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What you need to know about Online Forex Trading in Zimbabwe

The Foreign Exchange Market is the largest financial market in the world. Bloomberg, a global leader in financial data and analysis, reported a daily currency trade volume of over $6.6 trillion, back in April 2019. This was a 29% increase in volume compared to April 2016.

The Foreign Exchange Market is the largest financial market in the world. Bloomberg, a global leader in financial data and analysis, reported a daily currency trade volume of over $6.6 trillion, back in April 2019. This was a 29% increase in volume compared to April 2016.

24/5 availability, low capital requirements, high liquidity and zero low-entry costs are one of the few factors that has made retail forex so popular among investors.

With the rise of 3rd-party trading platforms like – MT4 and MT5, many low-cost retail brokers have opened in recent times which resulted in the growth of retail forex trading globally. In Africa too, retail FX trading has grown in the past few years and presently there are estimated to over 1.3 million African forex traders that trade in forex daily.

The trading in forex market is done on currency pairs. Traders can buy, sell or exchange currencies based on the current exchange rate of a currency pair like EUR/USD. FX trading involves a lot of risks and traders have to take risks related to leverage, interest rate, economy and counterparty into account before starting forex trading. Also, there are other risks related to human emotions and insufficient knowledge of the financial instrument & market uncertainty.

We take a look at some of the aspects of retail forex trading, the reasons behind its increasing popularity among African investors and the risks involved.

What is Retail Forex Trading?

 

Retail forex trading is a part of the larger forex market where banks, government and companies transact. Retail forex traders speculate on the exchange rate fluctuations of different currencies. Speculators buy currencies with the aim to sell them off at higher price later on.

 

Speculation can result in gains for the traders but the risks involved are very high. This is because, during the period that an investor holds the currencies they’ve bought, the currencies can fluctuate in value due to various reasons which can be hard to predict for most traders.

 

The forex market trade is done on currency pairs such as – the EUR/USD or Euro/US Dollar pair. Here, the base currency is Euro and the quote currency is US Dollar. Presently, the exchange rate of the EUR/USD pair is around 1.18. This means, in exchange for 1 Euro you can get 1.18 US Dollars. The EUR/USD pair is the most traded currency pair in the world.

Why is it so popular among African investors?

 

Africa has seen an increase in retail forex trading demand over the past few years. Currently, South Africa, Nigeria, Kenya, Tanzania have around 200,000, 190,000, 65,000 and 50,000 forex traders respectively. And Zimbabwe too has reportedly over 45,000 traders in the retail forex market.

One of the main reasons for this impressive growth in the region is the establishment of local forex regulatory bodies in Africa like – Financial Sector Conduct Authority (FSCA of South Africa) and the Capital Markets Authority (CMA of Kenya) which created secure & regulated trading environment for SA & Kenyan traders in which they oversee the conduct of the market participants as well as educate local investors about the risks. The FSCA and the CMA issue brokerage licenses as well as function as financial watchdogs over institutions that provide financial services and products.

Moreover, the startup & regulatory costs imposed by the FSCA and CMA on African brokers are much lower than most other regulatory bodies in EU, UK and Australia. This resulted in many local brokers like CM Trading, BlackStone Futures to open & grow their business in Africa and also encouraged big overseas brokers like FXTM, IG, HotForex, Avatrade, Pepperstone to get forex broker license from FCSA & CMA.

These brokers help build the local ecosystem in Africa for new traders by establishing local IB networks, trader groups, seminars where new investors are educated about forex trading.

Apart from above, African forex investors are attracted to forex market due to its unique nature over the other financial markets. This includes high volume, liquidity, low entry costs, ease of deposit/withdrawal options, 24-hour services and on-the-go trading facilities that can be availed by using just a mobile application or any platform of choice. Further, with the rise of mobile internet, social media and digital communications, more and more young people are coming to know about trading and are turning to online investing.

But, this growth has also caused rise to investment scams in Africa, just as there are genuine brokers who aim to provide safe environment to the investors and build a reputation for themselves, there are also some unregulated entities/persons who want to cheat inexperienced investors with false claims and promises.

Risks of Investing in the Forex Market

 

Most of the risks involved in forex trading arise from trading with insufficient knowledge about the markets.

