Introduction to forex trading: A Zimbabwean perspective€¦ · exchange your US$ for the Rand and you can do this in a bank. This process is itself participation in Forex market-

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Introduction to forex trading: A Zimbabwean

perspective



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Purpose of this e-book

This e-book is the first of a two-part series introducing forex and binary options trading in Zimbabwe.

This first part introduces forex trading and the second part looks at binary options trading.

This e-book grew out of the realisation that a lot of people in Zimbabwe have either no knowledge at all

or vague ideas of these two potentially profitable ventures which can be done from home with just a

computer/ mobile device and internet connection. The need for an introductory text that addresses

these two ventures from a Zimbabwean perspective also gave rise to the production of this e-book. Let

me hasten to add that trading carries a significant risk of loss of capital and as such it is not fit for

everyone. This e-book will help you get an idea of forex trading so that you can decide if you want to try

this trade. The e-book is by no means meant to be an exhaustive authority on trading, indeed I

encourage you to refer to plenty other publications found on the internet and elsewhere to compliment

what you will learn. Trading is by no means easy and there is a lot to learn. May this be your first step of

a hopefully long and profitable journey.

What you will learn

You will get an appreciation of forex trading and what it takes to start trading, all this from a

Zimbabwean perspective. Without further ado, let’s get into it.

What is forex?

The FOReign EXchange market (forex or FX for short) is one of the most exciting, fast-paced markets around.

Until recently, forex trading in the currency market had been the domain of large financial institutions,

corporations, central banks, hedge funds and extremely wealthy individuals. The emergence of the internet

has changed all of this, and now it is possible for average investors to buy and sell currencies easily with the

click of a mouse through online brokerage accounts. An illustration will help you understand forex trading.

Let’s suppose you visit South Africa and you have some US$ in your pocket. The first thing to do is to

exchange your US$ for the Rand and you can do this in a bank. This process is itself participation in Forex

market- exchange one currency for another. However, the forex trading we are discussing here is not done

physically, rather it is done online.

The foreign exchange market is the most traded financial market in the world. In forex trading, traders hope

to generate a profit by speculating on the value of one currency compared to another. This is why currencies

are always traded in pairs—the value of one unit of currency doesn’t change unless it’s compared to another

currency. Exchange rates are always changing and fluctuating, and this happens because of different factors.

Due to these fluctuations, it becomes possible to make a profit from speculative trades. Foreign Exchange is

the World’s largest and most active market. It operates every day except the weekends, and its volume



reaches up to US$5 trillion a day. This volume is larger than all the other markets combined!! For example, in

2013 the average daily trade volume on wall street was a paltry US$169 billion.

The forex market is very liquid, one can buy and sell currencies instantly i.e. there are always buyers and

sellers at any given time when the markets are open.

Why trade forex?

There are a number of reasons for trading forex.

1.) A 24-hour market five days a week.

From the Monday morning opening in Australia (11 pm Sunday Zim time) to the afternoon close in New

York (11 pm Friday Zim time), the forex market never sleeps. This is awesome for those who want to

trade on a part-time basis (even if you are employed full time), because you can choose when you want

to trade.

2.) Leverage

In forex trading, a small deposit can control a much larger total contract value. Leverage gives the trader

the ability to make nice profits, and at the same time keep risk capital to a minimum.

For example, a forex broker may offer 50-to-1 leverage, which means that a $50 dollar margin deposit

would enable a trader to buy or sell $2,500 worth of currencies. Similarly, with $500 dollars, one could

trade with $25,000 dollars and so on. While this is all presents a chance for increasing profit let me warn

you that leverage is a double-edged sword. Without proper risk management, this high degree of

leverage can lead to large losses.

3.) High Liquidity.

Because the forex market is so enormous, it is also extremely liquid. This is an advantage because it

means that under normal market conditions, with a click of a mouse you can instantaneously buy and

sell at will as there will usually be someone in the market willing to take the other side of your trade.

