The Benefits of Online Forex Trading in Africa

With financial markets becoming accessible to more and more people, Forex Trading Opportunities have grown exponentially over the past two decades. Online Foreign Exchange Trading, commonly known as FX Trading, refers to the practice of buying and selling currency values with the aim of making a profit. Being a global market, FX Trading is conducted all over the world, with New York, London, Tokyo, and Hong Kong serving as the major financial hubs with the largest markets.

Having previously been a preserve mainly of large financial institutions such as banks, multi-national corporations, and the wealthy few, Online FX Trading has become increasingly popular with many who have internet access and a fair knowledge of the basics of FX Trading, owing to its relatively easy entry requirements and suitability for beginners.

Although retail online forex trading has for a long time been considered a secondary source of income, many who have treated it as a primary source of income, have gained financial freedom by participating in it, given that a 9 to 5 job alone, most often than not, does not offer us the financial stability and freedom we desire. Although a 9 to 5 may offer you some job security, that doesn’t seem to be holding much ground in this post-pandemic economic situation we’re faced with now.

In this article, we discuss the benefits of trading forex in Africa, both for individuals and for their respective countries as a whole.

1. A LARGE AND GLOBAL MARKET TRADEABLE 24-HOURS-A-DAY

The sheer size and scale of the online Forex market sits at the top of the list when it comes to the benefits of online trading. As the world’s largest financial market, about $6 trillion on average, is exchanged daily. At ALL hours of the day, traders in every part of the world, are buying and selling currency pairs, making forex a truly global marketplace, with a very wide scope of profitability. In our very first article, How to Make Money from Forex in Ghana, we indicated the fact that, unlike other financial or capital markets, the forex market does not need a physical
location to operate from, but rather, operates via an electronic network of corporations, banks, and individuals engaged in trading one currency for another. This makes it possible and convenient for forex markets to operate 24 hours a day, 5 days a week, across different time

zones and financial centers. What makes this possible is the overlap in trading times of major sessions. Where most stock exchanges are open from 9am-4pm (depending on the country from where it operates), the FX Market operates continuously from the start of the week on Monday morning in New Zealand, till Friday afternoon New York time when it closes. Since it operates this way, the online FX market is not subject to any centralized exchange system; As long as there’s a market open somewhere in the world, you can trade. This is great news for those who
want to start off trading on a part-time basis.

It's the very size of the market that contributes to many of the benefits of trading Forex online; including Accessibility, Liquidity, Volatility, Technology, and Trading Hours.

2. FLEXIBILITY AND WIDE RANGE OF CURRENCY PAIRS

The very first point serves as an excellent springboard for another benefit of trading forex in Africa, which is the ability to participate in trading activities from anywhere on the globe. As already stated above, with market sessions, one is not limited to traditional office hours. Thanks to technological advancements, you don’t need to be tied to a desk, staring at six screens of charts to gain a decent handle on the market. With the additional element of a wide range of currency pairs to trade in, there is the flexibility to trade in your chosen currency pair at your own preferred time. Due to the flexibility Forex trading offers, a lot more people with regular jobs are choosing online day trading as an additional source of income.

If you trade online full-time, you get to set your own hours and be your own boss. You can work from the comfort of your home, making profitable trades, while giving you leverage to spend time with your family and loved ones. Given this opportunity, you’re able to make time for other priorities, which a regular job may not fully allow you to. You can work even when you’re on a trip to some Island; all you need is a smart device with a good internet connection. That is the beauty of forex trading – the ability to make money while on the move, anywhere, anytime.

3. ACCESSIBLE AND BEGINNER FRIENDLY

Yes, you read right. The Online Forex market can be beginner friendly if you make the commitment to acquiring the knowledge and equipping yourself with the required tools. First-Time traders who can only afford to make smaller investments can easily enter the forex market. Trading with the Best Forex Broker grants you access to real-time market pricing, news, price charts, tools, and strategies. As mentioned earlier, accessibility is one of the biggest advantages of forex trading; Compared to other capital markets, it does not require a large initial investment,
making it easy to enter, and accounting for its popularity among beginner and even hobbyist traders.

As a beginner, a good forex broker offers you a range of educational sources and Demo Accounts allowing you to practice and hone your skills on the market without the risk of losing real money. Demo Accounts essentially offer you a “Try-Before-Purchase” test run. They give you the opportunity to get used to a trading platform, familiarize yourself with market movements, and develop a risk management strategy, all without making any financial
commitments, in a simulated live trading environment.

