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How to start trading currencies

by , 06 November 2015

If you've decided that you want to start trading forex, you'll need to find a way to trade currencies.

You have a couple of options. It all comes down to what currencies you want to trade.

Let's take a closer look…


Trading forex with currency futures

 
You need to decide which currencies you want to trade.
 
If you want to trade the rand against a number of international currencies, you can do this using currency futures. 
 
To trade currency futures, you need to have an account with a stock broker offering derivatives trading.
 
By trading currency futures, you can trade the rand against the:
 
  • US dollar:
  • Euro;
  • Pound;
  • Australian dollar;
  • Canadian dollar;
  • Swiss franc;
  • Chinese yuan; and
  • Japanese yen.
 
You can spread trade the rand against other currencies too, but the spreads tend to be very large, which means it’s more expensive for you to trade.
 

Trading forex with spread trades

 
If you want to trade international currencies, the most cost effective way to do this is through spread trading. You can easily trade all the major currencies this way.
 
Spread trading works by trading the spot currency market using local currency futures.
 
Even though you’re trading foreign currencies, all your trades are in rands.
 
If you stick to trading the major currency pairs, the spreads are quite tight, meaning your trades have the potential to be in the money quicker.
 
To spread trade forex, you need to open an account with a trading company offering spread trading on currencies.
 
In comparison to trading currency futures, you’ll also find you need a much lower deposit in your trading account to be able to start trading.
 
So there you have it. How to start trading currencies.
 
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How to start trading currencies
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