The future looks bright for forex in Africa
With between approximately 1.3 and 1.8 million registered forex traders in the African continent, the user base rivals many of the other continents in the world. South Africa and Nigeria have typically housed the most, largely in part to their wider spread of internet access capabilities. However, the future of forex has increasingly become a democratized concept thanks in large part to the mobilization of trading platforms. It’s not the only reason – Forex has always lent itself to commercialization thanks to several factors – but the trend has shown no signs of slowing down. As the world’s largest trading volume market continues to expand across Africa, can its growth continue?
Cost-effective
The daily volume of forex trading hits close to $6 trillion per day, and no wonder. By far the most liquid of markets, the low spreads and affordable cost of transactions have allowed forex to flourish in Africa’s less-affluent nations. The most important factor, however, has to be the leverage factor in forex. For those with limited resources to invest, forex offers greater freedom than parallel trading markets like commodities, where the pricing can be more restrictive and the trades very simplistic in nature. Increased leverage brings with it a natural increase in risk, which is important to manage. Therefore, the popular option amongst retail investors interested in forex trading is to opt for platforms with very robust educational tools or practice accounts that will help them manage trades more cautiously and understand their own risk appetite better.
Simply Does It
Forex, in a general sense, was perfectly adapted to fit into the African market. Internet coverage, as mentioned, is burgeoning in the continent, however, once established, there’s little else a trader needs to get started. In addition, it’s one of the more simple concepts to understand. Forex pairs are self-explanatory in themselves, and the trading of one currency for another, sometimes within minutes or hours of each other, lends itself to those looking to invest a little time per day. African nations are investing in basic financial literacy that can improve further access. The specialist insider knowledge often demanded in other forms of trading, particularly stocks and shares, is, thankfully, not such a vital prerequisite to take part in basic forex trading.
Forex contains such a rich and diverse spectrum of options that will undoubtedly lead to increasingly higher numbers of new African traders accessing investing. Even those not interested in the volatility typically attributed to forex can find trades in safe-haven assets, foreign currencies that typically don’t fluctuate as dramatically as others, to make longer-term decisions. The barriers to entry are lower than most, but it also offers African traders the ability to trade in some of the most secure and well-regulated currencies in the world like USD and GBP, from the palm of their hands.
With access never having been easier, Africa’s forays into forex will continue to help the region discover increasing economic benefits and personal financial freedom for its people.