But, most common risk that new forex investors take is trading with an unregulated broker. Not all unregulated brokers pool money from the public with ill-intent. But, in most cases this is their intent and many new investors fall prey to such persons/entities who make huge promises of returns or never invest their money in the markets. So, it is always wise to choose a regulated forex broker that is licensed by bodies like FSCA, CMA, FCA or ASIC.

In case you run into any disputes with a regulated broker, you always have a dispute resolution body to appeal to for damages and seeking legal aid. But this is not possible in case of unregulated entities. So, it best to avoid them and be safe than sorry!

Apart from above, there are some inherent risks associated with retail forex trading. Such as:

  • Market Volatility and Unexpected Movements

 

The forex market is very volatile in nature. This is because the value of any currency is influenced by various economic, political and natural factors.

Any event, whether of local, national or global significance, can have the potential to crash the markets. This is why investors need to stay highly alert and updated, to be able to make a move in case of any unfavorable development.

For example, in the month of March, almost all currency pairs became volatile and some even dropped upto 35% in value. The cause was the outbreak of novel coronavirus. Developing nation currencies took the worst hit and one of the worst affected ones was the South African Rand – falling by around 32% against the US dollar, in the months of March and April.

 

  • Risks of using High Leverage/Margin Trading

 

Margin based trading allows you to trade with only a fraction of the required capital for an investment. It is expressed as a ratio of the minimum amount of money needed to make the investment against the actual amount of capital required for the investment. Most brokers in Africa offer high leverage with low margin requirements to their clients.

For example, for an investment worth $1000, a leverage of 1:1000 implies that you only need to pay $1 as margin to the broker.

Leverage is a double-edged sword. Higher leverage means higher profits, but only if the trade plays out in your favor. If it doesn’t, you can lose just as much as you stood a chance to gain.

  • Over Trading & Investing more than you are willing to lose

 

Due to the volatile nature of the forex market, any trade can go wrong in seconds. If you invest all your money at once, there is a chance that you might end up losing all of it. This is why one should only invest a fraction of the money from their savings and only invest what they can afford to lose.

Risk Management could help reduce risks of a forex trader where trader can determine his/her risk tolerance and make adjustments to their portfolio based on the same. It can be done through tools provided by brokers like:

  • Negative Balance Protection-

Protects you from incurring losses more than the amount you have deposited.

  • Stop-loss Orders-

Protects you from incurring losses greater than your risk tolerance. A stop-loss order can stop a trade if the losses exceed a pre-defined threshold.

However, even with proper planning and use of risk management tools, investors can still lose a lot of money. This is because the forex is much riskier to invest in than other investments like government bonds or mutual funds. For new investors, it is recommended to start trading in small amounts. This will help you to get accustomed to the market and also determine whether or not it is suitable for you.

Is Forex Trading Legal in Zimbabwe?

There is no clarity on rules relating to Online Forex Trading in Zimbabwe as there is no direct law or directive allowing or banning online forex trading activity.

Foreign exchange transactions are regulated by Reserve Bank of Zimbabwe and exchangers must be regulated by bureau of exchange. And trading is allowed to Regulated Organizations through new forex auction system.

Individual Investors are not allowed to invest online as there are restrictions on online & offline foreign exchange transactions. Yet some investors find their way to do so, which is illegal.

There is no regulation for forex brokers in Zimbabwe making it risky for investors. There is no forex broker that is regulated in Zimbabwe and if anyone claims so, take caution.

If you still want to invest in forex at your own risk, you must do proper due diligence on local Forex laws, online investing restrictions in Zimbabwe and on brokers you want to choose. Most globally reputed forex brokers are regulated under different top tier regulations like FCA, ASIC, FSCA and you must only trade with them.

New forex investors should study, analyze the market and strategize accordingly and before starting off with real money, test their strategy in a demo account. Most reputed brokers provide demo accounts to their clients. Demo accounts can help you familiarize with the effectiveness of your strategy and also help you understand more about the trading platform and tools offered by the broker.

Make sure you understand the laws and regulations in Zimbabwe on online forex trading before you invest any money.

