South Africa’s Rand has become a very popular trading instrument over the last twelve months, and especially so since Brexit and Trump have created extremely volatile trading conditions for GBP, EUR, and USD. South Africa’s ZAR has been consistently falling against USD for over ten years. Recently, however, ZAR seems to be gaining momentum, holding an upward trend since September of 2018. Is USDZAR entering a long-term sell zone? Before you start trading the trend, take a look at what’s going on this week. We might be looking at some very surprising price shifts for the end of Q1, and those who already have an Exness account and access to a trading platform will be in a good position to act on what’s to come.
A nation in the dark
This week, South African Finance Minister Tito Mboweni faces the challenging task of reassuring ZAR investors that the failing public electricity company will not be a problem. A string of nationwide blackouts has occurred as power production consistently fails to meet the country’s needs. Businesses are suffering and helpless against the problem, and there has been chaos on the streets more than once as traffic lights go dark. While a power outage isn’t enough to break a nation's economy, the fundamental reason that no clear solution is on the horizon is cause for speculation.
The power of debt
Currently, Mboweni is being pressured to rescue the failing power utility Eskom, which has already accumulated over USD 30 billion in debt. This week Mboweni allocated USD 4.3 billion in financial support, which will be released over the next three years by the Treasury.
Yesterday’s news release of the government bailout hasn’t yet had any noticeable effect on the rand, but traders are likely standing ready for ZAR’s forecasted bounce. The government has categorically announced that it will not be absorbing the Eskom debt, but this assurance will not do much to keep a positive ZAR sentiment. Rumors that Eskom could default on this sizeable amount are fuelling fears that current lenders might rapidly call back loans from other industries such as South African Airways. Continued talks of a loan default will certainly stir trouble, which may cause a domino effect as international investors might choose to take a step back to assess the situation.
The rand in 2019
With economic and political instability rocking the foundation of the South African nation, and the growing threat of a collapse of infrastructure, it’s hard to imagine the rand having an optimistic year. When a nation struggles with internal complications, market sentiment eventually gets wise, and prices adjust accordingly.
Analytic traders watching South Africa have likely noticed USDZAR’s downtrend and have already hit the ‘Sell’ button, without bothering to check the fundamental and political positions. For now, the monthly ebb and flow of USDZAR is still offering attractive entry points for long and short, with stormy swings ranging from 14.1097 down to 13.2362 in the last two weeks, so time your entries well. Open an account with Exness and start tracking the nine ZAR currency pairs. As always, market sentiment can change in a matter of days and even hours, so make your own up-to-date analysis before placing your order.
Get access to ZAR and other popular trading pairs
Your 4-step guide to opening a trading account
Step 1: Getting registered
It's very easy to open an account with Exness. Click here to open the sign-up page in a new tab. If you want to get everything done in the next 10 minutes, be sure to have a credit card, ID, and, proof of address by your side. You can choose to open a demo account without these things. Either way, everything you need to know is here in this two-minute video. Pause the video as you go through the first three steps.
Tip: Account type depends on the amount you wish to deposit. Leverage is effectively an interest-free loan that the broker offers. It allows you to make a large investment from a small deposit. If you are looking for high profit with high risk, a higher leverage might be right for you. If you prefer slow-burning safety with lower results, then keep your leverage low. You can never lose more than you have, but higher leverage means faster results... both good and bad.
Step 2: Prove who you are
Exness takes security very seriously, and they check every client signing up. Just like opening a bank account, you'll need to prove who you are before getting access to the global markets. Watch this one-minute video to see how.
Tip: While you're waiting for your real account to be approved, open up a demo account and start getting to know the trading platform.
Step 3: how to get access to the market
Trades are made using the award-winning MT4 trading platform. Inside the box of the demo or real account you'll see a gear cog. Click the gear cog to make a deposit. Use the passwords provided in the email. Click the gear cog again and select SIGN IN TO MT4 WEBTERMINAL then follow this one-minute video. You're about to make your first virtual trade on the real markets.
Step 4: making a trade
As a default, the top currency pair on the list will have an open chart. Right click on the chart and select the “close” option.
As a professional trader, selecting the right pair requires some research. For a first-time test, any pair will be sufficient. Drag a pair from the list of currencies on the left side of the trading terminal. The old saying goes, “what goes up, must come down.” Obviously, this principle goes the other way too. Your mission is to find a moment when the price direction is going to swing or reverse. If you feel the price is about to go up (bullish), then BUY, if it looks like it’s been trading high and the price has started a downward (bearish) trend, then SELL.
Open a trade
There are many ways to open your trade. You can select from the buy and sell options on the top left of the chart. Preferably, double-click the currency pair on the list. Right click on the chart when you’re ready to make your first trade. Time to set the volume depending on how confident you are in the direction you are forecasting. This is the perfect time to set your stop loss and take profit. Click the arrow to the right of the stop loss and take profit prices.
Note how the blue and dark red lines in the popup graph sit above and below the buy(ask) and sell(bid) price. In the example, we traded long (buy) and got a message confirming the order was successful. If you get an error, your volume was too high for your balance, or your stop loss/take profit was too close to the spread. Remember, every order starts as a negative because of the spread. Be patient. Your take profit will activate when the time is right, and your stop loss is protecting you. To close an order, you have three options. Click the X on the right or right-click the order. If you double click the order, you can close or modify the order.
You now know how to make a trade. Forex trading can be an exciting way to spend your free time, and you'll actually learn some real-world skills that will serve you well throughout your lifetime. Be patient, learn, and who knows, you might one day be one of the lucky few full-time traders. How will you spend your day?
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This article is a marketing communication and does not constitute investment advice or research. Its content represents the general views of our experts and does not consider individual readers’ personal circumstances, investment experience, or current financial situation.
This article is not prepared in accordance with legal requirements promoting independent investment research, and Exness is not subject to any prohibition on dealing before the release of the article. Readers should consider the possibility that they may incur losses. Therefore, Exness is not liable for any losses incurred due to the use of its articles. Please note that past performance of an asset is not a reliable indicator of future results.