Who Is Leading the Market in Forex Trading?

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The Forex market is one of the most interesting and profitable markets for traders, presenting an appealing alternative to stock markets. It has a market cap averaging $5.1 trillion per day, according to the Bank of International Settlements triennial report of 2016. 

Many traders are enticed because of some of the specific features it possesses, such as 24/7 trading and a high degree of liquidity. However, one still needs to grasp the technical and fundamental details to fully capitalize on trading opportunities.

In South Africa, the growth in the popularity of forex trading has been tremendous, especially in the last decade. Historically, financial markets in the continent of Africa had to deal with a spider web of regulations. With the demand for forex growing, regulatory challenges have eased and better trading conditions have emerged.  According to the Net News Ledger’s guide to forex in Africa, Nigeria and South Africa have been the primary drivers behind this change, both of which are backed up by rising demand and sustained technological advancement. 

More and more prospective traders in both South Africa and Nigeria have turned into real traders as they have gained access to the world of forex. In South Africa’s case, the combination of cheap internet access and user-friendly online FX platforms are responsible for this. 

It is true that internet penetration in South Africa has been fairly low. In South Africa, only a mere 59% of the population regularly access the internet compared to 85% or in some cases 95% for countries in Europe and the United States. However, according to Pew Research’s look at Sub-Saharan internet penetration, it is a reflection of the meaningful progress South Africa has achieved. It is the leader in the continent for this category with an almost 20% penetration growth rate since 2015.

Another thing that coincides with the rise in demand for forex trading is the emergence of Forex online platforms, making it easier for South Africans to access the market. Most popular online forex trading platforms allow users to sign up for their services in a matter of minutes in a few easy steps. Most require an online application to be filled out by the user, who are then provided a user name and a client portal. It’s a straightforward way of allowing users to quickly sign up, begin depositing their funds and start interacting with the forex market in real-time. 

All of these developments form the ingredients for an environment which is significantly more conductive to forex trading, compared to what the situation was a decade ago. There are numerous online forex trading platforms and services which a growing number of South African traders can use to access the forex market. 

Conclusion

In terms of daily forex trading volume, South Africa is currently the market leader. The market conduct regulator of the country, the FSCA, has over 1000 registered financial entities under it. Over the past decade, the FSCA has increasingly focused on improving South Africa’s financial landscape by pro-actively monitoring the market and as well as by educating investors. As a result, there has been an increase in local investor trust and demand. 

South Africa’s Forex market had a trading turnover of around $ 21 Billion and $20.37 Billion per day in 2016 and 2019 respectively according to Net-Gross turnover data by the Bank of International Settlements. Moreover, the average deposit made by South African traders with CFD brokerages is $742 USD per quarter, with around 190,000 active FX traders in the country.