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The Benefits of Online Forex Trading in Africa
With financial markets becoming accessible to more and more people, Forex Trading Opportunities have grown exponentially over the past two decades. Online Foreign Exchange Trading, commonly known as FX Trading, refers to the practice of buying and selling currency values with the aim of making a profit. Being a global market, FX Trading is conducted all over the world, with New York, London, Tokyo, and Hong Kong serving as the major financial hubs with the largest markets. Having previously been a preserve mainly of large financial institutions such as banks, multi-national corporations, and the wealthy few, Online FX Trading has become increasingly popular with many who have internet access and a fair knowledge of the basics of FX Trading, owing to its relatively easy entry requirements and suitability for beginners. Although retail online forex trading has for a long time been considered a secondary source of income, many who have treated it as a primary source of income, have gained financial freedom by participating in it, given that a 9 to 5 job alone, most often than not, does not offer us the financial stability and freedom we desire. Although a 9 to 5 may offer you some job security, that doesn’t seem to be holding much ground in this post-pandemic economic situation we’re faced with now. In this article, we discuss the benefits of trading forex in Africa, both for individuals and for their respective countries as a whole. 1. A LARGE AND GLOBAL MARKET TRADEABLE 24-HOURS-A-DAY The sheer size and scale of the online Forex market sits at the top of the list when it comes to the benefits of online trading. As the world’s largest financial market, about $6 trillion on average, is exchanged daily. At ALL hours of the day, traders in every part of the world, are buying and selling currency pairs, making forex a truly global marketplace, with a very wide scope of profitability. In our very first article, How to Make Money from Forex in Ghana, we indicated the fact that, unlike other financial or capital markets, the forex market does not need a physical location to operate from, but rather, operates via an electronic network of corporations, banks, and individuals engaged in trading one currency for another. This makes it possible and convenient for forex markets to operate 24 hours a day, 5 days a week, across different time zones and financial centers. What makes this possible is the overlap in trading times of major sessions. Where most stock exchanges are open from 9am-4pm (depending on the country from where it operates), the FX Market operates continuously from the start of the week on Monday morning in New Zealand, till Friday afternoon New York time when it closes. Since it operates this way, the online FX market is not subject to any centralized exchange system; As long as there’s a market open somewhere in the world, you can trade. This is great news for those who want to start off trading on a part-time basis. 2. FLEXIBILITY AND WIDE RANGE OF CURRENCY PAIRS The very first point serves as an excellent springboard for another benefit of trading forex in Africa, which is the ability to participate in trading activities from anywhere on the globe. As already stated above, with market sessions, one is not limited to traditional office hours. Thanks to technological advancements, you don’t need to be tied to a desk, staring at six screens of charts to gain a decent handle on the market. With the additional element of a wide range of currency pairs to trade in, there is the flexibility to trade in your chosen currency pair at your own preferred time. Due to the flexibility Forex trading offers, a lot more people with regular jobs are choosing online day trading as an additional source of income. If you trade online full-time, you get to set your own hours and be your own boss. You can work from the comfort of your home, making profitable trades, while giving you leverage to spend time with your family and loved ones. Given this opportunity, you’re able to make time for other priorities, which a regular job may not fully allow you to. You can work even when you’re on a trip to some Island; all you need is a smart device with a good internet connection. That is the beauty of forex trading – the ability to make money while on the move, anywhere, anytime. 3. ACCESSIBLE AND BEGINNER FRIENDLY Yes, you read right. The Online Forex market can be beginner friendly if you make the commitment to acquiring the knowledge and equipping yourself with the required tools. First-Time traders who can only afford to make smaller investments can easily enter the forex market. Trading with the Best Forex Broker grants you access to real-time market pricing, news, price charts, tools, and strategies. As mentioned earlier, accessibility is one of the biggest advantages of forex trading; Compared to other capital markets, it does not require a large initial investment, making it easy to enter, and accounting for its popularity among beginner and even hobbyist traders. As a beginner, a good forex broker offers you a range of educational sources and Demo Accounts allowing you to practice and hone your skills on the market without the risk of losing real money. Demo Accounts essentially offer you a “Try-Before-Purchase” test run. They give you the opportunity to get used to a trading platform, familiarize yourself with market movements, and develop a risk management strategy, all without making any financial commitments, in a simulated live trading environment. It’s critical to bear in mind, however, that regardless of your investment capital, Knowledge and skill are the bedrock of successful profitable FX Trading. 4. HIGH LIQUIDITY Online Trading benefits include High Liquidity. In capital markets or trading terms, Liquidity refers to the ease with which an asset can be bought or sold. Combined with the high volumes and 24-Hour-a-Day activity, the global scale of
