After learning what forex trading is, one of the questions you will have is how you can open a forex trading account in South Africa. In this article, we will explain to you what you need to do, step-by-step.
Four Easy Steps of Opening A Forex Trading Account in South Africa:
Below is a summary of the steps you need to take to open a forex trading account.
- Step One: Find A Suitable Broker
- Step Two: Open A Free Demo Account
- Step Three: Open A Live Account
- Step Four: Fund Your Account & Start Trading
1. Find A Suitable Forex Broker
A forex broker gives you access to the forex market. The increased popularity of forex trading in recent years has led to the proliferation of many brokerages. Unfortunately, not all brokers are created equal and the majority are scams that are out to get your money. This can make it quite tricky when you want to open a trading account as a newbie. You may not know how to choose the best broker and you may end up choosing the wrong one.
We will make it easy by showing you how to find a good forex broker in South Africa.
What Should I Look for in a Forex Broker?
- Broker Regulation
The most important thing to look for in a broker is whether and how it is regulated. Regulators watch over the operations of forex brokerage firms to protect the interests of traders.
There are many regulation agencies worldwide, some of them well respected and others less so. The best brokers will be regulated by at least one of the big three: The United Kingdom Financial Conduct Authority (FCA), the Cyprus Securities and Exchange Commission (CySEC) and the Australian Securities and Investment Commission (ASIC).
Locally we have the South African Financial Services Conduct Authority (FSCA) and it assures that regulated brokers treat all their clients fairly. In their own words, the regulator says
The FSCA is determined to enhance the efficiency and integrity of financial markets, promote fair customer treatment by financial institutions, provide financial education and promote financial literacy and assist in maintaining financial stability.
Choosing a regulated broker will help you safeguard your funds as you can raise a complaint if you feel that the broker has treated you unfairly.
- Minimum Deposit
The minimum deposit that is accepted by a broker is also important when you are starting out. A broker that has a minimum deposit of US$500 (R7000) is not beginner-friendly. Ideally, you would want a broker with a low minimum deposit requirement so you can start by exposing a small amount of your capital to the market.
You can click the buttons below to visit brokers with low minimum deposits.
- Deposit & Withdrawal Methods
Different brokers offer different funding and withdrawal methods including AirTm, WebMoney, Bank transfer etc. You need to find a broker that offers payment methods that you have easy access to. For example, if you want to use local payment methods to fund and withdraw from your account you can use brokers like Deriv, Superforex and JustForex.
- Languages Offered
You may also want to choose a broker that uses the Rand as the base currency. This will allow you to use this currency for deposits and withdrawals. These brokers have Zar accounts Iq Option, XM, Superforex,
- Trading Instruments Offered
Another critical issue is to find a broker offering the trading instruments you want to trade. For example, not all brokers offer Nasdaq trading. If you want to trade it then you would have to find a broker offering specifically that.
You may also want to trade Volatility and Synthetic indices like Boom & Crash, Step Index, V 75 etc. In that case, you will need to open an account with Deriv as it is the only broker that offers these instruments.
3. Open A Live Forex Trading Account
After familiarizing yourself with the demo account you will now need to open a real account. The real account will allow you to trade real money.
Different Live Account Types
Before you open an account, you need to understand which account you need. In South Africa, Forex brokers offer these account types:
- 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 a big deposit then you can try a Cent account. — Some of the brokers that offer cent account include FBS and FXTM
- 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 favourable 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 experienced traders with sizable assets. While some scalpers might be tempted to start on ECN Zero, it is not recommended.
Basic Requirements Needed To Open a Forex Account in South Africa
You will be required to provide your personal information to complete your account registration. Information needed includes the following:
- Name and Surname
- Email Address
- Address and proof of residence
- Create a secure password for your trading account
- Valid Phone Number
- Account currency type
- Country of citizenship
- Date of birth
- Tax ID or Social Security Number (you will be asked to provide proof of this as well.)
- Employment status
A broker will also ask you a few financial questions, such as:
- Your Net worth
- Your annual income
- Trading objectives
- Trading experience
The reason Forex brokers want this kind of information is that they want to comply with the law. This is also done to protect against money laundering by clients.
If you have challenges getting verification documents for your real account (i.e proof of residence and ID or passport) you can use Deriv to trade while you sort out your papers. Deriv allows you to trade and withdraw without verifying your account.
4. Fund Your Account & Start Trading
Now that you have your real account in place the next step is to fund that account. You can deposit using local payment methods like bank transfer, Mukuru or even cash using Deriv. Other brokers will allow you to deposit using other methods like Zingpay, MasterCard, Neteller, Skrill, Visa etc.
You can then go ahead and place your first live trade.
If you have any questions on account opening you can write them in the comments below and we will assist you. All the best in your trading journey.