Is Forex Trading an Investment package for South Africans?

By: Chime Amara

With the daily increase in inflation coupled with other poor economic conditions many South Africans now seek a reliable means of investment. Many have today asked the question if forex trading is an investment package or just a Ponzi scheme. Well, this work seeks to address the question and has offered more insight on how to invest meaningfully into Forex.

Is Forex trading an Investment package？

Yes, forex trading is an investment package. However, it is an investment that comes with the greatest risk. The risks are often so high that the trader could lose his entire capital if not controlled. Forex trading could be less risky if the trader indulges in spot trading. This is because Spot trading offers the trader opportunity to buy and hold a given currency for a long time till it appreciates in the future. This is quite different from CFD trading where the trader only speculates on the prices of different currencies exposing him to the risk of losing investment should the market go contrary to his positions.

However, with proper knowledge of the market structure, a trader could be to make good profits from his investments in Forex.

How to profit from Forex as an investment

To profit from forex trading as an investment package, the following conditions are necessary:

« Learn how to trade: Forex trading is not gambling, not a Ponzi scheme. It requires a proper understanding of the market structure to know when to buy and sell.

« Choose a good broker: The choice of brokers is very important today. ECN brokers have proved to be the most reliable brokers today offering the greatest security for investors' funds. Every trader today is advised to visit wikifx.com to see the list of the recommended brokers for trading.

« Develop a trading plan: A trading plan guides the trader on the best pair to trade and when to trade them.