There are thousands of Forex brokers around the world, and South African citizens can register and trade with all of them. However, traders are strongly advised to stick to brokers regulated by the FSB (Financial Services Board) in South Africa. Regulation is the first consideration traders should take into account before choosing a broker.
Many brokers appear very similar at first, but there are subtle differences which make each broker uniquely suitable for a different type of trader. All of the following brokers are regulated by the FSB and all of them offer demo accounts. These are the first prerequisites in narrowing the list down to the broker that is best for you.
Risk Warning: Trading Forex and CFD is Risky, Your Capital is at Risk.
Here are the top Forex Brokers in SA regulated by the FSB:
Plus500 is a great broker for South African traders. They offer a lot of trading products including the ability to trade CFDs on Bitcoin and various other cryptocurrencies – there is only one account type, and the pricing structure is simple.
This broker also offers guaranteed stops and negative balance protection.
Clients can trade directly via the website or one of their many other trading platforms such as Android App, iPhone App, Windows Phone App or Windows 10 trader.
Sign-up for a free demo account and take Plus500 for a test drive.
Plus500AU Pty Ltd, ACN 153 301 681, is authorized as a Financial Services Provider in South Africa, FSP 47546. Plus500AU’s AFSL 417727 authorises them to provide their services to Australian residents.
IronFx pride themselves on their transparency. They offer three account types: micro with a minimum deposit of $100, a premium account with a minimum deposit of $2,500, and VIP accounts which require accounts of $20,000 or more.
Their proprietary app is IronFx webtrader, and clients can also use the PMAM platform to manage multiple accounts. This broker offers a very wide array of reports for clients to track their accounts. IronFX offers fixed and variable spreads to suit different trading styles and volumes.
FXTM is a fairly generic broker, but they do offer one unique feature. Clients can use Gold as collateral to open trading positions. So for traders keen to own gold over the medium to long term, FXTM is a compelling option.
FXTM also offers a wide range of educational material for novice traders. They offer trading via the full range of MetaTrader platforms as well as their in-house platform. From time to time FXTM offer generous sign up bonuses, so check their website for the latest offers.
AvaTrade is based in Ireland and is a good option for beginner traders. They offer a wide array of educational resources, and provide novice traders the opportunity to follow the trades of more experienced traders.
In fact, they offer one of the widest choice of trading platforms. Their own platforms are AvaTradeAct and AvaTradeGo. AvaTradeAct is Mac compatible while AvaTradeGo can be used on Apple and Android devices. As with most brokers, clients can also trade with MT4. ZuluTrade, Mirror Trader and MQL5 allow clients to copytrade and follow signal services.
AvaTrade was one of the first brokers to offer cryptocurrency trading and still has the widest range of cryptocurrency CFDs.
FxPro is a well-known international broker with offices in Cyprus and London – they do not have a South African office, but are regulated by the FSB. FxPro offers a wide range of pricing plans to suit clients with varying account sizes and trade volumes. While they do offer two proprietary platforms, cTrader, FXPro Markets, they are a favourite amongst clients using MT4 and MT5.
FxPro also offers premium accounts for clients with more than $50,000. Premium accounts give clients access to a dedicated account manager, and access to faster servers if you trade with MT4 or MT5. Premium accounts give clients access to a wide range of expert advisors and other algos to trade automatically.
NB. Don’t confuse FXPro with http://fx-pro.co.za/ a local company dedicated to FX payments and money transfers.
Markets.com is a popular broker which has won awards for customer service. They are not only a FX broker and offer numerous other products too. Clients can trade via MT4 or the proprietary platform, Markets.com Trader.
Their spreads start at around 2 pips, with no commission. This is a good rate for a commission free trading structure. This broker offers a $25 bonus for new sign ups.
Markets.com has been around since 2008 and is based in Cyprus.
IG is a UK based broker with a significant operation in South Africa. They offer forex trading as well as trading in equities, commodities and indices. Most of their client’s trade markets via CFDs and spreads, however they also offer DMA (Direct Market Access) to the Forex market via their Forex Direct platform. Clients can trade using the slick website, mobile apps and MT4.
IG is regulated by the FSB in South Africa and the FCA in the UK. They are also listed on the LSE.
Saxo is one of the oldest dedicated FX brokers and also the largest in the world. They offer trading via SaxoTraderGo, their mobile platform and SaxoTrader a desktop platform. They also offer options on Forex, something few brokers are able to do. Saxo Capital Markets is owned by Saxo Bank who act as a market maker and can ensure liquidity and better prices.
Saxo offer lower leverage than most brokers, and also increase margin requirements with larger trades.
Saxo also offers trading in CFDs, equities, commodities and other instruments. The parent company, Saxo Bank, is based in Denmark.
FXCM is another large international FX broker which has been around for some time. The have three account types: Mini, Standard and Active Trader with minimum required account balances of $25, $5,000 and $25, 000 respectively. The larger accounts have lower spreads, but higher minimum commissions, so the pricing works out well for larger accounts.
