Forex trading has become a popular pursuit in South Africa, attracting individuals seeking financial freedom, flexible working conditions, and the potential to earn in stronger foreign currencies.
Yes, it is possible to make a living forex trading in South Africa, but it is not an easy and effortless get-rich-quick solution. While many people dream of earning a living forex trading, the reality is that it requires skill, discipline, and the ability to manage risks effectively.
Here’s a closer look at a few points that are good to take into consideration if you are considering making a living trading forex in South Africa.
Why Is Forex Trading Growing In Popularity In South Africa?
Forex trading has gained traction in South Africa for a combination of several reasons. Here are a few factors that are believed to contribute to the growing popularity of forex trading in the country.
Improved online access
In the 21st century, South Africa has improved greatly when it comes to internet connections. Today, a lot of South Africans have a smartphone which is connected to the internet, and this has lowered the barriers to trading. You do not need to move to a big city to access internet infrastructure or higher education, since you can access both trading platforms and educational material online.
A good legal frame work
In South Africa, forex trading is legal, and a governmental agency is responsible for authorizing brokers, oversee them, and go after brokers that do not behave correctly. This has helped traders feel more secure, and it is also turning forex trading into something that more and more people in South Africa now see as a legitimate and worthwhile pursuit.
The FSCA, formerly the FSB, is the government agency responsible for regulating South African brokers.
A high level of unemployment and underemployment
The South African economy is struggling with high levels of unemployment and underemployment, and there are also many people who want to shift from blue collar work to white collar work. In the second quarter of 2024, the official South African unemployment rate was 33.5%.
There are therefore a lot of people who are looking for a way to earn in income, and online trading – including forex trading – is an appealing opportunity. You do not have to make a huge investment to get started, you do not have to go the formal route of higher economics education, and you do not need to have the right contacts and connections to get your foot through the door.
More online brokers targeting South Africa
There are now more brokers that are actively going after the South African market; both international brokers that are offering better tailored solutions to South African traders and domestic brokers based in South Africa that have this market as their main focus. This has translated into a better environment for South African forex traders and it is for instance possible to pick a broker that accepts local South African transaction methods and will let you have a ZAR account if you want to.
The volatility of the ZAR
Many South Africans are acutely aware of the dynamics of volatile currencies and inflation, and this has helped boost a general interest in the currency market – which is now translating into an increased interest in online forex trading.
The South African Rand (ZAR) is a volatile currency and many South Africans – even those who are not fx traders – are exposed to these fluctuations in their daily life and need to learn the basics of how currencies work to navigate the everyday situation. This has prompted an interest in the forex market.
The volatility of the ZAR, and the constant risk of rapid inflation, is also making it very appealing to go online and earn money in another, more stable, currency – such as the US Dollar (USD) or Euro (EUR).
Is It Possible to Make a Living from Forex Trading?
The short answer is yes, it is possible. That does not mean that it is easy or that success is guaranteed. Making a living from forex trading in South Africa is feasible, but it requires a lot.
Here are a few examples of factors that can impact your long-term success as a forex trader:
- Patience: Long-term successful retail forex traders typically achieve small, consistent profits over time rather than chasing a few big wins here and there. Exactly what consistutes “small” vs. “big” depends on the size of your trading capital.
- Willingness to grow your trading capital: You do not need a big capital upfront to get started with forex trading, but you need to be willing to slowly build it up over time through consistent small profits. You need to be able to resist the temptation to withdraw money as soon as you have some extra in the account. Trading with a small account balance is more challenging, especially when attempting to generate a sustainable income, so when you first get started, the plan should be to initially focus on growing your capital rather then try to live from forex trading right from the bat. A larger account balance provides more flexibility, makes diversification easier, and reduces the pressure to overtrade.
- Risk management: The forex market is highly leveraged, and poor risk management can lead to significant losses. Protecting your capital is essential. Even the most skilled forex traders rack up a lot of losing traders, so you need a realistic risk-management plan that takes this in account and makes sure you don´t wipe out your trading account each time the market turns against you.
- Knowledge: Understanding the forex market, trading, risk-management, etcetera is critical to success. You will need to deepen your understanding of many different fields, e.g. technical analysis, market fundamentals, and trading strategies. Forex trading is a not an easy way to earn money. Prepare yourself to devote a lot of time and energy into getting yourself a top-notch forex education. You do not need to take university courses, but you need to be willing and able to go out and find reliable educational material online and study it. Throughout your forex trading career, you need to continue to learn and develop, to stay on top of the dynamic world of currency exchange rates.
Important: While some traders do succeed in making a living from forex trading, statistics show that a majority of retail traders (non-professional traders) do not achieve consistent profitability. Part of the problem is commercials and social media campaigns that are painting a very rosy picture, making prospective traders believe that forex trading is an easy and low-risk way to quickly earn big money.
