Forex and commodity trading have become popular in various parts of the world. Forex is an acronym that stands for ‘foreign exchange’. Forex trading is the act of buying and selling global currencies by exchanging one for another. Currencies are usually traded in pairs and the combination of any two currencies is called a currency pair.
On the other hand, commodity trading involves assets such as gold, oil, gas, metals, and coffee among other products. If mastered well, trading can be a very profitable venture. South Africa is one of the countries that actively participate in trading. Thus, it’s quite easy to find brokers that offer forex and commodities trading.
Forex Trading And Regulations
South Africa has removed unnecessary barriers to facilitate trading in the financial markets. This has given countless people the opportunity to achieve financial freedom. Consequently, the economy of the country has experienced tremendous growth.
Trading in South Africa is regulated by the Financial Sector Conduct Authority (FSCA). Thus, it has instilled more trust in people. It’s a step that has drawn many into forex and commodity trading.
Getting Into Forex and Commodity Trading
Trading is similar to any other profession; you have to be fully invested physically, mentally, emotionally, and financially to become successful. Joining a good brokerage platform is equally important.
Furthermore, it’s important to familiarize yourself with the basics from the very beginning. There are numerous terminologies and strategies you need to learn to be successful. The following are some of the things you’ll commonly encounter in trading.
Common Terminologies in Trading
PIP – it’s an acronym for Percentage in Point which refers to the smallest price increase a currency can achieve.
Spread – the difference between the selling price and buying price.
Leverage – a way that enables a trader to increase their trading ability by opening a greater position with minimal investment.
Margins – minimum deposit a trader has to put to open a position.
Slippage – a small difference between the expected price and execution price. This is mostly attributed to market volatility and execution rates.
Good Trading Practices
All successful traders have certain characteristics that make them excel in the markets. Here are some of the things you should consider adopting as you’re starting your trading journey.
Managing Fear in Trading
Every trade a person enters is often accompanied by risk. Managing these risks usually comes down to one’s personality and mindset. Fear hampers sound trading judgment and impairs exceptional performance. Therefore, you have to learn how to harness your fear to succeed as a trader.
Inculcating Discipline in Trading
Successful traders are very objective and have a specific trading plan which they follow. A trading plan should be goal-oriented and well-defined. It has to have mechanisms of gaining profits and averting losses.
Being Up-To-Date With Market Trends
Rapid changes in the financial market require investors to always be on their toes. This allows them to take advantage of the changes. Additionally, it also helps them to get out of bad trades, thereby reducing losses. This is why professional traders are quite knowledgeable and at par with the current financial market condition.
Traders need to exercise patience and wait for the right setup to enter a trade. Otherwise, taking the wrong setup can easily make them lose the invested capital.
Forex and commodity trading is a lucrative venture which if given time can reap great returns. Although it isn’t hard to learn, a person has to be patient as he or she learns to trade. Persistence, coupled with good strategy will ultimately lead to success.