Successful Forex traders in South Africa turned $100.000 to $1 million dollar, ForexSQ experts say the South African Forex millionaires making money by turned $100k to one million dollar.
Successful Forex traders in South Africa
[sam id=”8″ codes=”true”]
Shrewd currency trades based on big news events were the winning moves for a Johannesburg auditor who won Standard Bank Webtrader’s first global trading competition.
Ricky Jacobsohn, 25, transformed virtual spending money of US$100 000 to more than US$1,3m in 30 days. He was awarded the title of best investor and a cash prize of US$6 250.
About 1 300 people entered the competition aimed at familiarising South Africans with do-it-yourself investing on world markets through the domestic web-based trading platform.
It is easy to buy and sell shares and other securities in New York, London and other markets using your foreign currency investment allowance. You do not need SA Reserve Bank permission to invest your first R1m. In order to invest an additional R4m each year, you will require the approval of the South African Revenue Service.
The investment competition used virtual currency, with each participant given US$100 000.
Jacobsohn, an auditor who is studying towards a bachelor of commerce degree, says that his strategy from the outset was to win the one-month challenge.
“I saw opportunities in currencies rather than shares, because of the gearing you can get on currencies.”
Jacobsohn says he always keeps up-to-date with current events, but did more research than usual with a view to looking out for trading opportunities.
“When you trade in currencies it is the most direct way to play economies. I saw there was a meeting at the European Central Bank and that the policymakers were going to make decisions that would affect the European economy,” he says.
“I thought, based on that, the Euro would weaken against the US dollar. I took maximum gearing.”
That trade, of US$60 000 for about US$10m exposure, carried Jacobsohn through the competition. “The Euro lost significantly,” reflects Jacobsohn.
[sam id=”8″ codes=”true”]
Next, he “played small here and there” until he spotted another big news event with potential to make money by trading in Spot FX.
“In week three, there was another opportunity. Scotland was voting to leave the UK. There was news that the pound was depreciating a lot, however my gut feel was that Scotland would vote ‘no’.”
He says he saw that polls recorded a high number of undecided voters. “I thought if they were undecided they would stick with what they know,” says Jacobsohn of Scottish voters.
The young investment enthusiast bought the pound sterling against US dollars and was proved right when the referendum results were announced.
“At that stage, I had an incredible lead. I thought that if someone beat me they would have to be trading something similar. So, I used the fact that I had more money and took an exposure bigger than everyone else. I was buying pounds for a couple of days,” he says.
Jacobsohn says he had been tempted by Alibaba, the biggest initial public offering ever on Wall Street. However, he couldn’t get the same gearing as he could with currencies and so he decided against it because he wanted to win.
The competition winner says he would not invest the way he did when he competed in the Standard Bank Webtrader challenge. “The gearing that I took I would never do with my own money. I took a gamble with gearing, because my idea was to win the competition.”
Jacobsohn has never invested in the real markets, however he says that his win has “sparked my interest”. First, though, he says he will complete his articles because getting his career on track is his priority. “I want to build a stable career for myself,” he says.
Jacobsohn, known to other traders as UrbanLegend, is the first person to be awarded the Webtrader trophy.
Fatima Essop Mohamed of Standard Bank Webtrader says: “As is the nature of trading, those participants who stayed abreast of current affairs and traded in or out accordingly (intra-day) reaped the benefits and maintained positive growth.”
She says only 5% of participants made a profit of 50% and more, while 20% lost more than 20% of their virtual funds.
“As this was a trading game over a short period, stocks were not a popular choice. Instead, participants opted to trade geared instruments that allowed leverage of the initial US$100 000 in virtual funds,” notes Essop Mohamed.
The most popular instruments traded in the competition, she says, were: FX – EUR/USD, GBP/USD and XAU/USD; and CFDs – AAPL:xnas, DAX.I, SP500.I.
Currency trading: A primer
Forex or spot FX trading allows for the buying of one currency against the selling of another. Currencies trade in pairs, like the euro-US dollar (EUR/USD) or US dollar-Japanese yen (USD/JPY), explains Essop Mohamed, pointing out that Standard Bank Webtrader provides access to more than 160 forex crosses.
“Trading on margin, as is the case with forex trading, allows investors to buy and sell assets that have a greater value than the capital in their account. It is important to note that margin trading involves a large amount of risk. Since a position held exceeds the actual value of the account, a trader could incur substantial losses if the market moves against his or her position,” she says.
Investing vs trading
“Investing and trading are opposing methods both attempting to profit in financial markets. The aim of investing is to gradually amass wealth over an extended period of time usually through the buying and holding of shares,” emphasises Essop Mohamed.
Trading involves more frequent buying and selling of favourites like CFDs and forex with the goal of generating returns that outperform buy-and-hold investment strategies, she points out.
