13 OCTOBER 2021: “Trading is alive and well,” says Zihaad Israel, SA Regional Manager at CMTrading, who shares his perspective on South Africa’s move to level one. His comments follow.
“On 30 September, President Cyril Ramaphosa announced that the Cabinet had agreed to remove several restrictions and transfer the country from adjusted alert level two to adjusted level one, as the country continues its recovery efforts following the third wave of the coronavirus.
“The move will help companies that have been adversely affected by the restrictions – the tourism and liquor industries in particular. Simultaneously, Ramaphosa urged millions of South Africans who have not yet been vaccinated to do so as soon as possible.
“Furthermore, sporting and cultural activities will be permitted to continue with fewer restrictions. Masks are still required and vaccines are necessary to ensure the economy recovers and employment can be generated, according to Ramaphosa.
“Unfortunately, the Rand’s bullish run has come to an end (at least for now). The global focus is on the United States and the issues it faces as a result of high inflation and slow economic growth. The term ‘stagflation’ has been coined to describe the scenario, which could harm the Rand if it persists.
“Tensions between the US and China are growing, and Evergrande is causing anxiety in the markets. For those who don’t have context, Evergrande is one of China’s largest property developers. In September, investors experienced a shockwave when the property conglomerate struggled to service several major debts. Both this and the trade war are contributing elements to a decline in the Rand, as seen in the local currency and bond markets.
What does this mean for local traders – is the economy improving?
“One industry – trading – is alive and well despite the pandemic. CFD (Contract for Difference) trading is one of those industries simply has to weather the storm during a lockdown. Over 10 million people trade currencies regularly throughout the world and South Africa is one of the countries where online trading is at an all-time high.
“Due to significant dollar strength generated by the anxiety following worldwide economic slowdown and the potential of withdrawal at the start of the Federal Reserve, the South African Rand depreciated by about 15.2 percent versus the US dollar in October, reaching its lowest level since 29 September.
“In addition, the South African Reserve Bank reversed its direction and hiked interest rates until 2023. Meanwhile, the economic prognosis for South Africa is projected to improve, with the economy functioning well in the first half of the year due to rising inflation and the domestic COVID-19 yearly lowest warning of level one.
How can local traders take advantage of this?
“At the start of the global lockdown, there were widespread interruptions in corporate operations. COVID-19 lockdown restrictions were imposed at a time when the market was focused on the US-China trade war, causing global supply chain disruptions. These disruptions such as shipment delays, transportation challenges and an insatiable need for resources required to complete specific manufacturing cycles are detrimental to business revenue and growth. Global investors raced to safe-haven assets as trade shocks took root, stinging emerging market equities and foreign exchange markets the most.
“Despite broad worldwide issues, forex trading has grown and strengthened for a variety of reasons. And as a result, local traders may benefit from a range of advantages, as South Africa's economy is growing considerably and fast, despite the continent's numerous troubles.
“Africa remains one of the most appealing investment destinations, with several global corporations establishing operations across the continent, strengthening the Rand. Many local traders have already noticed a ripe-for-penetration trading sector that provides almost infinite chances for traders of all levels, including beginners, intermediates and professionals.
What are some red flags we should watch out for?
“Whether you're new to forex trading and want to learn more before getting started, or you're eager to jump right in and give it a shot, understanding a few techniques and ideas to make the most of your money is always a good idea.
“You'll be able to make more and more money regardless of how much you invest or how much time you spend trading if you know how to execute while also having a solid risk management strategy in place.
“In South Africa, the common perception of forex is that it’s dominated by con-artists and unethical people whose main purpose is to deceive unsuspecting investors. Most of the forex traders you meet on Instagram, YouTube or on any other social media platform are fraudulent or misappropriating money.
Unregulated trading platforms
“When it comes to CFD Trading in South Africa, having access to the appropriate platform is critical, yet most individuals overlook it. Instead of going with the first broker or platform you come across, take your time and look into your options. Consider the benefits and drawbacks of several alternatives so you can select the one that best meets your requirements – and is legitimate.
Considerations for traders
“Many novice forex traders get into it expecting to become millionaires overnight. They quickly discover that generating money from trading is more complicated than just opening positions and withdrawing any winnings. Traders require a trading plan with years of experience in technical and fundamental analysis in order to succeed in the market. However, the potential is there for anyone to become successful in trading, given the right focus and dedication”.
For more information on CMTrading, visit their official website at www.cmtrading.com or call +27105008026, and one of their friendly staff will assist you.
CMTrading is the brand name of Global Capital Markets Trading Ltd (A Seychelles company, company no. 104785)