Why Is Forex Trading So Popular in South Africa?
Concerning the global trading volume, the foreign exchange market is the largest globally, with a turnover of $6.6 trillion per day. Even though most of the forex markers are from Europe, America, and Australia, interestingly, there has been a significant rise in Africa's forex market recently. Especially the market is growing rapidly in South Africa, with the highest trading volume in the continent.
According to forex brokers.co.za, the total number of forex traders in South Africa is 200000, leading all countries of Africa.
Keeping in view the growth potential of the market increasing number of people are getting involved in it. Therefore, the popularity of forex trading has also increased considerably in South Africa.
Reasons for popularity of forex market in South Africa:
Are you curious about the reasons for the growing popularity of the foreign exchange market? Here are some weighty reasons of forex trading being popular in South Africa:
Covid 19 pandemic:
People all over the world are confined to their homes due to lockdowns. They shifted to sustainable remote work to earn. Similarly, in South Africa, people turned towards forex trading to make a living. As unemployment peaked during the pandemic, people turned towards work from home. The same trends were observed in South Africa, where people invested more in the currency market.
Booming Internet accessibility:
The easy access of the internet to a greater part of the population in South Africa enabled this growth in the forex market recently. People jumped into the online trading market as the awareness and accessibility to the internet elevated. Internet provided people with the opportunity to grow fast financially by international trading. Thus, a multitude of brokers invested in the market.
Strong regulatory structure:
The Financial Sector Conduct Authority (FSCA) lays the foundation of a strong regulatory framework in South Africa. It is the license provider organization in the country. They also provide regulations that support social, financial trading. Other countries in Africa are currently working to build a solid regulatory framework. South Africa, having already a well-built financial structure, has the upper hand on them.
The currency market has grown exponentially over the period in South Africa. Still, the market has not yet reached a point of saturation. It provides an opportunity for common people to invest in the forex market to generate fast income without any complicated requirements. Therefore, almost anyone can invest in electronic trading with as little money as a few thousand Rands.
Increasing popularity of Rand:
South African Rand is one of the leading trading currencies in the world. It's the 18th most traded currency globally, with a volume of $72 billion per day. The currency is much stabilized as compared to many other markets. Because they produce better financial gains compared to other currencies thus, it's preferred-on currency pairs from other countries like USD/ZAR and the GBP/ZAR.
Rigid rules in Europe:
Europe has one of the biggest forex markets in the world. In 2018 new regulations were imposed on the currency market in Europe by The European Securities markets authority (ESMA). These regulations limited forex retail by limiting the leverage to a minimal value of 30:1. Small brokers have started moving out of Europe to Africa for foreign exchange due to these strict regulations.
Regulators give no limit to brokers for providing leverages in South Africa, unlike Europe. So, they can provide leverage of almost any amount. The standard leverage provided ranges between 400:1 to 500:1. It can even be risky at times, but this is still an attraction for traders because it allows traders who deposit only a few hundred dollars to trade in big numbers.
Brokers who trade in foreign currency usually provide free training and educational resources about how the currency market works. Webinars, seminars are arranged to train people for entering the currency market. Software, tools, news, analysis, and much more resources are provided for free. They enable people to practice schemes without risking any money from their pocket. It is a great way to attract potential traders and popularize the forex market in South Africa.
Fast income on investments:
Forex trading has become a profession for many in South Africa. Because it provides a quick return income on financial investments compared to many other businesses, Africa forex trading makes 5.5 percent of the total market, which shows potential growth in the coming years. It's called to be the fastest possible method to gain prominent income.
Free of geographic boundaries:
The foreign exchange market provides an ease to work from almost anywhere. Any geographic boundaries do not bound exchange currency. Traders can get linked to the online market via a laptop or other devices without having to move to a certain place like other jobs or businesses. This work can be managed from anywhere comfortably. For this reason, this draws the attention of many considering the luxury and convenience of working from anywhere.
South Africa, the Hub of forex trading in Africa:
Brokers have made South Africa their operational Hub of forex trading in the continent of Africa. Leading brokerages like ForexTime, in markets, Hortex, Saxobank have registered with South African FSCA. They have built their offices locally. The FSCA regulations safeguard the investor's interest, contrary to other African countries, and have helped build international brokers' trust. FX and CFD's leverage currently has no restrictions under FSCA, unlike other regulatory organizations like FCA(U.K), ESMA, and ASIC(Australia).
This is an undeniable fact that the Forex market in South Africa has massive potential for growth. FSCA being the regulator, should implement a strong regulations framework to prevent illegal acts and scamming in brokers.
New traders should bear in mind that Forex does provide quick profits, but this is not riskless. It requires a lot of hard work, skills, and patience. One must research these aspects to gain some perspective before entering the market.