Top Forex Brokers and CFD Platforms in South Africa for Forex Trading
Foreign exchange trading, or Forex trading, has always been one of the most popular opportunities in modern times, and thanks to technology, it is now available to anyone, any time. It is no surprise than that it caught the attention of one of the largest and fastest developing web markets of today – South Africa.
Thanks to the meteoric rise of internet users in South Africa, many of its citizens have been introduced to the world of Forex trading.
With the average monthly income being close to 10,000 Rands, according to 2016 numbers, thousands of South Africans have turned to Forex trading as a way to supplement their income, or even make a living out of it. And given the liberations that the Reserve Bank has introduced in past years, it’s hard not to be at least tempted into trying your hand at Forex trading.
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1st
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Deposit: $10 Leverage: 1000:1 |
  
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2nd
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Deposit: $50 Leverage: 1:50 |
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3rd
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Deposit: $5 Leverage: 30:1* (T&C apply)Leverage depends on the financial instrument traded
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4th
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Deposit: $100 Leverage: 1:30 |
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5th
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Deposit: $50 Leverage: 1:1000 |
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The South African Rand is, unsurprisingly, one of the most popular assets to trade on by South African traders, with most Forex exchanges offering it as part of the USD/ZAR and GBP/ZAR pairs. The advantage of knowing major market influences like the unemployment rates and industry growth in South Africa but also having access to global events, gives locals an advantage that other foreign traders just don’t have.
Legality of Forex Trading in South Africa and the FSB
When it comes to the legal framework, the legality of trading foreign currencies in South Africa isn’t quite as straightforward as it is in other markets, but it’s nothing you can’t wrap your head around. Basically, South Africa doesn’t specifically regulate Forex platforms as much as it does regulate the outflow of cash from the country. The South African nation is one of the few countries in the world to have set up a system of exchange control, and the supervisory body that oversees this system is the South African Reserve Bank (SARB).
Under this system, every transaction in South Africa which involves the movement of money in and out of the country is the subject of the exchange control system, with no exception. The system allows for payments to be made under specific circumstances, but any transfer of money to a foreign party must be reported to the SARB, which is exactly what most deposits and withdrawals at Forex brokers are.
As an individual, you have several circumstances under which you are allowed to send money. The only circumstances that apply to sending funds to Forex brokers is the annual offshore investment allowance and the single discretionary allowance. The offshore investment allowance is 10 million Rands per year, while the single discretionary allowance is R1million. Combined, this gives any trader from South Africa an allowance of 11 million per year. On the other hand, if you’re a business entity, you will have other options at your disposal.
Most brokers offering their services to South Africans will be regulated by internationally reputed regulatory bodies like CySec (Cyprus Securities and Exchange Commission) and FSA (Financial Services Authority) while there are but a few, if any, regulated by South Africa’s Financial Services Board (FSB).
The FSB is an independent body that oversees financial institutions in the country that are not part of the banking sector in order to protect the users of such institutions. As such, it is the only body you can turn to in case of any disputes. However, licenses from CySec, FSA, and other trusted regulators gives you the same level of protection, which is particularly useful considering the FSB has rarely been involved with Forex brokers.
Finding a South African Forex Broker – What to Keep in Mind?
When choosing what broker to use, the first thing you need to consider is whether the broker is licensed and registered with any relevant body or not. Needless to say, you should always choose brokers that hold a license to make sure you have the best trading experience. And apart from the license, the second most important thing to keep in mind is the quality of your broker’s offer. In short, it all comes down to having the right:
- Currency Pairs
- Spread
- Platforms
- Leverage
- Bonuses
Unless you are planning on only trading Rand pairs, you should choose a broker that can offer more trading variety rather than just the standard offer. In general, most brokers will offer anywhere from 30 to 70+ currency pairs that range from the most popular currencies like the British Pound, Japanese Yen, US Dollars, and Euros, to other less explored options like the Ruble and Rupee. Most beginner traders go for the more familiar currency pairs like the USD/EUR, since they come with tighter spreads as result of their trading popularity. However, that is not to say that you can’t get pairs like the ZAR/USD. On the contrary, there’s plenty of value to be found in this market.
In short, it’s all about finding a combination of the right currency pairs with the best possible spreads. In today’s competitive industry, many brokers try to attract traders by offering better spreads than their competition. That’s why it always pays off to compare before you sign up.
The trading platform is another important step in the process, especially if you’re used to one platform over the other. Most brokers will offer from one to several popular platforms like the MT4, while some will even develop their own. The easier for you to understand your platform and tools, the easier will it be to start earning money.
The leverage offered by Forex broker can range from something as small as 10:1 to over 900:1, depending on the broker. A 10:1 leverage means that you can trade 10,000 Rands amounts for a R10 deposit, while higher rations will give you better opportunities. However, taking leverage is also risky and can lead to substantial loses, and as such it’s better left for the more experienced trader.
And lastly, if you want to enjoy more than tight spreads, pair variety and good leverage, you might also want to check out the bonus offer. Another way in which brokers compete against each other is by offering sign up and loyalty rewards to their customers. Some brokers will offer no deposit rewards while others will have additional promotions like trading competitions with lucrative prize pools, or similar incentives. Choose what speaks to you most.
Other Important Aspects
When picking your South African Forex broker, there are also other important factors, apart from the trading offer and license. And although these are not the most crucial of features, the following are still vital to having the best possible trading experience with your Forex broker:
- Payment methods
- Fees
- Resources
- Support
The payment methods offered by your broker are important, because some methods have a much faster processing time and fewer fees than others. While e-payment providers will usually process your withdrawals in up to 24 hours, banks might take anywhere from 3 to 7 days to do to this.
And depending on the broker, you might also be charged fees for withdrawing money out of your Forex account. While this is no longer a standard practice in the industry, there are still some companies that do this. There are also some brokers who charge account maintenance fees and apply other additional charges. That’s why it’s important to consider the fee structure, so that you can avoid any surprises down the road.
Resources are yet another overlooked factor that is just as important as any other feature of your Forex broker. Keeping yourself updated and informed can make a world of difference when trading foreign currencies, as most major market events can be foreseen, to some length. And apart from news and market insights, it’s also always a good idea to have valuable tutorials like video lessons and webinars at your disposal.
And finally, a good customer support team that’s always available will mean less time lost on resolving issues and more time spent on taking advantage of market opportunities. Apart from standard support channels like e-mails and contact forms, it’s also useful to have access to a direct phone line and live chat.
FAQ
The regulatory body for non-banking financial institution is the Finacial Services Board (FSB), although they have rarely issued licenses to Forex brokers. But some brokers hold licenses from other internationally trusted bodies like the CySec and the FSA.
Profits from Forex trading is taxable, just like your normal income, based on the applicable tax rates. You should also know that you can list your profits on your ITR12 income tax return under foreign income.
Yes you can. A number of leading Forex brokers of today offer the South African Rand as part of the USD, EUR and GBP pairs. Some brokers might also pair it with other currencies.
This depends on the broker. Most leading Forex brokers won’t charge any fees for trading, although they might charge additional fees for account maintenance, withdrawals, etc.
The Rand is one of the most popular currencies mainly due to the fluctuations it has seen over the past years in its value against the Dollar and Pound. In recent years, ZAR trading has accounted for 1.1% of the global currency trade, with most of the trading coming from other countries, rather than South Africa.