Aftermath Of Russia-Ukraine War On Africa’s Economy
Trademap, the WTO’s international trade database estimated that Africa imports seven times more goods from Russia than it exports to the African continent. In 2020 alone, Africa imported $12.4billion worth of goods from Russia as compared to the $1.6billion worth of goods bought from them. With this, it is evident that a striking trade deficit of more than $10 billion already exist, toppling with the insurgence of the ongoing war, poses a bigger threat to the emerging African Economy. Even though Russia holds only 2.4% of the Africa’s market share against 19.6% for China- the continent’s largest trade partner – the effect is going to be enormous as the continent depends solely mostly on importation. Africa depends on Russia for the importation of cereal which amounts to 30% of overall cereal imports, especially wheat which alone accounts for about 95% of cereals imported into the continent. Africa buys mineral fuels such as coal, oil products, gas from Russia and these account for 18.3% of the total imports. Overall, volumes of goods traded stood at $14.8billion as at 2020. There has already been a decline in trades between 2019 and 2020 due to Covid-19 which has affected global trade immensely. Data indicate that between Africa and the rest of the world, trade fell by 14% to $900 billion in 2020. With Russia as a major producer of commodities such as oil, gas, wheat, and aluminium, the sanctions against them and market concerns about the War’s disruption on supply chain, have definitely caused commodity prices to soar. First pronounced effect will be the surge in global commodity prices, particularly for oil, gas and wheat, Georgieva Dietz said. Brent crude has whipsawed to all-time high in the last 12months to $110/bl, signaling an over 80% price jump Heightened energy prices will be felt most severely in transport and utility cost including gas, electricity and other fuel like kerosene, indicated by Renaissance Capital bank of Moscow. The disruption of the supply chain as earlier mentioned coupled with sanctions against Russia will drive commodity prices high and inflation will sky rocket. This will hit households spending, investment and also raise the risk of social unrest. Surging commodity prices will also create winners and losers across Africa and the world. African countries most vulnerable to the War are those that import huge shares of cereal like Kenya, Nigeria, Tanzania, South Africa, and Egypt. Meanwhile in the area of energy, Africa’s importers like Ghana and Nigeria will feel the heat more due to their over dependence on the fuel importation from Russia, as the giant of the world’s largest exporter has been hit by various sanctions and faces a potential embargo. On the winning side, Nigeria is likely to benefit from the war as a commodity exporter as the supply constraint commodity price boom that began in 2021 will last longer, according to Renaissance Capital bank of Moscow. Major impacts on Africa As an Emerging economy, fuel tend to be the biggest import for the African Economy, so a price increase has a material effect on import bill, and by implication, the trade balance and current accounts. The war stands to cause a flare up in Africa’s debt. One of the key things noted is the backlog of lighter external financing conditions causing grave concerns about debt positions across Africa. Ghana is not at immediate risk of default as the country has not got much debt payable in the next few years. In a vote at the U.N. General assembly condemning Russia’s invasion, 28 African countries (51%) voted in favour, 17 abstained (31%) one voted against and 8 Countries were absent. This indicates the war will have diplomatic ramification on the continent. The war will tend to reinforce the trend and will imply pressure for Africa countries to choose sides The continent remains scarred by cold war segregation and will be a terrain where super powers play out their rivalries as seen with the recent resurgence of Moscow in Africa as Prof. Carlos Lopez of the University of Cape Town and the UN Economy Commission for Africa (UNECA) said. Reports on March 2nd also indicated that the war may disrupt the completion of a major steel project in Nigeria – the $8billion Ajaokuta steel plant – that has already been subjected to delays for 40years. While it’s still early days, the domino effect of the Russian War will no doubt trickle down to the African Economy, worsening the already struggling economies.
