While the forex market is one of the biggest entities of its type anywhere in the world, it's also highly volatile and not safeguarded by an international regulator. This is why regulators in South Africa are still amid their forex rigging probe, more than three years after financial watchdogs in the West issued multi-billion-dollar fines to global banks.

The need for more efficiency, as showcased by the SA Competition Commission, is concerning for forex traders, particularly those based in the region or including the South African Rand (ZAR) in their portfolio. The Bank of International Settlements currently ranks it the 20th most traded global currency, while the nation's population of 50 million continues to drive a growing economy.

This post provides tips for forex traders who want to build a successful portfolio in South Africa.

The Best Hours for Forex Trading

When Are the Best Times to Trade Forex? Currency trading is unique because of its hours of operation. The week begins at 5 p.m. EST on Sunday and runs until 5 p.m. on Friday.
  • U.S./London (8 a.m. to noon): According to Lien, more than 70% of all trades happen when these markets overlap because the U.S. dollar and the euro (EUR) are the two most popular currencies to trade. 
  • Sydney/Tokyo (2 a.m. to 4 a.m.): This period is not as volatile as the U.S./London overlap, but it still offers a chance to trade during higher pip fluctuation. 
  • London/Tokyo (3 a.m. to 4 a.m.): This overlap sees the least amount of action of the three because of the time, and the one-hour overlap gives little opportunity to watch significant pip changes occur.

Understand your Tax Requirements

Before building your portfolio, you must understand how your forex trading profits will be taxed.

This is governed by the South African Revenue Services (SARS), which taxes profits for all individual traders based in the country using the same model applied to regular income.

Tax rates range from 18% to 42%, depending on traders' profit levels and individual tax brackets.

So, before you begin to select currency pairings and build your portfolio, you need to estimate your future tax repayments and understand how this will impact your profitability.

Partner with a Reputable Broker

Once you've determined your tax status and built a wealth of theoretical knowledge, the next step is to partner with a reputable and secure broker.

This gives you a so-called "demo account," which enables traders to use trade strategies in a real-time, simulated marketplace without requiring them to risk their hard-earned capital.

Typically, you can use a demo account for three to six months, allowing you time to hone your strategies and translate knowledge into practical trading skills.

When you partner with a global brokerage site like Oanda, you can also access a wide array of currency pairings that enable you to diversify your interests. Similarly, you'll also be able to access different markets and asset classes as you look to develop your skills over time.

Minimize your Risk as you Continue to Diversify.

As you continue to diversify and build your forex trading portfolio, you'll likely use a high leverage ratio and margin to control a significantly more prominent position with a relatively small amount of money.

This strategy magnifies losses and profits, so you could lose more than you can afford if the market turns against your trades and makes your position vulnerable.

If you leverage a position too much, an adverse market shift could wipe out even the most balanced portfolio.

So, as a forex trader, adopt a balanced approach to maximizing profits while imposing stop-loss measures to safeguard your capital in the worst-case scenario. This automatically closes positions once they've absorbed a predetermined level of loss, and it can make a significant difference for new or inexperienced traders.