With a growing number of Forex brokers in South Africa, there are many options for retail traders nowadays.
This article offers a detailed guide to selecting the best brokers in South Africa for Forex trading based on broker reliability, trading platforms, and competitive fees.
Read on to get started on your Forex investing journey.
Best Forex Brokers in South Africa
Here is our list of the best Brokers For Forex Trading in South Africa 2021. We’ve detailed their benefits and given you our honest opinion on where they might lack.
Plus500 is a clear winner for Forex day trading in South Africa. It boasts over 2,000 CFDs available. This includes cryptocurrencies, forex pairs, options, and more.
Plus500 gives beginners an easy way to test out Forex trading. It offers tight spreads and free deposits and withdrawals. The strong 24/7 customer support is a finishing touch for those wanting a seamless trading experience.
This brokerage has a notable lack of educational resources and research tools. New traders will have to find additional resources elsewhere.
Intuitive mobile trading app
Lack of educational and research tools
Offers a wide range of market instruments
Fast order execution
Free paper trading account
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76.4% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Pepperstone is an Australian company that provides Forex brokerage services to South Africans.
The broker is well-known for its extensive selection of third-party trading platforms. This includes MetaTrader and cTrader. Traders gain access to a range of different trading and crowdsourcing tools.
A downside is that Pepperstone is not listed on the stock exchange. This limits the number of financial assets you can trade. Some financial information is also not made publicly available.
Low non-trading fees
Not listed on the stock exchange
No deposit and withdrawal fees
Financial information not publicly available
Access to third-party trading platforms
Great customer service
eToro is the best overall choice for beginner South African Forex traders. It offers a versatile mobile app that is great for both beginners and experienced investors.
The broker gives you access to a broad range of trading strategies to copy. This includes forex, CFDs, and cryptocurrencies.
eToro offers a range of useful research materials for traders. Paper trading is available with access to $100,000 of virtual money for testing out your trading strategies. A downside is that eToro is on the pricey side when it comes to Forex trading fees.
800+ shares listed on 17 international markets
Pricing on some securities
Ideal for beginners
Disclaimer: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 67% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
IQ Option is currently one of the fastest-growing Forex brokers in the world. With its strong reputation, this trading platform is a safe choice for South Africans interested in Forex trading.
This broker has no deposit and withdrawal fees, which is a major upside. Its offerings also include ETFs and options trading.
A downside is that the firm’s customer service is often slow, especially during busy trading times.
Easy and convenient method of opening an account
Wide range of trading instruments available
No deposit and withdrawal fees
XM is currently one of the biggest, most-regulated market makers in the Forex broker industry.
This broker provides traders with competitively low fees and a user-friendly account opening. There are many educational resources as well as a demo account for beginners.
A significant downside is that there is no investor protection for South African customers. XM also has a limited product portfolio as it only offers forex and CFDs.
No investor protection for South African traders
Low non-trading fees
Limited product portfolio selection
Easy account opening
Great educational tools
As one of the first major forex brokers, AvaTrade has built up a solid reputation over the years. It offers South African traders access to a wide range of 55 different Forex currency pairs.
Opening a Forex account through AvaTrade is fast and easy. There are no fees charged for deposits and withdrawals. It offers user-friendly and diverse research and educational tools.
On the downside, the brokerage charges high inactivity fees which aren’t ideal for passive traders.
Wide range of currency pairs
Easy account opening process
Free deposits and withdrawals
Great research tools
ForexTime (FXTM) is another reliable choice for South African traders. It stands out for its excellent customer service and educational tools. Traders have access to a free paper trading account as well as live educational webinars.
On the negative side, the broker charges high CFD fees. There are also inactivity fees and withdrawal fees.
High CFD fees
Extensive educational tools
Inactivity and withdrawal fees
Fast account opening process
Forex Capital Market (FXCM) offers South Africans a great range of CFD investment products.
This brokerage supports several third-party trading platforms such as ZuluTrade, and MetaTrader4. This platform variety gives you access to an abundance of drawing tools and technical indicators.
