How To Start Forex Trading In South Africa

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How To Start Forex Trading In South Africa

What Is Forex Trading?

Forex trading entails buying and selling different currencies to profit from currency swings. Simply put, you purchase a currency when you anticipate that it will increase in value (go up) relative to another currency. You sell a currency when you expect that it will decrease in value (go down) relative to another currency. The difference between the entry and exit prices determines your profit or loss on the trade.

The Foreign Exchange

Foreign Exchange, sometimes known as FX or even Spot FX, is the market where different world currencies are traded against one another. While visiting your bank, you may have noticed ticker symbols for currencies like USD/ZAR, EUR/ZAR, etc. These are the current exchange rates for the various currencies. The forex market, which is open 24 hours a day, roughly five and a half days a week, is the most liquid market in the world. This is the world’s largest financial market, with an average daily trading volume of more than $6.5 trillion. The volume is so large that it would take a major stock exchange, such as the New York Stock Exchange (NYSE), almost a month to catch up to the average daily volume of the forex market. Commercial banks, governments, central banks, institutional investors, currency speculators, and even companies that deal in commodities are among the market participants in the foreign exchange market (wanting to hedge their risks or speculate).

How Do Currency Pairs Work?

The exchange rate between two currencies is known as a currency pair. All currencies are traded against one another on the Forex market, hence the term “currency pairs.” Consequently, when you trade on the forex market, you are trading two currencies simultaneously. As an illustration, the US Dollar is traded against the South African Rand in the currency pair USD/ZAR (ZAR). The US Dollar is strengthening versus the South African Rand when the price of the USD/ZAR currency pair is rising, and the opposite is true when the price of the pair is falling. Other terms include Base Currency, Quote Currency, Majors, Minors, and so forth.