Africa is arguably home to the fastest-growing forex market in the world, with an estimated 1.3 million traders now active in the region, according to Finance Feed.
Within the continent, South Africa and Nigeria continue to lead the way, with both nations constituting a large percentage of the total number of forex traders. Other prominent FX African nations include Namibia, Angola and Tanzania, with the total number of traders likely to increase incrementally in the coming years.
But does the FX market really offer a viable investment opportunity for young African investors, and what are the best ways to leverage this opportunity?
What Opportunities Exist in the Forex Market?
There are numerous ways in which the forex market is advantageous from the perspective of African residents, whether they regularly invest in other markets or are simply looking for an additional stream of passive income in the wake of Covid-19.
For example, this market offers unparalleled leverage to investors, with even reputable brokers offering leverage of up to 100:1 in some instances. This enables investors to open and control potentially large positions with a relatively small deposit, creating an accessible market that can still be highly profitable.
This advantage can be enhanced through the provision of a forex account that offers a welcome bonus, which affords traders free capital and allows them to take their first real money plunge into the marketplace.
Of course, major currencies pairings (which pit the USD against assets such as the GBP, Euro and Japanese yen and account for around 68% of daily trades) are also highly liquid.
This means that they can be easily bought and sold in the real-time marketplace, creating an opportunity for traders to profit and speculate even in challenging conditions.
Make no mistake; this also increases daily volatility, creating more frequent and sizable price fluctuations that traders can leverage successfully to their advantage.
How to Get Started in the Forex Market?
To succeed as a forex market trader, your first step should be to learn about its functionality and the underlying laws that govern change.
You can learn this through various online resources and seminars, creating a genuine sense of determinism that recognises the underlying laws and triggers that impact price shifts on a daily basis.
From here, you’ll need to bridge the gap between theoretical knowledge and practical trading experience, using a so-called “demo account” to achieve this objective. This type of account is accessible for a period of between three and six months, while it essentially creates a simulated, real-time marketplace where you can hone your strategies without risk.
This is a crucial part of the learning process for young Africans, especially as it enables them to experiment with variable currency pairs and exotic assets that include the South African rand.
We’d also recommend keeping a trading journal when starting out, so that you can track your successes and failures and learn from these over an extended period of time.