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ECB Minutes show no indication of exit discussion – MUFG

Derek Halpenny, European Head of GMR at MUFG, suggests that the release of the minutes from the September ECB policy meeting were pretty clear with the focus still very much on ensuring continued monetary stimulus.

Key Quotes

“The minutes stated that “there should be no doubt” that the Governing Council is determined to execute asset purchases and also emphasised that it would adopt further measures as required to reach its price stability goal. The minutes also showed that the Governing Council felt it was “crucial” to maintain the high level of monetary accommodation.

Add to that, we had comments yesterday from key ECB Council members to emphasise the maintenance of the current stance. Executive Board member Praet stated that recovery would stall if stimulus was removed prematurely while Constancio was more direct stating that the report on the ECB nearing a taper consensus was simply not correct.

So the stance of the ECB is unlikely to change and we maintain that the ECB will extend QE in December at the current pace with alterations recommended by staff committees allowing for an extension. While that in itself might not drive the euro weaker, it certainly limits the upside as we move toward that key meeting in December.”

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Daily Financial News

Is Your Portfolio’s Performance Satisfactory? (WMT, VOO, BOND)

What’s your investment portfolio’s performance? Do you know? Just 57% of U.S. adults are “financially literate,” according to a study from Standard & Poor’s titled the “2015 Global Financial Literacy Survey.” Another study by a large insurance company found that people are more frightened by planning their finances than dying.  What’s wrong?

Part of the problem is structural: Fewer than half of all U.S. states require high school students to enroll in a personal finance course.

(Audio) Portfolio Report Card on a $4 Million Account for T.R.

The other problem is psychological: People are fearful when it comes to saving and investing money.

Once a person has overcome these obstacles and gotten started with their investment plan, how can they know if their investment portfolio is making progress?

The Case for Benchmarking
The concept of “benchmarking” boils down to measuring the performance of your investments against relevant yardsticks. “Relevant” is key, because measuring performance against irrelevant yardsticks will inevitably lead to irrelevant results.

For example, racing a collie against a field of greyhounds could lead observers to incorrectly assume collies are slow. On the other hand, racing each dog against its corresponding breed will result in a more accurate view of canine speed. If your collie is able to easily outrun a field of competing collies, you have a fast dog. And if he/she can’t outrun a pack of greyhounds, it’s mainly because he/she isn’t a greyhound.

Beyond choosing relevant yardsticks, the exercise of measuring investment performance should become a consistent routine for all investors. Why? Because failing to periodically measure your portfolio’s performance, either by choice or by ignorance, leads to a distorted view of satisfactory results. Moreover, just because you’re comfortable with portfolio’s results doesn’t necessarily make the results satisfactory.

Level 1 Analysis
Benchmarking your investment performance is a layered process. Layer 1 is what I refer to as the “big picture” because it examines your portfolio’s investment performance against relevant passive yardsticks using an asset weighted approach. Let’s look at an example:

Portfolio ABC
30% U.S. stocks
10% International developed stocks
40% U.S. bonds
10% Global real estate
10% Money market (cash)

Comparing the performance results of a portfolio with exposure to different asset classes (like our example of Portfolio ABC shown above) against the S&P 500 (NYSEARCA:VOO) is a common mistake. In this example, the vast majority of Portfolio ABC (70%) has non-U.S. equity exposure, which makes an all U.S. equity benchmark like the S&P 500 an irrelevant yardstick for all but Portfolio ABC’s 30% U.S. equity exposure (NYSEARCA:IWB).

Properly measured, the other assets like bonds (NYSEARCA:BOND) and real estate (NYSEARCA:ICF) should have their performance compared to relevant passive benchmarks over the exact same time frame. And together, the asset weighted returns for the passive benchmarks will explain whether portfolio’s performance has been satisfactory or unsatisfactory. Simply put, outperformance over identical time frames is good whereas underperformance isn’t.

Level 2 Analysis
Analyzing investment performance at level 2 is less “big picture” versus level 1. Why? Because level 2 analysis focuses on the performance examination of individual securities versus their respective peer group. Put another way, level 1 analysis is comparable to using a telescope whereas level 2 is comparable to using a microscope.

