases the risk of falling for a scam. Even choosing the best South African forex broker for your needs does not mean there are no risks to forex trading as leverage amplifies the chances of losing your money and you can even go into negative balance. Make sure you understand the risks and willing to take them before forex trading.
One of the most established forex broker comparison websites is Compare Forex Brokers created in 2004. It was established after having built a comparison website in the health insurance niche and seeing how it transformed the user experience and improved lead generation they decided to create a comparison website for the Forex market.
The co-owner Justin Grossbard explains that after spending months identifying the different niches within the industry and what clients are actually looking for they compiled their first comparison tables. “Although, we must admit that despite having strong financial knowledge, gaining the information from forex brokers needed to actual determine the best forex broker was quite challenging.”
“Our first comparison tables didn’t last too long. That’s not because they were incorrect or lacked the information our readers were looking for, but rather because of the rapidity at which the industry moves. Forex Brokers are frequently evolving and changing details surrounding many of the services they offer.
“Our comparison tables are not designed to be static. They’re designed to change as the industry changes. New technology, cheaper fees, new regulation or more instruments to trade, our tables are updated all the time to reflect these updates.” He notes that the South African forex broker section was just finalized in November 2019.”
Watch: 5 Things I wish I had known when I started trading:
More about choosing Forex Brokers in a nutshell:
Why choosing a forex broker is so important before forex trading?
Like all financial products, you want to make sure you get what you pay for an avoid a scam. The SA consumers protection act has limited protection so choosing a replicable forex broker is recommend that is FSCA or overseas regulated in UK, Australia or Singapore.
A forex broker also determines many factors such as what interface (forex trading platform) you use, what brokerage (spreads and fees) you will be charged, what safeguards you will receive and leverage.
What Checklist Should You Make When Choosing A Forex Broker
There is forex broker that is perfect for everyone. It really comes down to your forex trading requirements from your risk tolerance, style of trading what you want to trade. A standard checklist that can assist in selecting the forex broker that’s right is:
- What fees does the forex broker charge (spreads/commissions/funding charges)?
Does forex trading platform(s) does the broker offer? Is it easy to use?
What leverage does the broker offer?
Is the broker regulated in South Africa or with a replicable regulator like the ASIC?
What other CFDs products such as cryptocurrency does that broker offer?
Does the broker offer strong customer service?
Does the broker offer safeguards when trading such as negative balance protection?
What Is The Best Forex Broker For Beginners?
Beginner forex traders are recommended to use EasyMarkets based on the fx brokers fixed spreads that bring transparency to trading costs combined with a risk management tool. These tools include guaranteed stop-loss orders and Deal Cancellation allow a currency trader to exit within an hour of the trade. The full beginner forex broker table and the EasyMarkets broker review can be viewed on this dedicated page.
What is the best forex broker for expert traders?
Advanced currency traders want a fast execution broker with Pepperstone and IC Markets two established Australian forex brokers leading the space. Pepperstone as mentioned earlier are also in the process of receiving an FSCA license. Both brokers offers ECN type spreads and low commissions and a higher leverage rate of 500:1.
Understanding the risks of forex trading
Currency trading is a leveraged product which means that an fx broker will amplify your deposit up to 500 times. This leverage means there is a real possibility of losing your money so it’s important to understand the risks involved and consider options such a practice accounts. To check the credentials of people or businesses offering financial services and advice, call toll-free 0800 203 722 or visits the https://www.fsca.co.za/