Forex trading in South Africa might seem like an isolated activity, however, this is not the case. The principles that drive forex trading in SA are the same as those anywhere else because the trading game knows no boundaries.
Forex trading is based on anticipation of the currency market’s future moves. The forex market moves based on supply and demand, market sentiment, fear or greed.
The reasons that attract traders to the currency market are the same everywhere. This article explores why forex trading in South Africa is just as effective as it is globally.
Why Forex Trading in South Africa is the Same as Everywhere Else
Forex trading in South Africa follows a global pattern because the fundamental principles and dynamics of the forex market apply worldwide and are not limited to any geographical location.
The arguments presented here are valid for South Africa and any other country where traders can access a Forex trading account.
Interpreting Local and International Economic Data
A forex trader may prefer to trade his/her local currency. Therefore, unless the local currency is not free-floating, the trader will always be biased to anticipate the moves in the local currency market.
Local economic data helps determine the movement of the currency, such as the Gross Domestic Product, the Unemployment Rate, or the Inflation Rate. But sometimes, it is not enough to create good trading opportunities.
It doesn’t matter where you are located when trading the FX market, as local and international economic data move the market. All you have to do is to pay attention to economic data and capitalize on market movement.
Monitoring the Local and International Central Banks
A central bank sets the monetary policy in the country or region, and its decision strongly impacts the local currency. A South African trader interested in the local currency, the ZAR, should know the central bank’s calendar and when it is releasing its monetary policy decisions. For example, the rand hit a record low in May when the SARB announced a 50bp hike.
But international central banks also move the currency market. The Federal Reserve of the United States or the European Central Bank strongly impacts the currency market as the US dollar and the euro are on the move when the two central banks announce their decisions.
Using Technical Analysis Patterns to Forecast Future Prices
All traders use some form of technical analysis. The beauty of technical analysis is that it only uses past data or charts, and technical studies can be applied to any market or currency pair and from anywhere in the world.
Therefore, forex trading in South Africa is the same as everywhere else.
Final Thoughts: Forex Trading in South Africa and the World
The forex market speaks one universal language from South Africa to every corner of the world.
Forex trading in South Africa is guided by the same principles globally. It is not about where you trade from but how your trading style aligns with the forex market.