Concerns Over Inflation and Other Economic Indicators Impacting the Ghana Stock Market
A Financial Advisor to Geldex Invest, Ms Gifty Annor-Sika Asantewah, has bemoaned the slow start of performance of the Ghana Stock Exchange in 2022, noting that the rising level of inflation, depreciation of the cedi and other economic indicators are badly affecting the performance of the Ghana Stock Market. According to the analyst, the stock market has gone through some challenges in recent years but managed to bounce back last year. However, she observed that 2022 has not started as predicted, which can “partly be blamed on the pandemic and declining confidence of investors.” “Many markets are under distress due to the pending pandemic that slowed investment. As such, that may be just one of the reasons why trading activities declined in the first few months of 2022… That being said, the Ghana Stock and investment terrain for past few years has gone through some dramatic scrutiny that has left some investors overwhelmed with low market confidence and trust.” – Annor-Sika Asantewah Miss Annor-Sika however, explained the reason why some major stocks such as: Fan Milk LTD, MTN Ghana and others that performed brilliantly last year, 2021, are now struggling this new year 2022. “Investors are more likely to purchase or trade stocks if they feel or are convinced the stocks or the market instrument will increase in value in the future. Currently, few stocks such as, SIC Insurance Company PLC and others are doing relatively well, while others like MTN Ghana, Fan Milk Limited, Unilever and some banking stocks are not doing well…Looking at the statistics, foreign investors holdings on equities market dipped. The Ghana Stock Exchange’s report on fund managers holdings for February showed that foreign investors contributed 82.0% of equity market trades as of end of February 2022 in comparison to 86.6% for the same period in 2021. Concerns over inflation, depreciation of the cedi, high interest rates, and other economic indicators is gradually driving foreign investors away from the Ghanaian stock market. These indicators affect how money is spent by investors. They [investors] are making certain ‘safer’ investments a more attractive alternatives to stocks.” – Annor-Sika Asantewah Slow Level of Technology in GSE The financial advisor expressed worry over the slow level of technology being adopted by the Ghana Stock Exchange. She noted that the Ghanaian equities market is behind when it comes to technological advancement. “The impact of disruptive technology on capital markets is as significant as fire was to the cavemen. In fact, technological progress in capital markets offer investors the opportunities to boost flexibility, scale efficiencies and reduce complexity in how the market operates. It is time that leaders in the industry embrace new-age technologies which are further going to transform the Ghanaian capital markets ecosystem in the upcoming years. Stock markets are embracing new technologies and innovations. Many are shifting from the conservative stock market trading to digitalization which the Ghana stock exchange is yet to embrace. I hope that the market expands to other innovative instruments beyond just stocks, shares and bonds to attract more traders and investors.” – Annor-Sika Asantewah Miss Annor-Sika observed that investors are gradually changing tastes in regards to trading activities, types of stocks to indulge and how it should be done. She thus, predicted that the performance of the Ghanaian stock market might further plummet in the coming weeks and months. “Frankly, the performance of the Ghanaian bourse might worsen due to the uncertainties facing our monetary and fiscal policies this year coupled with increment in taxes. Unfortunately, the cedi is on a downward spiral and thus, eroding investors confidence.” – Annor-Sika Asantewah Miss Annor-Sika moreover, sided with Bloomberg Africa’s prediction that the invasion of Ukraine by Russia is likely to further hurt Africa’s coronavirus ravaged and fragile economies through fiscal constraints, weaker investment flows and higher costs. The pronounced challenge, she noted, will have implications on inflation in the country. Meanwhile, the Ghana Statistical Service (GSS) announced that inflation has accelerated to 15.7% in February 2022 compared to 13.9% in January.