You are never “stuck” in a trade. You can even set your online trading platform to automatically close

your position once your desired profit level (take profit order) has been reached, and/or close a trade if

a trade is going against you (a stop loss order).

4.) Low Barriers to Entry

Getting started as a currency trader does not require lots of money. Online forex brokers offer “mini”

and “micro” trading accounts, some with a minimum account deposit just of $1!(We will look at

different brokers in later sections). This makes forex trading much more accessible to the average

individual who doesn’t have a lot of start-up trading capital.



6.) You can practice trading using virtual money

Most online forex brokers offer “demo” accounts to practice trading and build your skills, along with

real-time forex news and charting services.

And guess what…. they’re all free!

Demo accounts are very valuable resources for those who are “financially hampered” and would like to

hone their trading skills with “play money” before opening a live trading account and risking real money.

Demo accounts allow you to get a feel of the trading process without using your real money. Every

trader should start trading with a demo account before risking real money.

7.) You can trade from anywhere in the world

With forex trading you can trade from anywhere in the world as long as you have a device with internet

connection! This means that with forex trading you choose to settle in any part of the world and still

continue your trades. You can trade at home in your pyjamas, report to no boss and not have to keep up

with those nosy and irritating co-workers. Forex trading can offer one a possibility of being their own

boss and if done well it can pay handsomely.

These are some of the reasons why forex trading is getting more and more popular in Zimbabwe. Now

let’s look at the most traded currencies.

Which are the most traded currencies?

These are the most traded currencies with their symbols

1 United States dollar USD ($)

2 Euro EUR (€)

3 Japanese yen JPY (¥)

4 Pound sterling GBP (£)

5 Australian dollar AUD ($)

6 Canadian dollar CAD ($)

7 Swiss franc CHF (Fr)

https://en.wikipedia.org/wiki/United_States_dollar

https://en.wikipedia.org/wiki/Euro

https://en.wikipedia.org/wiki/Japanese_yen

https://en.wikipedia.org/wiki/Pound_sterling

https://en.wikipedia.org/wiki/Australian_dollar

https://en.wikipedia.org/wiki/Canadian_dollar

https://en.wikipedia.org/wiki/Swiss_franc



These are the currencies with the highest volatility. Volatility measures the overall price fluctuations

over a certain time and the higher the volatility, the more the chances of profiting from trading

those currencies. High volatility means that the exchange rate changes very fast. Next, we look at

the most traded currency pairs.

Which are the most traded currency pairs?

The following are the most traded pairs

• EUR/USD.

• USD/JPY.

• GBP/USD.

• AUD/USD.

• USD/CHF.

• USD/CAD.

• EUR/JPY.

• EUR/GBP.

Most currency traders stick to these pairs because they generally have high volatility, I would

suggest start out with these pairs too.

To illustrate volatility, lets use two charts. The chart below shows a currency pair with high volatility.



The chart below shows low volatility in the circled area. This is called a ranging market (because the

price movement stays within a certain range) and is a bit tricky to trade.

Why do exchange rates fluctuate?

Exchange rates float freely against one another, which means they are in constant fluctuation. Currency

valuations are determined by the flows of currency in and out of a country. A high demand for a

particular currency usually means that the value of that currency will increase. Demand for a currency is

created by tourism, international trade, mergers and acquisitions, speculation, and the perception of

safety in terms of geo-political risk. If, for example, a company in Japan sells products to a company in

the United States and the U.S.-based company would have to convert dollars into Japanese yen to pay

for the goods, the flow of dollars into yen would indicate a demand for Japanese yen. If the total of

currency flow led to a net demand for the Japanese yen, then the yen would increase in value.

You may remember a time in Zimbabwe in the last decade when we were using our own Zim dollar and

the rate of the rand would fall towards Christmas when Zimbabweans who were working in South Africa

would come back home with the rand and change it for the Zim dollar. The rate of the rand would fall in

comparison with the Zim dollar because the rand would be in high supply. The rate of the rand would

shoot up in early January as those people now wanted to go back to South Africa and the rand would be

in high demand. This illustration shows how demand and supply affects exchange rates.