A downside is the broker’s inactivity fees, but this only applies if your account is inactive for more than a year.
Supports various third-party trading platforms
Well-established and reputable broker
User-friendly mobile trading app
No commission and tight spreads
FxPro is an ebroker that offers South Africans access to a range of premium trading platforms. These include cTrader, MetaTrader4, and the FxPro Edge platform.
These come with various useful trading tools, educational resources, and top-notch market analysis.
The spreads and fees are not the most competitive unfortunately though. Customer support is also not very responsive.
Several premium trading platforms
Uncompetitive spreads and fees
Top-tier trading tools
Poor customer support
Educational and research materials
HotForex is best known for its market execution, offering tight spreads to South African retails traders.
It features a selection of account types ideal for both professionals and beginners. There is a low minimum account deposit of $5.
On the negative side, there are no other investment products available besides Forex and CFDs.
Only Forex and CFDs available
Wide range of account types
Premium market research
Great customer service
How To Pick a Forex Broker In South Africa?
All forex brokers should be registered with at least one financial regulating body. South Africa forex brokers are regulated by the Financial Sector Conduct Authority (FSCA). Your brokers need to follow all the rules set by the FSCA.
The best brokers will make your account security a top priority. Account security features help ensure that your forex account is protected from growing cyber threats. Features such as two-step authorization should be included.
Currency Pairs Offered
You need to make sure you should a broker that offers the exact currency pairs that you are interested in. The best forex broker will offer traders a wide selection of currency pairs.
Fees & Commission
Stock brokers charge a wide range of trading and non-trading fees. If you’re a retail trader then it’s best to choose a broker with low commission fees. It’s important to be aware of all the fees that your broker charges in advance.
Rollover interest is charged by a broker when a position is held at the end of a trading day. Different brokers might charge different rollover interest rates. Forex brokers with low rollover interest rates are best for beginner forex traders.
Trading Platforms Supported
A user-friendly trading platform makes a big difference to your forex trading experience. The best broker should give you access to premium platforms such as MT4, NT5, proprietary, or cTrader. Some brokers also offer their own trading platforms with unique features.
Leverage and Margin
Leverage is when you use borrowed capital to make a trade or investment. While this might increase your potential return, it increases potential risk at the same time. High leverage generally leads to higher profits or higher loss. This depends on how the trade goes.
Margin risk is the risk that comes with achieving an expected margin. This is the probability that certain economic changes will negatively impact the expected profit margin.
Forex brokers might offer different account types to their clients. You should make sure that your broker offers exactly what you’re looking for. Different account types usually come with different trade fees and account minimums.
Micro or Mini Accounts: A micro account, also known as a mini account, is an account designed for smaller investors to access the forex market. This is best suited for beginner forex traders who only trade in smaller volumes.
Retail Accounts: A retail trader is someone who trades their own money but does not trade for a living. Some brokers cater more for retail traders with lower fees and no minimum account balance.
VIP or Professional Accounts: A VIP forex account, also known as a professional account, is designed for traders who deposit large amounts and actively trade large volumes. These accounts offer custom-tailored services. Account-holders usually get charged lower trading fees and are offered more competitive trading costs.
Demo Account Available
Demo accounts are offered by most online forex brokers nowadays. These are sometimes known as paper trading accounts. This allows traders to invest fake virtual money in real-time markets. This tool is especially useful if you’re a beginner forex trader.
Your forex broker should offer a straightforward deposit process. A simple login method should be available to enter your credit card information. Your funds should be deposited within one business day.
Other deposit methods include bank wiring and transferring money from a digital wallet. Some brokers may offer different deposit options and charge different deposit fees.
Base currency and the ZAR
If you’re a South African trader then you’ll want to look for a broker that offers currency pairs with South African rand (ZAR) as the quoted currency.
Make sure your broker offers a selection of base currencies that you are interested in trading. A good forex broker should make a wide range of currency pairs available.
Forex brokers should cover at least the basic order types. Here are the most common order types that you should be aware of.
Market orders are orders to instantly execute a trade at a current market price.
Pending orders are orders that are to be executed at a specific price at a later time.
