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Trading Advice for Beginners in South Africa

12 August 2021 | 0 comments | Posted by Louis Schoeman in Money Talks

Trading in South Africa for Beginners

Several financial markets in the world attract a diverse assortment of traders, including stocks, forex, commodities, cryptocurrencies, and several more. Trading in these financial markets can be a great way to diversify any traders' portfolio and profit from specific trading strategies.

Beginners and experienced traders alike must never forget that practice, knowledge, and discipline are crucial to trading and staying ahead of other market participants.

South Africans who are just starting on their trading journey can consult the sections below to get some of the best trading tips and advice which has been sourced from experts in the field, providing them with the information that they need to make the best financial decisions and investment choices in becoming successful traders.

Define your unique goals and trading style

Before any trader can start their trading journey, they must have an idea of the destination and how they intend to get there. This involves having clear goals in mind and ensuring that the trading plan can help traders achieve these goals.

Every trading style has its risk profile, trading strategy, which will require a specific attitude and systematic, strategic approach to trade successfully. It is essential to realise that each financial market is different and will subsequently require a different direction as well.

There is a wide range of tradable markets, including the forex market, stock market, cryptocurrency market, and others. Each of these has tradable financial instruments such as currency pairs, shares, digital coins, and tokens, and so on.

For example, if you cannot bear the thought of keeping an open position in a financial market while you sleep, you should consider day trading, where you trade during the day and close all positions before your trading session ends.

If you have funds that you think would benefit from the appreciation of a specific trade over weeks, months, and even years, your trading style resembles that of a position trader and not a day trader.

Make sure that your personality and unique characteristics fit the trading style that you commit to. Understanding who you are is very important in trading as it can influence the trading decisions that you make.

The broker and trading platform

One of the most crucial choices that beginner traders will make in trading revolves around online brokers. This will entail spending a significant portion of time researching and evaluating different online brokers in South Africa.

One of the most crucial, useful tips for beginners is to evaluate the regulatory bodies that regulate and authorise the online broker.

In South Africa, online brokers must be regulated and authorised by the Financial Sector Conduct Authority (FSCA). South Africans can easily evaluate the status of regulation on the official website of the FSCA.

Beginner traders in South Africa must also explore and evaluate the online broker's trading accounts offered to evaluate how these align with their unique trading needs and objectives.

The daily trading volume of the online broker is also important as it will give traders an idea of the broker's liquidity and their liquidity providers.

Another consideration is the demo trading options offered, especially for beginner traders, market analysis, risk management tools, educational resources that they provide on the basics of forex trading, and the range of markets offered, ensuring that traders have a choice in trading options.

The trading platform that the broker offers is another crucial component as it is the trading software through which trades will be executed when beginner traders take to real trading using capital.

It is important to ensure that the trading platform supports a range of functions and features and the necessary tools to conduct fundamental analysis, technical analysis and get a general idea of what the market conditions are on the trading day.

Make sure you have a solid trading plan and keep to it

A trading plan is a crucial tool in trading financial markets, and it is a system or a set of predefined parameters or rules that traders must follow.

To become a successful trader, the trading plan must be solid; it must consider the trader's experience, financial situation, trading performance, profit potential and target, and other components.

The trading plan ensures that traders trade in a disciplined manner and helps determine when traders enter and exit trades, regardless of whether they have made a profit or experienced loss.

Forex trading involves some substantial risk, and forex traders must ensure that they have the necessary risk management protocols and tools in place.

Recordkeeping is also an important part of the trading plan that involves keeping written notes on both winning and losing trades, giving traders something that they can refer to, either in avoiding mistakes, repeating some winning trading strategies, and adapting strategies to improve future performance.

Consistent trading methodology

Before a trader enters any market, they must know who they intend to decide to execute their trades.

Traders must know what information and investment advice they will need to make the best possible trading decision, regardless of whether they are trading forex, stocks, cryptocurrencies, or other financial instruments.