Currencies are traded around the clock - 24 hours per day. Even though morning in Tokyo occurs during

U.S. night-time, trade and banking continue around the world. Therefore, as banks around the world

buy and sell currencies, the value of currencies remain in fluctuation. Interest rate adjustments in

different countries have the biggest effect on the value of currencies because investors typically look for



safe investments with the highest yields. If an investor can earn 8.5% interest on deposits in England,

but can pay 1% interest for the use of money in Japan, then the investor would pay to borrow the

Japanese yen in order to buy the British pound. Such trades take place all the time and in very large

numbers.

Reading a Quote

One of the biggest sources of confusion for those new to the currency market is the standard for

quoting currencies. In this section, we'll go over currency quotations and how they work in currency pair

trades.

Let’s simplify it: Do you remember when $1 was equal to R10? The quote would look like this

USD/ZAR=10

The currency to the left of the slash is the base currency, while the currency on the right is called

the quote or counter currency. The base currency (in this case, the U.S. dollar) is always equal to one

unit (in this case, US$1), and the quoted currency (in this case, the South African Rand) is what that one

base unit is equivalent to in the other currency. The quote means that US$1 could buy 10 South African

Rand.

Since the base currency (USD) is always equal to $1 in the quote, if the rand gets stronger the quote

would look like this.

USD/ZAR=8

Which means that you now need fewer Rands to buy one dollar.

If the Rand becomes weaker against the USD, the quote would read something like this.

USD/ZAR=13

Meaning you now need more Rands to buy one dollar.

The forex quote includes the currency abbreviations for the currencies in question. Most currency

exchange rates are quoted out to four digits after the decimal place, with the exception of the Japanese

yen (JPY), which is quoted out to two decimal places.



How do you profit in forex trading?

So now you have an idea of what forex trading is, lets tackle the one burning question that everyone

who is interested in a new business venture asks…… Where is the money?

Trading currency in the Forex market centers around the basic concepts of buying and selling.

Let's take the idea of buying first. What if you bought something (it could literally be almost anything...a house, a piece of jewellery or a stock) and it went up in value. If you sold it at that point, you would have made a profit...the difference between what you paid originally and the greater value that the item is worth now.

Currency trading is the same way...

Let's say you want to buy the AUDUSD currency pair. If the AUD goes up in value relative to the USD and then you sell it, you will have made a profit. A trader in this example would be buying the AUD and selling the USD at the same time.

For example, if the AUDUSD pair was bought at 0.74975 and the pair moved up to 0.76466 at the time

that the trade was closed/exited, the profit on the trade would have been 149 pips*. (See the chart

below…) 0.76466-0.74975=149 (disregard the fifth digit)

* A pip is a number value. In the Forex market, the value of currency is given in pips. One pip equals

0.001, two pips equals 0.002, three pips equals 0.0003 and so on. One pip is the smallest price change

that an exchange rate can make. Most currencies are priced to four numbers after the point.

So what is the value of the 149 pips in money terms? Well this depends on the lot size. And I hear you

ask, ‘What is a lot?’. Let me break it down for you.



What is a Lot in Forex? In the past, spot forex was only traded in specific amounts called lots. The standard size for a lot is

100,000 units. There are also a mini, micro, and nano lot sizes that are 10,000, 1,000, and 100

units respectively.

Lot

Number of

Units Profit per pip

Standard 100,000 Ten dollars ($1490)

Mini 10,000 One dollar ($149)

Micro 1,000 10 cents ($14.90)

Nano 100 1 cent ($1.49)

If one micro lot of the AUD/USD is being traded, each pip would be worth $0.1, as opposed to $10 for a

standard lot. I have calculated the profit in the table above using the 149 pips from our example above.

