South Africa is leading the way in terms of forex volumes. Online trading is more popular than ever, and its spread has been accelerated by the pandemic. Anyone can learn to be a trader, and any trader may succeed by pursuing the right strategy. Here is an overview of trading products offered by internationally acclaimed brokers.

1.   Currency Pairs (Major, Minor, Exotic)

If you have ever travelled abroad, the logic of the currency exchange is intuitively clear. All currencies, be it the US dollar or the South African rand, have ever-changing values. They rise and fall based on different factors, both economic and political.

For instance, collapsing oil prices cause the currencies of exporting nations to depreciate, and vice versa. When a central bank raises its interest rate, more foreign capital flows into the country, strengthening its monetary system.  Traders keep track of these multifaceted drivers through technical and fundamental analysis.

Fundamentals are factors like interest rates, GDP, oil prices, etc. Traders keep track of financial and economic news and act upon them. Their software has special features like the Economic Calendar which summarizes all key announcements. Some traders combine both methods of analysis.

The second school of thought focuses on price patterns. Traders look for regularities which recur. Specific price trajectories on a chart form particular figures like the Hammer or the Morning Star. They tell traders when to buy or sell.

All currencies form pairs, as they are valued against one another. Thus, to foresee the direction of USD/ZAR, you need to monitor the health of the American and South African economies. The price for the pair is the price of 1 US dollar in rands. The former is the base currency, and the latter is the ‘counter’ or the ‘quote’ currency. This is the basis of forex trading.

2.   CFDs (Contracts for Difference)

Contracts for Difference are derivatives — financial securities linked to underlying assets. Their value rises or falls in line with the price for the asset. Forex brokers offer a wide choice of trading products, allowing clients to build multifaceted portfolios to earn more and risk less. Here are the most common types accessible with Forextime:

• CFDs on stocks of the largest corporations like Apple;
• CFDs on commodities like crude oil or wheat;
• CFDs on cryptocurrencies like Bitcoin or Litecoin.;
• CFDs on market indices like Dax 30 or ND100m.

CFDs on indices are linked to the performance of a cluster of companies. For instance, the price for ND100m reflects the successes of 100 top technology giants in the US. This adds another layer of diversification.

CFD traders do not own any physical assets — they only speculate on the respective prices. To profit from Brent or WTI, one does not have to purchase physical barrels. Profit is the difference between entry and exit. All you need is to spot the best moment for selling or buying. The same universal logic holds: buy low and sell high.

3.   Spot Metal Trading

Gold and silver never go out of fashion. Now, you can trade them against majors like the Euro or the US dollar. Common pairings are XAU/USD (Gold/US Dollar) and XAG/EUR (Silver/Euro). The precious metals market is assessed using the same software.

Spot metals are chosen by traders wishing to diversify their portfolios and hedge risks. Gold and silver are safe havens. This is particularly important in times of market uncertainty.

4.   Stocks of Popular Companies

For companies, going public is a way to attract investment. For traders, stocks represent another type of instrument they can buy and sell. Unlike conservative investors, they do not hold on to their assets for months or years. Instead, they buy and sell their stocks frequently, cashing in the profit. Through FXTM, you may access shares of such giants as Facebook, Microsoft, and Alibaba.

The Modern Way to Make Money

Global brokers connect their clients to a variety of markets. The sheer volume of the currency exchange is 6+ trillion US dollars daily! The profit potential is undeniable, but not every trader succeeds. While entry is affordable ($10 with FXTM) and education is free, risks are still palpable.

Fundamental forces driving those markets are beyond any trader’s control. Trading requires strong analytical skills and a willingness to learn incessantly. Brokers deliver a plethora of educational content, but it is up to their clients to use it properly. Free demo accounts unlock unlimited risk-free practice on trading platforms. This stage is paramount.