Below we use level 2 analysis by comparing the performance of Wal-Mart Stores (NYSE:WMT) against its peer industry group, consumer staples (NYSEARCA:XLP). Over the past 10-years, Wal-Mart has gained almost +103% against a +173.10% gain for the Consumer Staples Sector SPDR ETF. In other words, Wal-Mart has badly underperformed its peer group by a whopping +70% over the past 10-years!

WMT vs XLP

Had we failed to use level 2 analysis on Wal-Mart by simply accepting the fact that its stock has gained +102.97%, we could’ve been easily misled to conclude that Wal-Mart’s 10-year equity performance  has been wine and roses. However, our level 2 analysis explicitly shows that Wal-Mart’s 10-year performance record has been substandard compared to its peers.

Because virtually all individual stocks will have a corresponding peer sector group, comparing the performance of a company’s equity performance isn’t just easier, but mandatory for all serious and truthful stockholders.

Summary
The proper way to determine satisfactory investment performance is to use relevant benchmarks over identical time frames. Level 1 analysis examines the portfolio’s asset weighted performance against passive yardsticks, whereas level 2 analysis focuses on the performance of individual securities.

Level 2 analysis can also be applied to mutual fund holdings, however, the fund’s underlying asset exposures vs. its peer group classification are far more important for correct analysis. This is a similar approach I use with the Portfolio Report Card grading system that I invented.

It’s crucial to remember that investment performance is directly impacted by your portfolio’s cost, risk, diversification, and taxes.  And while performance measurement is an ultra important step,  focusing exclusively on historical performance results and nothing else will tell you most of the story, but not all of it.

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EasyMarkets Demo Account Review for Practicing Trading

easymarkets demo account review
    • A 10+ Year Veteran of the Forex Market with a Strong Presence in Europe and Asia
    • One of the Few Brokers to Provide Guaranteed Stop Losses and Negative Balance Protection
    • Deep Product Coverage with CFDs on 95 Forex Pairs and Vanilla Forex Options on 23 pairs
    • Use Exclusive Tool Trade Controller More Effectively, Set Stop Loss and Profit Points For Your Trades
    • Personal Assistance with Trade Strategy and Order Execution from Dealing Room
  • stablished –2003
  • Domicile –Marshall Islands
  • Regulation –
  • Cyprus – CySEC (License Number 079/07), Australia – ASIC (AFSL 246566)
  • Restricted Jurisdictions –United States
  • Ownership –Privately Held
  • Segregated –Yes
  • Broker Type-Market Maker
  • Web Security –Verisign
  • Negative Balance Protection Policy –Yes

The EasyMarkets demo account review platform with a Demo account and experience simulated trading under live market conditions.

  1. No obligations,
  2. no cost
  3. no risk.

Feel the thrill ofEasymarkets Demo Account Review

 

trading the world’s markets, discover our trading platform and see for yourself just how easy we are.

this is the way to improve your techniques and professional traders to hone their skills. Try their trading simulator now for eight days. If you like them you can always open a live account, you’ll also get your lifetime demo account to practice trading strategies before you open live deals

EasyMarkets Demo Account Review Trading Features

EasyMarkets guarantees trade execution at pre-set stop-loss and profit points.  EasyMarkets is able to offer this because of its time tested risk management systems and procedures.  Brokers who do not provide these protections may execute an order at a very different level than your stop levels (also known as slippage), causing you to have much greater losses than anticipated.  Please note that this guarantee is only available for trades placed via EasyMarkets ’s web trading and mobile platform.

EasyMarkets is one of the few brokers with a negative balance protection policy.  Traders can incur a negative balance if the market gaps quickly and the broker is forced to close out open trades at a loss exceeding the account’s equity.  While some brokers begrudgingly forgave negative balances after the CHF crisis on a one-off basis, EasyMarkets is one of the few brokers offer this protection at all times and include it in its terms of service.

This Broker has more in-depth coverage of the markets than most forex brokers.   It offers CFDs on 95 currency pairs, 16 commodities, and 15 indices.  However, its coverage isn’t as broad as other brokers, some of which also offer CFDs on individual shares, bonds and ETFs.