Such a movement (of 149 pips) can take place within minutes during very volatile periods! So,

depending on your lot, you could have made a profit of $1,49 to $1490 in ten minutes! Quite exciting

stuff, right? However, this is not always the case, sometimes such movement can takes hours to get or

the currency pair can start falling before it reaches that number of pips. This is just an illustrative

example of the potential profits of forex.

Leverage

You are probably wondering how a small investor can trade such large amounts of money. Think of your

broker as a bank who basically fronts you $100,000 to buy currencies. All the bank asks from you is that

you give it $1,000 as a good faith deposit, which he will hold for you but not necessarily keep. Sounds

too good to be true? This is how forex trading using leverage works.

As you can see from the diagram, without the stick and the lever, this person would not have managed to move this rock. Leverage has made it possible for him to move a bigger mass than he normally could.

https://media.dailyfx.com/illustrations/2012/02/23/The_Basics_of_How_Money_is_Made_Trading_FX_body_AUDUSDFinal.png.full.png

https://media.dailyfx.com/illustrations/2012/02/23/The_Basics_of_How_Money_is_Made_Trading_FX_body_AUDUSDFinal.png.full.png



The amount of leverage you use will depend on your broker and what you feel comfortable with.

Typically, the broker will require a trade deposit, also known as “account margin” or “initial margin.” Once you have deposited your money you will then be able to trade. The broker will also specify how much they require per position (lot) traded.

For example, if the allowed leverage is 100:1 (or 1% of position required), and you wanted to trade a position worth $100,000, but you only have $5,000 in your account, your broker would set aside $1,000 as down payment, or the “margin,” and let you “borrow” the rest. Of course, any losses or gains will be deducted or added to the remaining cash balance in your account.

The minimum security (margin) for each lot will vary from broker to broker. In the example above, the broker required a one percent margin. This means that for every $100,000 traded, the broker wants $1,000 as a deposit on the position. Leverage is a double-edged sword, it can help you get higher profits but if your forecast is wrong, you will incur heavier losses. Most brokers will give you the option to choose your leverage when you sign up for a demo or real account. The lesser the leverage ratio the safer it is. You should however, research more on leverage. Let’s go back to our illustration.

Had the pair moved down to 0.74805 before the trade was closed, the loss on the trade would have been 17 pips.

This is how you profit from opening a buy position. It makes no difference which currency pair you are trading. If the price of the currency you are buying goes up from the time you bought it, you will have made a profit.

Here is another example using the AUD; In this case, we still want to buy the AUD but let’s do this with the EURAUD currency pair. In this instance, we would sell the pair. We would be selling the EUR and buying the AUD simultaneously. Should the AUD go up relative to the EUR we would profit as we bought the AUD. (Remember you always buy or sell the base currency. If you buy the base, you are selling the quote currency simultaneously and vice versa)

In this example if we sold the EURAUD pair at 1.2320 and the price moved down to 1.2250 when we closed the position, we would have made a profit of 70 pips. Had the pair moved up instead and we closed out the position at 1.2360 we would have had a loss of 40 pips on the trade.

Now let's take a look at how a trader can make a profit by selling a currency pair. This concept is a little trickier to understand than buying. It is based on the idea of selling something that you borrowed as opposed to selling something that you own.

In the case of currency trading, when taking a sell position, you would borrow the currency in the pair that you were selling from your broker (this all takes place seamlessly within the trading station when the trade is executed) and if the price went down, you would then sell it back to the broker at the lower price. The difference between the price at which you borrowed it (the higher price) and the price at which you sold it back to them (the lower price) would be your profit.

For example, let’s say a trader believes that the USD will go down relative to the JPY. In this case the trader would want to sell the USDJPY pair. They would be selling the USD and buying the JPY at the same time. The trader would be borrowing the USD from their broker when they execute the trade. If the trade moved in their favour, the JPY would increase in value and the USD would decrease. At the point



where they closed out the trade, their profits from the JPY increasing in value would be used to pay back the broker for the borrowed USD at the now lower price. After paying back the broker, the remainder would be their profit on the trade.