Make sure you have realistic expectations

One of the reasons why so many beginner traders in South Africa fail within the first few months of their trading journey is unrealistic expectations.

The currency market, amidst other markets, is a very lucrative market where great profits can be earned, but it is not a get-rich-quick scheme or a way to become a millionaire overnight.

It is therefore important that beginner traders in South Africa first determine why they want to trade, what they expect to gain, and how they will go about doing it before they become market participants and put capital at risk.

There is a reason every online broker in South Africa has a risk warning. Many advanced traders have made poor investment decisions that have resulted in losing all their capital with a single trade.

The substantial risk involved with forex trading, trading stocks, and any other financial instruments is a reality that forex traders must realise and mitigate to safeguard their capital from unnecessary losses.

Focus and small losses

Once beginner traders in South Africa have chosen their online broker, and they have registered a real account, they must remember that their money is at risk. For this reason, traders are urged only to use disposal income and funds that they can afford to lose.

Traders should not use money that is needed for regular living expenses. Traders can consider their trading funds as vacation money. Once the vacation comes to an end, the money is spent.

This type of attitude towards forex trading will psychologically help forex traders in South Africa accept small losses, which are crucial to managing risk effectively. By focusing on trades and accepting small losses instead of counting equity, traders can become more successful.

Positive feedback loops

This is created because of well-executed trades according to the trading plan. When forex traders plan a trade and subsequently execute it well, they form a positive feedback pattern.

Success is known to breed success which in turn breeds confidence, especially in the face of profitable trades. Even if beginner traders in South Africa face small losses but do so per a planned trade, they will still be building a positive feedback loop.

This approach is also known to assist in maintaining and understanding trading psychology. It can assist in preventing making haphazard and sporadic investment decisions that may lead to significant losses.

Spend time conducting market analysis over weekends

There are weekend gaps in stock and forex trading when the financial markets are closed. During this time, beginner traders in South Africa can study weekly charts to identify patterns or trading news that may affect their next trading day.

By conducting fundamental analysis and technical analysis on the past trades of the week, forex traders can prepare themselves for market conditions that may present themselves in the next week.

Traders are advised to make use of the trading tools offered by forex brokers and trading platforms to help them conduct in-depth and comprehensive trading analyses.

Keep Printed Records

A printed record is one of the best learning tools for beginner traders in South Africa as they can easily be studied, and traders can add notes. By printing out a chart, traders can easily list their reasons for executing a specific trade, including the fundamentals that sway their trading decision.

Traders can also use the chart to mark their entry and exit points and make relevant comments. Recordkeeping, as previously mentioned, is a crucial part of the trading plan and can serve as a point of reference that can be revisited at any given time.


How much money do you need to start forex trading in South Africa?

All brokers in South Africa will have different minimum deposit requirements. Some brokers offer live trading accounts from as little as 76 ZAR.

How can I start forex trading in South Africa?

You can easily start trading forex in South Africa by learning about trading, the different markets, choosing a market to trade and choosing a regulated broker, opening a trading account and funding your account to start trading.

Is forex trading legal in South Africa?

Yes, forex trading is legal in South Africa and is overseen by the FSCA.

Are there success stories of forex traders in South Africa?

Yes, there are many success stories of traders in South Africa who have made significant profits.

How much Risk is Involved in day trading?

There is a significant amount of risk involved in day trading. However, most online brokers offer traders many risk management tools to manage and mitigate their risks.

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Recommended reading

If you enjoyed this post and have the time to spend diving deeper down the rabbit hole, then we suggest you check out the following posts about improving your finances in South Africa.

Disclaimer: This is not investment advice and is for informational purposes only. nichemarket cannot be held liable for any investment decisions made based on the information given by independent financial service providers. Under the ECT Act and to the fullest extent possible under the applicable law, nichemarket disclaims all responsibility or liability for any damages whatsoever resulting from the use of this site in any manner.

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