How to select a Forex Trading app in South Africa that is right for you?

BUSINESS NEWS - You might have heard about forex trading. It is trading on currencies with an aim to profit on movement of currency pairs. It is a popular form of trading instrument these days among retail investors.

With a wide range of online trading platforms and mobile apps available now, forex trading has become more accessible to retail investors.

Forex trading through CFDs or derivatives is regulated in South Africa with availability of various apps that allow FX trading. Due to this, it has become quite popular among retail investors in South Africa.

There are many forex trading apps in South Africa offering different features and platforms suited for different traders and it may be difficult for traders to find that is best fit for them.

Mobile apps provide constant access to trading accounts on the move that help traders to take advantage of unexpected opportunities through their mobile device. While, desktop apps have multiple features suited to advanced traders.

However, choosing an app that fits your needs can be overwhelming if you are new to Forex trading. New traders often make mistake of choosing an app that charges high fees or is not regulated.

There are number of apps providing different features suited for different traders, how to know which is best for you. Well, it starts with selecting a well-regulated broker. South African capital market is regulated by Financial Sector Conduct Authority (FSCA).

Although regulation is important, but it isn’t the only factor you should consider while selecting a forex trading app. There are other factors such as trading fees, tools, and available currency pairs to keep in mind before making your final selection.

To make it easy, we have listed 7 most important factors which a trading app must have.

Regulation and Trust - An App should be offered by a Regulated & Trusted Entity

Regulation should be the most important criteria for choosing a forex trading app.

FSCA, previously known as FSB, is responsible for protecting the interests of investors and traders in South Africa. You can check the status of a broker on fsca.co.za.

FSCA ensures fair treatment of investors by forex brokers and other financial institutions. It also has the authority to revoke a broker’s license if they don’t adhere to FSCA’s regulatory guidelines.

Brokers having licenses from top-tier global regulatory bodies such as ASIC and FCA can also be considered if they are not registered with FSCA. However, it is advised to only choose a trading app that is regulated by FSCA.

Device support – Web based or Mobile or Desktop or Integrated platform

Multi-device support should be the second important criteria for your consideration.

Although web based platforms can be accessed through all the devices, it usually lacks the advanced features offered on desktop or integrated platforms. Mobile apps provide convenience to traders and execute orders while on the go, but even they don’t have all the most advanced features.

These limitations can be overcome by choosing an integrated platform available across all devices, so it provides a seamless experience.

A majority of South African forex brokers offer third-party trading platforms like MT4 or MT5 or cTrader which are available on all the devices including mobile, desktop and web.

App must be suited to your Experience Level and must be user friendly

New traders can feel overwhelmed while trading through a trading app that has lot of features that they don’t understand.

Beginners may choose an app that offers easy to use and understand interface along with necessary trading tools. On the other hand, if you have some experience in FX & CFD trading then choose an app that have advanced features like advanced charting and technical analysis.

So your selection of an app should be based upon your experience level. Overall, we recommend apps which meet these minimum criteria:

Speed - Currency-pairs are constantly fluctuating. The speed of your trading app can be a determining factor of your profit or loss. So choose a stable and faster app that executes your order on time.
Real-time data - Apps offering real-time data and news feed will help you in making an informed decision.
Charting and functionality - Charts are the language of financial trading. Choose an app that offers different charting options along with variety of timeframes.
Security - Your financial transactions and personal details should always be secured.

Trading Fees must be minimum

Another important factor for traders is trading fees.

The trading fees is levied when orders are executed. It can be in the form of commission, spread, financing rate and conversion fees.

Commission - It can be either of the two: fees per trade-volume, and fixed fee per trade.
Spread - The difference between bid (sell) price and ask (buy) price is called spread. Remember, wider the spread, higher the cost.
Overnight rate - A financing/overnight rate is applied when you don’t close your leveraged-position in the same trading day.
Conversion fees - When you trade in or deposit/withdraw in different currencies, conversion fees are charged on the transaction. It can hurt your trading yields if you are a day-trader. You can avoid this by opening sub-accounts with different base currencies. To avoid conversion fees, South African traders can choose a forex broker that offers ZAR Accounts.

Traders must always compare these different types of trading fees before selecting their FX trading app.

Instruments availability – App must offer all required Instruments

There are different types of trading instruments like forex, CFDs, commodities, indices and cryptocurrencies to name a few.

The forex trading app of your choice should offer whatever instruments are you interested in. For instance, if you are interested in currency trading then check how many currency pairs they offer and their base currencies.

Secondly, check what are the fees/charges associated with your different instruments. Probably, your choice should be an app offering plenty of instruments along with lower fees.

Tools and Data - App must offer all Trading tools and market data to help with trading

As a soldier needs weapons to fight in a battle-field, you will need tools to trade in forex market.

Your selected app should offer comprehensive set of tools including - financial newswire, economic calendar, calculators, copy-trading, algorithmic trading, risk management tools, charting and technical analysis, market data and other tools.

Let’s have a look on some of the general tools and its usage.

Calculator - An ideal app should offer range of software to calculate pip, volatility, profit and margins.
Economic Calendar - It helps you to mark the regular financial releases and events which might affect the trade. Central bank interest rates, economic releases, geopolitical events and economic statements are some of the items you probably can mark in your calendar.
Charting & Analysis - The vital part of a trader’s success depends upon his ability to see the patterns in the trading data. There are number of charting and technical analysis tools available with different apps, but some of them are only available on single device like desktop or are for web only. Some of these softwares are provided by independent providers. Some of the most frequently used tools are MT4 & 5, TradingView, JSE’s Trading Services & Systems, CTrader, Ninja Trader and Zulu Trade. Some of them also offer Copytrading.
Trading Journal - It shows the historical data concerning your previous trading orders. You can track your trading orders and study them to avoid the earlier mistakes.

Free Demo Account

A Demo Account enables a user to trade in simulated environment without risking any real money. It helps traders to get acquainted with the trading platform, different tools and build initial strategies without putting their real-money at risk.

A good trading app must offer a free Demo Account.

Bottomline

Forex is considered the largest and most liquid financial market, open 24 hours a day with average transactions over $6.6 trillion per day. Despite forex market offering many advantages such as fewer instruments to analyse and extended market sessions; around 60-70% traders lose their money. Why is so?

The biggest reason for trade losses is unwise use of leverage. Traders should avoid using leverage or even if they use, the leverage ratio shouldn’t be more than 1:5. Secondly, forex trading is inherently risky. Without proper knowledge and experience, there are higher chances of losing than profiting from currency trading.

However, one can avoid unwanted losses to some extent by first educating themselves. Like learning about best forex risk management tools such as stop loss, negative balance protection, risk to reward ratio and others.

New traders can start with opening a Demo account before risking their real money. Other than these, it’s also important to choose a trusted and well-regulated broker. Ensure that your select trading app is highly regulated, and provides the best trading tools along with minimum brokerage and no hidden costs.

Always ensure that you have considered all the factors before entering into Forex or CFD trading. Also, make sure that you compare different trading apps on the factors given in this article before making your decision.

Article supplied by Forex Brokers SA.