How South Africa is Taking The Lead In Forex Trading

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The forex market has always been an interesting one for traders to look into. On the one hand, it can be an appealing alternative to stock markets, and has some specific features (such as high liquidity and 24/7 trading) that a lot of people find appealing. On the other hand, as we made clear in our article ‘Timing the Forex Market — Can it Be Done?’, you still have to learn some fundamentals and technical details in order to fully capitalise on the market.

What we’re exploring in this piece though is the idea that forex trading is gaining steam in South Africa specifically.

This conversation begins with the fact that forex trading has been on the rise in Africa over the last few years. The continent is famous for its spider web of regulations that have historically made certain financial markets less than accessible. However, with some nations having supplied significant new demand to the forex markets, regulatory challenges have been met, and better trading conditions have come about. Net News Ledger’s guide to forex in Africa noted that this change has been driven largely by Nigeria and South Africa, and the “perfect storm of rising demand and sustained technological advancement” that has occurred in those two countries.

Another way of putting it is that as prospective traders in Nigeria and South Africa have gained more ability to access the world of forex, they have in fact become traders. In South Africa specifically, this comes down to a combination of internet access and easy-to-use FX platforms.

Where internet access is concerned, you may have heard that South Africa has fairly low penetration, and that’s true. In much of Europe and in the U.S., for instance, well over 85% (and sometimes over 95%) of the population regularly accesses the internet; in South Africa, the number is closer to 59%. However, Pew Research’s look at Sub-Saharan internet penetration shows quite clearly that this actually shows meaningful progress for South Africa. The country is the leader in the region in this category, and has seen penetration grow by close to 20% since 2015.

Coinciding with that rise, as mentioned, has been the emergence of FX platforms that make the markets easy for South Africans to access. FXCM’s overview of how to set up an account shows that in just a few steps, a trader can be off and running. There’s a brief online application to fill out, and from that point forward a trader can gain an online username and client portal, where they can deposit funds and begin interacting in real time with the forex markets. It’s about as straightforward as any sort of market investment can get.

Add these developments up, and you get an environment that is significantly more conducive to forex trading than South Africa of five or 10 years ago. Improving regulatory conditions, more widespread internet access, and the availability of simple, trusted trading platforms have together turned South Africa into the continental leader in FX trading.