For example, let’s say the trader sold the USDJPY pair at 122.761. If the pair did in fact move down and the trader closed/exited the position at 121.401, the profit on the trade would be 136 pips.

In a nutshell, this how you can make a profit from selling something that you do not own.

When you buy a pair, like in the first illustration, you would have gone ‘long’ on that pair. When you sell a pair, you open a short position. So, remember this, buying a pair=going long: selling a pair=going short. This is the technical jargon of the trade.

In wrapping up, if you go long on a currency pair and it moves up, that trade would show a profit. If you open a short position on a currency pair and it moves down, that trade would show a profit. Simple, right? Not by a long short! Making the forecast on the movements of the pairs is by no means an easy task. By now, I hope I have impressed it upon your mind that making accurate forecasts of the currency movements is where the profit lies, doing wrong forecasts leads to losses.

So how do traders make the forecasts?

How traders make forecasts of currency movements

This is a critical part of trading as I highlighted above. Since this is e-book is directed to beginners, I would just highlight the methods of analysis without going into great detail because there is a lot to cover on analysis and I don’t want to give you an information overload at this point. Now let’s look at analysis in brief.



There are two broad ways of analysing exchange rate movements 1. Fundamental analysis and 2. Technical analysis.

1.) Fundamental analysis

Fundamental analysis is the interpretation of statistical reports and economic indicators. Things like changes in interest rates, employment reports, and the latest inflation indicators all fall into the realm of fundamental analysis.

Forex traders must pay close attention to economic indicators which can have a direct – and to some degree, predictable – effect on the value of a nation's currency in the forex market.

Given the impact these indicators can have on exchange rates, it is important to know beforehand when they are due for release. It is also likely that exchange rate spreads (we will look at spreads later) will widen during the time leading up to the release of an important indicator and this could add considerably to the cost of your trade.

Therefore, you should regularly consult an economic calendar which lists the release date and time for each indicator. You can find economic calendars on Central Bank websites and also through most brokers.

2.) Technical analysis

In finance, technical analysis is a security analysis methodology for forecasting the direction of prices through the study of past market data, primarily price and volume. Like weather forecasting, technical analysis does not result in absolute predictions about the future. Instead, technical analysis can help investors anticipate what is “likely” to happen to prices over time. Technical analysis uses a wide variety of charts that show price over time. I used two charts above to illustrate how to profit in forex and another two to highlight volatility.

Technical analysis other tools like candle charts and technical indicators like MACD, oscillators etc.

How do you start trading? After you have done your research and you decide you to try trading how do you go about it?

1. You choose a broker of your choice (I will review a few brokers that some local traders are using below)

2. You create a demo account to test their platform 3. If you are happy with the platform you then open a real account 4. You deposit funds into your real trading account and start trading 5. After making profits, you want to withdraw them so you can enjoy them.

Let’s look closely at these various steps.

1.) Choosing a broker

Your broker is the one who gives you access to the forex market. In the past people would call their brokers to get in or out of trades but now it all happens with the click of a button. There are literally hundreds of brokers out there and choosing the one to start with can be quite daunting when you are a beginner. So, what should you look for when you are choosing a broker?



Availability: The first and foremost issue with choosing a broker from Zimbabwe is that some brokers do not offer their services for Zimbabweans. This is true for brokers like GDMFX. An easy way to check if the broker accepts Zimbabweans is to check on their drop-down menu list of countries when you try to open a demo or real account. If Zimbabwe is not there it means they do not offer their services to us. You can crosscheck by contacting their support.

-Regulation: The most important aspect to check before choosing a broker is how and if their firm are regulated. If the broker's firm is located in the U.S, it must be regulated by The National Futures Association (NFA). It should also be registered as a Futures Commission Merchant (FCM) with the Commodity Futures Trading Commission (CFTC). This is a very simple verification. You can just check a broker's NFA membership status and any disciplinary actions by visiting the NFA official website.