Challenges of Making a Living from Forex Trading
One of the biggest challenges in forex trading is volatility. While volatility creates opportunities for profit, it also increases the risk of losses. Managing this risk requires discipline, proper position sizing, and effective use of tools like stop-loss orders.
Leverage is another factor that complicates forex trading. While it allows traders to control larger positions with smaller capital, it amplifies both profits and losses. Many inexperienced traders misuse leverage, leading to account depletion.
Emotional discipline is critical. Trading is a psychological game, and sudden emotions such as fear or greed in front of the trading screen often leads to impulsive decisions. Maintaining a clear plan and sticking to it, even during losing streaks and high-stress days, is essential for long-term success.
Additionally, forex markets are accessible 24/5, allowing individuals to trade at their convenience. While this is great, it also increases the risk over overtrading, as traders put in long hours trading thinking that it means they are “devoted to succeeding” and have “a good work ethic”. You do not get paid by the hour when you are a retail forex trader and there is not guarantee that trading longer will make you more money. In most cases, the opposite is actually true, because if you spend too much time trading, you will increase the risk of making poor decisions, e.g. because you are tired, sleep-deprived, or have been concentrating for too long.
A good piece of advice is to put more time into developing your knowledge base and skills, and less time with real-money positions open.
Building a Sustainable Forex Trading Career
To make forex trading a viable full-time career in South Africa, or anywhere else in the world, you’ll need a structured approach and a long-term mindset.
Here are a few examples of points to consider.
Education is important
Forex trading is not gambling—it’s a skill that takes time to learn. Beginners should focus on understanding how the market works, learning about technical and fundamental analysis, and familiarizing themselves with brokers and trading platforms.
Many brokers offer free educational resources, including webinars, tutorials, and demo accounts, to help new traders get started, but is not a good idea to get all your knowledge from your broker. As always, it is better to obtain knowledge from multiple sources and employ a critical eye.
You can find a lot of educational material on forex trading by visiting DayTrading.com and especially their section about forex trading in South Africa.
Develop a trading plan
A trading plan is the foundation of success. Among other things, it should outline your goals, strategies, and risk management rules. For instance, limit the amount you risk per trade (e.g. max 1% of your account) and set clear entry and exit criteria for each position.
Choosing the right broker is imperative
Selecting a suitable broker is essential. You need to stay clear of the fraudsters and the sub-par brokers, and you need to select a broker and trading account type that is suitable for your trading plan and preferences.
A first step to decreasing the risk of fraud is to pick a regulated broker. In South Africa, the Financial Sector Conduct Authority (FSCA) oversees forex brokers to ensure they operate transparently and adhere to the rules for trader protection.
If you pick a broker where the fee structure is unsuitable for your trading strategy, you will quickly spend your bankroll on spreads and commissions. Also check the fees for transferring money to and from your account (both broker fees and transaction method fees). You may be able to save money by picking a broker that accepts local South African mobile payment methods or transfers to and from South African banks.
Do not pick a broker that does not give you access to a high-quality trading platform.
Use a demo account
Use a free demo account to check out the broker, learn how the platform works, and practice trading strategies before committing any real money.
Start small and grow gradually
While the prospect of earning a living from forex trading can be exciting, it’s crucial to start small. Once you transition to a live account, trade with an amount you can afford to lose and focus on building consistency.
Don´t quit your day job. Having a financial cushion is critical, especially in the early stages. Forex trading can be inconsistent, and having alternative sources of income or savings ensures you can cover living expenses during losing periods. Transitioning into a full-time forex trader is only something you should consider down the line.
Maintain realistic expectations
Forex trading is not a get-rich-quick scheme. Building a sustainable income takes time, and losses are an inevitable part of the process. Setting realistic profit targets and focusing on gradual progress can help you stay motivated without taking unnecessary risks.
Tax Considerations
Profits from forex trading in South Africa are subject to taxation. Depending on the nature of your trading activities, the South African Revenue Service (SARS) may classify your earnings as income tax or capital gains tax. Keeping detailed records of your trades, profits, and losses is essential for accurate tax reporting.
Is Forex Trading Worth Pursuing?
Forex trading offers the potential for financial independence, but it’s not suitable for everyone. It requires discipline, resilience, and a willingness to continually learn and adapt. While some traders achieve consistent profitability and make a full-time living, many struggle to overcome the psychological and financial challenges of trading.
For those who are passionate about the market and willing to put in the effort, forex trading can become a rewarding career. However, it’s essential to approach it with a realistic mindset and a focus on long-term sustainability.
Making a living from forex trading in South Africa is possible, but it’s not without challenges. Success depends on education, discipline, and effective risk management. By starting small, choosing the right broker, and maintaining a structured approach, traders can build the foundation for a sustainable career.
It is important to never forget that forex trading carries risks, and consistent profitability requires time and dedication. For those who are prepared to commit to the journey, forex trading offers the potential to achieve financial freedom and work on your own terms.