Limit orders are another important order type. You place a buy limit order to buy either at a specific price or lower. A sell limit order is placed to sell at a specific price or better.
Stop orders are designed to prevent an order from being executed until the price reaches a specific price.
Stop loss orders are a type of order that prevents additional losses if a price goes against you.
Trailing stop orders are a type of stop loss order that changes as the price fluctuates.
A mobile trading platform is a more compact version of a proper desktop trading platform. Trading is done through an app on your smartphone. You should choose a broker that offers mobile trading if you’re looking for easy to access your accounts on-the-go.
Type of Brokers
Market Makers are brokers that create and control market prices for their clients. They will often take the other side of a trade to fix prices.
Both Straight Through Processing (STP) and Electronic Communication Network (ECN) brokers do not create their own market prices. These brokers allow clients to trade at current market prices and only connect trading parties.
Education and Research Available
Education resources are very important for new Forex traders. These include how-to articles, videos, and community forums.
A good Forex broker should also provide a variety of market research. Access to thorough records of a currency will showcase its performance and potential growth on the market.
Trading Tools Available
You should look for a brokerage that offers you user-friendly trading tools for thorough trading analysis. This includes charting tools, price alerts, and analyst ratings.
Forex trading is often complex with high risk. This is why having a broker with easy-to-use trading tools could significantly help your trading strategy.
A good forex broker should provide a hands-on 24/7 customer support team. You must have easy access to your broker. This is especially important for beginners. Make sure you can quickly get in touch with service staff for urgent advice.
Order execution is how fast your broker completes a buy or sell order on your behalf. Each order is sent through to your broker to be executed. A forex trader with fast order execution time is particularly important if you’re interested in day trading.
Hedging and Scalping
Scalping is a short-term trading strategy where you aim to make a profit by quickly closing a trade with tight pips.
Hedging is another trading strategy that involves placing orders on both sides of a specific currency pair. If both a buy and a sell order are made, then a profit is guaranteed.
Forex Trading Risks
While Forex trading comes with high potential gains, it also comes with high risk. Before jumping in you need to understand the most common risks involved.
Margin and leverage risk is when a sudden price movement in a trade might result in immediate losses above the amount you invested.
Exchange rate risk is the potential loss caused by changes in the value of a currency. This is due to the constant shifting of worldwide supply and demand.
Interest rate risk refers to the profit and loss made by changes in global interest rates. The higher the rate of return, the more profit you make. One of the biggest factors in the Forex market is interest rate changes made by the eight global central banks.
Forex Fees Explained
The most obvious Forex trading fee is the spread. This is the difference between the buy and sell price in a currency pair. The lower or tighter the spread, the less you will spend on the trade. A good Forex broker will make their spreads public for all currency pairs.
The rollover fee is a small fee charged by all brokers for holding a trading position overnight. These are only avoided by opening and closing trades on the same day. If you’re looking for a cheaper broker then you should make sure that their rollover interest rates are low.
Deposit and withdrawal fees
The best Forex brokers charge no fees for deposits and withdrawals. This is an easy way for brokers to make unnecessary money off clients. Some brokers might charge a flat fee, while others charge an amount percentage. This makes large deposits and withdrawals very expensive.
Most forex brokers require a minimum deposit amount to open a trading account. This amount will range from broker to broker. Some will only require a minimum of R50, while others might R5000 or larger deposits.
Yes, forex trading is legal for South Africans as long as you abide by financial laws that prevent money laundering. All profits made from forex trading need to be declared for income tax.
The main way that forex brokers make money is through the spread. They charge a set commission fee per trade. Some forex brokers also make money through non-trading fees such as withdrawal and deposit fees.
eToro is the overall Forex broker for beginners. It provides a range of useful research materials. With its versatile mobile app and excellent crowdsourcing, this broker has everything a beginner needs.
Jabulani Ngcobo, born in 1985, is one of the richest South African Forex traders today. He is a self-made millionaire with an estimated net worth of $2.4 billion. Ngcobo has written a biography called Cashflow Naked which educates readers on managing your finance.