It’s critical to bear in mind, however, that regardless of your investment capital, Knowledge and skill are the bedrock of successful profitable FX Trading.

4. HIGH LIQUIDITY

Online Trading benefits include High Liquidity. In capital markets or trading terms, Liquidity refers to the ease with which an asset can be bought or sold. Combined with the high volumes and 24-Hour-a-Day activity, the global scale of foreign exchange makes the forex market the most liquid in the world of capital markets. In effect, your assets can easily be exchanged with little variance to their value if you you’re dealing in the major currency pairs, including
EUR/USD, GBP/USD, EUR/GBP, or USD/JPY.

If you view a “little variance” as little profit, this may seem counter-productive. But with a strong trading strategy, this liquidity allows you to trade effectively with minimal risk. Ultimately, your approach to risk management, and your predictions, based on intellectual analysis, are the strong determinants of success and what you benefit from Trading Forex online.

5. LEVERAGE AND LOW TRANSACTION COST

Of all the benefits of Trading Forex, and the reasons to venture into it, the availability of Leverage, is perhaps the most appealing, as it allows you to take a high position with a relatively small capital amount. In everyday terms, you could define leverage as an amount your broker allows you to borrow against, in order for you to control a much higher stake than you could have afforded on your own. This could be compared to the down payment you make against a mortgage when dealing in property, for instance.

Aside low capital for entry on the back of Leverage, there are also low transaction costs once you get in. Brokers typically make money from spreads, which are factored into the price of a currency and measured in pips. It’s thus essential to find a broker with low spreads. You can read more about this in our article “Choosing the Best Forex Broker to Trade with”. With as low as $10, Geldex gives you the opportunity to start trading the FX market.

6. PROSPECTS OF HIGH REWARDS

We always look for higher returns when we venture into a business. Trading Forex online offers the prospects of relatively higher rewards, with returns being directly proportional to the risk you take. In that regard, you should be prepared to take risks if you want to earn significant profits. In this sense, we mean calculated risk – Gaining in-depth knowledge of Online Forex Trading, keeping yourself updated with current news and trends, and learning to do your fundamental and technical analysis. The prospects of high rewards that trading Forex online offers you are also made possible by the fact that it allows traders to trade both the market highs and lows; regardless of whether the market is rising or decreasing. You must be able to CORRECTLY PREDICT the movement or direction of a currency (up or down), and you will be able to make a profit.

Online Forex Trading indeed can yield you higher returns compared to other financial or capital markets, but you’re required to have good knowledge about it, as well as patience, analytical skills, and the discipline to consistently increase your profit potential. Lastly, the broker you choose is critical to this. We discussed these traits extensively in our article “Facts to Know About the Most Successful Traders in Africa”. Please refer to it for more.

While online FX Trading is an investment to earn some extra income for individuals, this venture benefits the overall economy of their respective countries. Online trading benefits for a country, such as Ghana, for instance, include income generation opportunities for its citizens. Not only does it create employment opportunities for the individual traders, but also for the staff who will be employed to work in brokerage firms to be established, as well as forex investment funds.

This further widens and solidifies the digital financial inclusion that many African governments have embarked on in recent years, by allowing more citizens to participate in the largest global financial market of foreign exchange through their own trading or investment in forex funds. This way, the citizens’ competence in the regional, as well as the international market, is improved upon, and instead of watching citizens of other countries taking advantage of the global markets, they will become active players themselves and be able to benefit from it as well. Registered companies including investment funds and large corporations can also open margin accounts with brokers, and start trading with their own funds to generate income for their investors.

In view of the above, income generation for the government in the form of taxes from profitable traders and brokerage firms will also be another benefit of trading forex for the country; such as has been done with countries like Kenya, Nigeria, South Africa, Uganda, etc.

In conclusion, trading forex online can be convenient, engaging, and highly profitable; The foregoing benefits can be enticing, but they don’t come without effort. There is a steep learning curve; As such, it is after making the commitment to acquire knowledge and overcoming the hurdles, that online Trading becomes rewarding, exciting, and a flexible job option. To be successful in this venture, you need a continuous thrust for knowledge, efficient capital and risk management, the ability to not allow your emotions to cloud your judgment, and the choice of an
International or Multi-Regulated Broker with a well-established brand.

Brought to you by: Geldex Invest on behalf of Growell Capital.