FXCM has a proprietary platform called Trading Station, but also offers integration with MT4, Ninja Trader, ZuluTrade. They are actually one of the few FX brokers to provide access to the hugely popular Ninja Trader.
IQ Opton is not your traditional forex broker but due it’s large popularity in South Africa I’ve decided to include it in this list. What do I mean by ‘not your traditional’? While IQ Option is a binary options broker which is a really simple way of trading the markets from Forex to Indices and even several Cryptocurrencies inlcuding Bitcoin, DASH & Ripple.
|IG Forex Direct
||No IG spread, commission charged on sliding scale
||1:66 to 1:200 depending on the pair
|Saxo Capital Markets
||0.2 pips plus commission
||Tiered margining up to a maximum of 1:66
||0.1 pips plus commission
||1:50 to 1:400
||2 pips, no commission
||From zero, with commission
- Regulation is the most important factor when choosing a broker. Next comes pricing, the responsiveness of customer support and the trading platforms offered.
- The leverage a broker offers should be the last factor considered. Trading with leverage of 100 to 1 is very risky, so anything more than that is unnecessary.
- Decide which currency pairs you will trade, the position size you will trade and how many trades you will execute each month. Then look at the pricing to work out which pricing plan is right for your trading.
- Some brokers will advertise very small spreads – but these only come when you pay commission. These commission structures will often entice you to trade too often, and too big. Sometimes it’s best to pay the higher spread and avoid these commission structures.
- There are thousands of brokers around and numerous scams. One of the biggest red flags is when clients struggle to withdraw cash from their trading account. Before depositing money into a trading account, do your research and visit forums and Facebook pages to see if their clients have had a problem getting money back from the broker.
- More brokers are registered in Cyprus than anywhere else. There is a reason for this – Cyprus is the easiest jurisdiction to register a broker. Avoid brokers that are only registered in Cyprus and nowhere else.
What exactly is a Forex Broker?
A Forex broker acts as an intermediary between traders and international currency markets. They do this by providing a platform and capital.
A trading platform provides traders with access to the interbank market. The interbank market is a collection of technology platforms used by banks to trade with one another. The broker platform provides traders with live prices, the ability to execute trades, and tools like charts.
Most traders use leverage to trade, and brokers provide leverage by effectively lending capital to their clients.
What is Leverage?
Leverage, also known as gearing, allows traders to take positions using capital borrowed from a bank. The trader’s margin account is used as collateral against the loan, and any losses are subtracted from the margin account.
There is more than one way to trade with leverage. A margined trading account gives traders access to leverage as mentioned above. Derivatives also give clients access to increased buying power. When a trader buys a CFD, future, option, or spread position, they must pay margin to enter the trade. In this case, the margin is like a deposit against which any losses are offset.
Forex brokers offer leverage of anywhere from 50 to 1,000 times a trader’s margin, though this usually depends on the account size, trade size and volatility of the currencies being traded.
What is a Pip?
For most currency pairs, a pip is the smallest change that can take place in the rate. It will usually be the fourth number after the decimal. If a currency rate is quoted at 1.1515 and it moves to 1.1516, then the rate has increased by one pip.
Some pairs are quoted to five decimal places, in which case the pips are measured in decimals. If the
EURUSD pair is quoted at 1.17895 and it moves to 1.17898, then it has increased by 0.3 pips.
What is the Spread?
The spread is the difference between the buy and sell price. So, if the EURUSD pair is quoted at 1.17485 to 1.17489, the spread is 0.4 pips.
In the above example, a trader would buy at 1.17489, which is the offer (or ask) price. If the trader wanted to sell, they would sell at 1.17485, which is the bid price.
How do Forex Brokers make money?
Brokers either charge commission, or add their fee to the spread. Sometimes they do both.
Commission is calculated as a percentage of the value of the trade. Commission is deducted from a trader’s margin account.
If a broker makes money on the spread, they will quote a wider spread than the spread available in the interbank market. So, if the EURUSD pair is quoted at 1.17480 – 1.17485 in the interbank market, they might quote the rate at 1.17470 – 1.17495. If a client bought at the broker’s offer price, the broker would buy at the lower price in the interbank market, giving them a 1 pip profit.
Why do Forex Brokers need to be regulated?
Forex brokers need to be regulated for two reasons: risk and fraud.
Most traders use leverage. Most brokers have thousands of clients, and all the positions a broker’s clients hold can add up to significant exposure. If a broker does not manage its own risk properly, it can be wiped out if market volatility increases. This would mean the broker’s client accounts can also be wiped out. It also poses systemic risk to the market. Regulations force brokers to take adequate measures to ensure they do not put client accounts at risk.
Brokers are also regulated to prevent fraud. Client accounts and the broker’s working capital need to be separated. If client money is used to run the business, this amounts to fraud. Regulatory oversight is needed to make sure this does not happen.