EasyMarkets is one of the few forex brokers to offer vanilla forex options on the same platform.  This means you don’t have to switch to a different platform or broker when you want to options.  You can also use the same pool of funds for your option trades.

This means you don’t have to deal with  the hassle of transferring funds around and avoid withdrawal and deposit fees from other brokers.  EasyMarkets allows you to trade options on 23 currency pairs.  While there are no margin requirements for options, however, you will not be able to sell options unless you have an existing position in the underlying.

EasyMarkets offers up to 200:1 leverage on most currency pairs.  Automated trading available with Expert Advisors via Metatrader 4.

Market Analysis and Education

EasyMarkets provides a number of exclusive tools to help you optimize your trading.  The Inside Viewer allows you to see which are the most popularity traded currency pairs, the percentage of bullish / bearish traders, and the average stop losses and profit points on Easy-Forex.EasyMarkets demo account review

 

Trade Controller is a great tool which aids you in setting and modifying stop loss and profit points for your trades.  Its intuitive visual display allows to see profit / loss levels as both dollar amounts and exchange rates.

EasyMarkets demo account review

You are also given access to Reuters news feeds, exclusive fundamental analysis from EasyMarkets ’s research team, and technical analysis from leading independent research firm, Trading Central.  You can set SMS alerts for fills on limit orders, trade closings, and exchange rate levels.

this Broker has a nice archive of educational articles, videos, and eBooks.  They also have a well maintained YouTube channel where they provide videos on timely topics in the forex markets.  EasyMarkets also hosts the occasional webinar and in person seminar.

easymarkets demo account review Trading Features

  • CFD’s –Forex, Indices, commodities
  • Currency Pairs –95
  • Leverage –up to 200:1
  • Cryptocurrencies –No
  • Options –Forex Options
  • Trading Signals –Yes, Trading Central
  • Automated Trading –Yes
  • Social Trading –No
  • Phone Trading –No

easymarkets demo account review –  Trading Platforms

EasyMarkets demo account review Platforms 

  • Metatrader 4 (PC), Metatrader Multi-terminal (PC), EasyMarkets Web Trader (Browser), Metatrader 4 Mobile (iPhone, Android), EasyMarkets Mobile (iPhone, Blackberry)
  • Metatrader –Yes
  • Mac Software –No
  • Mobile Trading –Yes

easymarkets demo account review –  Customer Service

  • Online Support –Live chat and email
  • Phone Support –Yes
  • Multi-Lingual Support –Yes
  • Personal Account Manager –Dealing Desk Access for VIP accounts (USD 20,000 minimum deposit)

easymarkets demo account review –  Account Options

  • Minimum Initial Deposit –$25
  • Base Currencies –EUR, GBP, USD, CNY, AUD, PLN, ILS, ZAR, NOK, JPY
  • Minimum Lot Size –5,000
  • Account Types –Standard, Premium, VIP
  • Payment Options –Visa, Mastercard, Skrill, Bank Transfers

Safety and Security

asy-Forex is a respected veteran of the forex industry with 10+ years operating history. Its parent company is a privately held company domiciled in the Marshall Islands. EasyMarkets has offices in major financial centers around the world including London, Shanghai, Limassol, Warsaw and Sydney.

EasyMarkets is currently regulated by CySEC in Cyprus and by ASIC in Australia. They previously held coveted US licenses but decided to withdraw in 2010 after regulatory capital requirements were increased twenty fold during the recent financial crisis.

Over its more than a decade long operating history, EasyMarkets has been subject to a few small regulatory fines from CySEC relating to its advertising practices in 2010 and compliances lapses in 2009. There is an Israeli class action lawsuit alleging that Easy Forex provided investment advice without proper licenses.  There was a similar suit in 2010 that was subsequently settled out of court.  Overall, there hasn’t been regulatory action in recent years and the issues above didn’t endanger client funds or integrity of EasyMarkets ’s trading system.

Customer funds are held in segregated accounts in a number of reputable European banks and ANZ bank.  Online payments are secured by Verisign and EasyMarkets is subject to yearly audits by PriceWaterhouseCoopers.

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Trading Forex, Stocks and CFDs carries risk and could result in the loss of your deposit, please trade wisely.

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