Is CFD trading legal in South Africa?
Yes, it’s legal! CFD are available in south Africa, as legislation is similar to that of the UK and Europe. Today there are many CFD brokers which are allowed to operate in south Africa and to accept clients from the country. This is a huge advantage that US traders still don’t have, since CFDs are not yet allowed in the United States, and even forex trading is so controlled that it only is available at limited leverage. South Africa along with many other countries allow CFD and full forex trading, offering their investors unique trading potential. What makes south Africa great, in economic terms is:
- Competitive economy
- Lower living costs
- Good, competitive infrastructure
Apart from classic markets, provided through CFD instruments, many of the brokers also offer CFDs on Bitcoin. CFDs are much better to trade than the actual crypto coins themselves, through online crypto exchanges, because your funds are much safer in a regulated CFD broker, and moreover they cannot be stolen by hackers. Whereas funds kept in actual digital coins can be hacked at the exchanges. Traders can do all of their trading through CFDs, in the safest way possible. And this is another huge, really overlooked advantage of CFD traders, that traders in USA still don’t have. US traders cannot trade crypto coins at large size, an they are advised to only invest up to $500. Whereas CFD traders can catch all the action, and they can commit much more money.
Cryptocurrencies are important, they are the beginning of a revolution, and that’s why the CFD brokers took notice. It pays to stay informed about these, and to carefully study cryptocurrency trading through CFDs. As the same brokers will offer more and more of these major cryptocurrencies. Anyone not knowing how to trade through CFDs will be at a disadvantage soon, because of the cryptocurrencies alone. Not to mention the classic assets which are already very important in every retirement investment portfolio.
How to Make Money in CFD Trading in South Africa
South African traders and investors are similar to UK traders and investors. And many of them are already familiar with UK stocks, and with widely traded commodities. Many of them do invest outside of south Africa, through CFDs. They also trade forex and all kinds of available assets through CFDs. As a country, south Africa is still a developing country compared to the UK. However it is the richest and most industrialized country in Africa, which has resulted in many of its citizens having a relatively good income, or even becoming rich. The point is that many average citizens can now afford to trade the financial markets, and actually they can afford it better than most people in the UK or other developed countries. A big factor in this is personal income compared to living costs. And then how one can afford financial trading through CFDs, at a trade size that makes sense. South African traders who have even basic education are actually financially better off than many people in the UK.
Regardless of one’s exact income, CFD trading can do amazing things. If trading can be done with $5000 or more, and the trader has a proven strategy, then they have advantage. They stand to make money month after month, and they can afford to live on less money relative to traders in the UK or the rest of Europe. When you are under extreme pressure to make ends meet, you are far more likely to lose money trading. I do believe that most losing traders in the UK do make emotional trade decisions because of the extremely high living costs in the UK. The same traders perform much better when living in a cheaper country.
The best way to make money in south Africa, is to focus on forex and commodity CFD trading. This is by far the best markets to be in, and it makes sense. Because they can use the same experience to manage other investments which are related to these commodities and currencies. The main benefit in south Africa is the relatively lower living costs, and the wider range of choice for accommodation. These factors allow a trader to have the same comforts as a European trader, but with much less stress and less haste to win. In any case it’s important to plan your trading strategy according to your budget, in south Africa, and according to local investment opportunities in the area. Investments that are related to say EURUSD, or some gold mining company in America, which has invested in south Africa. This way you will have better understanding of how market price is likely to move in the future. As opposed to trading a totally unknown asset. Successful CFD trading is about:
- Gaining a market edge (knowing something that others may not know)
- Patience (not trading hastily, in an effort to cover the running month’s living costs)
- Comfort (not risking too much money)
I believe that south African traders do have an advantage over European traders, especially compared to traders based in the UK or France, where living costs are excessive. And there are more factors relating to the local industries and investments, because these can be analyzed and combined with CFD trading. Remember that most good CFD traders start out as stock investors, and they always have long stock portfolios. There are more countries that are also affordable for foreign investors, but they are not as welcoming as south Africa is. Therefore one has to be careful not to judge a country based on economic growth potential alone, but also on how friendly and cooperative it is to foreign investors. Because these investments related directly to stock investing and commodity trading. And these are the first reasons why investors need CFD trading, in order to enhance their own investments.
List of CFD brokers in South Africa
UFX was established in 2007, and is a proven CFD broker that has done very well so far. It is regulated in Cyprus by the CySEC, and it also conforms to the EU MiFID directive. It offers all the latest, including Bitcoin trading, the latest version of MetaTrader4, educational tools, market analysis tools and even sentiment tools. Most professional traders who trade through UFX trade precious metals and selected currency pairs. But there’s much more to trade than these. It’s a broker of high standards and it is aimed at serious traders. That’s why minimum deposit is $500, and minimum trade size is also higher than that of other brokers. Nonetheless all serious traders do trade with more than $500 after few weeks.
South African traders can use AvaTrade. Established in 2006, AvaTrade is now regulated in Ireland, in the UK and in Cyprus. This broker also offers all the popular markets plus more ETFs and various stocks. It can meet the demands of commodity traders and specialist investors who need specific ETFs and related markets. AvaTrade also offer the MetaTrader4 platform in web based form, making access to your trading account possible from any device, this is quite unique.
24option was originally in the binary options, but now it has expanded to professional CFD trading, taking good care of new customers and beginner traders. Through educational tools and support. It was established in 2010, and today it is regulated by the CySEC in Cyprus. They offer a very good platform, plus free trading signals. Which is useful to beginner traders.
eToro offers a wide range of markets, through CFDs. It was established in 2006, and it has been so successful and popular that now everybody may have heard of this broker. eToro doesn’t offer the MetaTrader4 platform, in case you want to use your MT4 tools, you won’t be able to. But this broker offers other things, such as innovative social trading, with very good signal providers, and leading cryptocurrency trading, which other brokers do not offer at this time. So eToro is now used mostly by beginners but also by some advanced traders. Minimum deposit is only $50, and their platform if specifically designed to be easy to use, because beginners find the MetaTrader4 difficult and confusing. Many of the advanced clients, trade Bitcoin there, or simply have become signal providers. All in all eToro offers the following:
- Beginner friendly environment
- All the major, most popular crypto currencies
- Social trading
Plus500 was established in 2008, and is now regulated by the FCA in the UK and by the CySEC in Cyprus. It’s one of the best brokers, and it offers wide range of ETFs, stocks, stock indices, currencies and commodities. Plus500 offers Bitcoin trading, and it also offers low spreads and guaranteed stops (ideal for higher frequency, and overnight trading).