Why consider forex trading as your next investment move
A hard reality of our current situation is that at the time of writing this article, if you did a dollar conversion of your salary in Ghana as of January 2022, it’s safe to say you’ve been hit with a 50% salary cut, if not more; and it won’t stop there. Troubled? You should be. If you’re reading this article, you’re most likely particularly interested in Online Forex Trading, or are simply like many looking for an alternative investment. As the world teeters on the brink of economic catastrophe, with economists anticipating another global economic recession a little over 10 years after we came out of one, institutional investors, businesses, households and everyday people are frantically searching for alternative investments. Forex investment has a lot to offer all kinds of traders, from beginners to professional traders; and in this article Geldex explores the five most compelling reasons why you must consider Online Forex Trading as your next investment move. Global Economic Hedge With Global economic activity experiencing a broad-based and sharper-than-expected slowdown, inflation has been higher than expected in the aftermath of lingering effects from the COVID-19 pandemic, Russia’s invasion of Ukraine, the rising cost of living, and tightening financial situations. These are all weighing heavily, especially in the face of global growth being projected to slow from 6.0% in 2021 to 2.7% in 2023 – a record low since 2001. This comes with attendant inflation – forecast to rise from 4.7% in 2021 to 8.8% by the end of 2022. The IMF has warned: “The worst is yet to come, and for many people 2023 will feel like a recession”. As Ghana engages in Debt Restructuring with the International Monetary Fund, government securities, including Treasury bills and bonds – previously regarded as an all-safe, risk-free investments – are most likely to lose a large aspect of that safety and protection from risk. Now more than ever, in the present economic situation Forex Investment has become an absolute necessity to guard against financial shocks, missing out on high-potential opportunities, and to hedge against inflation. The currency market allows you to invest in Forex by trading currencies based on how you perceive their relative values will change over a period of time. Depending on which direction you believe a particular currency is headed, you can speculate or project both ways; either long or short. After having gained enough experience, you can allocate your risk across the currencies of several countries; allowing you to profit from changing global macroeconomic conditions. A level playing field Online Forex Trading was previously reserved for multi-national corporations, banks, financial institutions, and very wealthy investors. With prevalence of the Internet and technological advancements, Forex trading companies and proprietary currency trading platforms, this investment opportunity is now open to everyone willing to invest. The same technologies that have made online forex trading possible are the same ones that have made information freely available. In addition, unlike other capital markets, the news that drives currency prices is available to everyone on a real-time basis. Unlike stocks, bonds and even commodities which can many times be influenced by proprietary information held by insiders and key stakeholders of those assets, control of the currency market is much less centralized – and thus far less influenced by insider information, if ever. This aspect of online forex trading makes it one of the most transparent markets for trading. Knowledge is indeed power, and today’s information technology provides it in abundance. The speed at which technological advancements have ensured news travels across the globe means that someone investing in Forex can monitor their open positions from anywhere on the globe, and can react just as swiftly as a professional trading from the very centre of it in New York, London or Tokyo. Resources previously available only to large financial institutions are now open to all who may be interested in Forex investment. This means you can do your own analysis of events that influence a country’s economic health and actual monetary flow, which are the elements driving and impacting currency valuations. Thus, the online forex trading market cannot be controlled by one person or a few individuals and institutions. Considering how incredibly complex the online forex market can be, coupled with the myriad of influences (both macro and micro) they are subject to, everyday people investing in Forex are now better-positioned than they have ever been to take advantage of information and use it to manage their capital profitably. Volatility In simple terms, volatility refers to the price fluctuations of assets. It measures the difference between the opening and closing prices over a period of time. When looking to invest, many people tend to gravitate toward more stable options – such as the Real estate market, which is largely viewed as a solid investment market. But who says volatility has to be a bad thing? In actual fact, when a market moves frequently it creates an avenue for many opportunities to make strong gains within a relatively short period of time. Warren Buffet was once quoted as saying: “Look at market fluctuations (volatility) as a friend, rather than an enemy”. The volatility of currencies is influenced by a number of factors, including but not limited to: The economic stability of a particular country Global economic happenings as a whole Political news, events and policies (e.g., interest rate fluctuations, currency revaluations, political upheavals, trading sanctions, monetary policy changes, trade deficits, tax changes, import restrictions, etc.) Trade deals, etc. On any given day, Forex markets can move between 50-100 pips on a major currency pairing, allowing investors to cash-in on poor-performing assets or seize upon potential opportunities that present themselves. Regulation Forex Market regulations refer to the rules, laws and guidelines that Forex Trading Companies or brokers operating within the Online FX Trading space must abide by. They extend to the continuous oversight and enforcement of these rules. Forex Investment is well regulated by several bodies across the globe – including CYSEC (Cyprus Securities and