-Professional Website: "Show me a company's website and I will tell you who they are". A company’s website can really give you a clear picture of who you are dealing with. Obviously, this is a subjective matter, but there are some very basic questions you can ask. Does it crash a lot? Is it easy to navigate? Is it professional looking? These are all questions you need to ask when learning about any company, but it becomes much more crucial when you are about to invest your money in the company at hand.

-Competitive Spreads: This is a very important aspect to examine before signing with a broker. What spread are they offering? Just to give a very basic explanation, currencies are traded in pairs. The difference between the selling and the buying price is called a spread. A good indicator is that the spread should be no larger than 5 pips for the major currencies. Spreads represent the commission of the broker for facilitating your trade. If a broker has high spread they eat into your profits or increase your losses.

-Customer Support: This is a more important characteristic in Forex than it is in other industries. In addition to the frustration caused by lack of customer support, this can lead to major losses. Before signing up with a specific broker, test out their customer support by emailing, calling, or chatting with their online representative. If you do not get the response you expected, think twice before opening an account with that broker.

-Quick Response Time: This is connected to the customer support but it goes beyond. Even if the customer support is to your satisfaction, it is important to verify that when making a request to open or close a position, your request is fulfilled with a minimal delay. The most effective way to verify this is by opening a demo account with the broker, something you should do anyway to improve your trading skills. This is not a perfect method as very frequently, the speed of the demo account is in fact different than the real account, but it is the best way to check given the tools you are provided.

-Stop Loss Protection: This is a feature that enables you to ensure that your losses do not exceed a certain amount. Most brokers offer this feature, but it is still important to verify with your broker before signing (all the brokers I reviewed have this feature).



-Competitive Platform Technology: This is one of the most basic and essential verifications you need to make before choosing a broker. The trading platform is where it is all going to go down. If their platform is not easy to navigate and user-friendly, their customer support can be the best in the world, and you will still fail as a trader. The platform should have an interface that enables you to fulfil your goals with a minimal number of steps. You should also check how the interface feels on your preferred trading device i.e computer or iPad or phone. You need the interface to be as seamless as possible because when you venture into trading you will find out that ten seconds can be the difference between closing a trade in a profit or suffering a loss. You should also check if your preferred broker offers the Metatrader 4 or 5 platform (all the reviewed brokers offer MT4)

-Withdrawal and deposit procedure. We will look at this in detail just now.

-Minimum Deposit. When starting out you may want to begin by depositing a small amount of money. Thus, you need a broker who accepts a minimum deposit of around $5

I should bring it to your attention that after you register a demo account with some brokers they will start calling you persuading you to upgrade to a real account. They claim that when you deposit real money they will give you a dedicated account manager who will help you to learn trading and maximise your profits. They can call you day after day. Be careful with these, only open a real account when feel you want to. Bottom line, DON’T BE COERCED INTO MAKING A DEPOSIT INTO A REAL ACCOUNT WHEN YOU ARE NOT READY.

-References by other Zimbabweans: It also makes sense to ask other local traders which brokers they are using and why they chose them.

To summarize, there are many things one must do before becoming a successful Forex trader, but one of the most important of all, if not the number one most crucial task, is finding a trustworthy professional broker. The above steps will assist you in doing just that and you should research further.

2.) Open a demo account

After choosing a broker of your choice you then open a demo account that allows you to trade real time charts and currency movements using virtual money. Think of a demo account as a simulated test drive, you trade real time currencies but you don’t risk any real money. The profits and losses you make would be reflective of how you would have fared using real money. It free to open demo accounts with brokers so you can open as many as you wish and test the brokers platforms.

A WORD OF CAUTION HERE, although using a demo account is vital in learning to trade, it has differences with trading a real account. One of the differences is that with a demo account you can start with any amount from $1000 to $100 000 depending with your broker. The danger is that such high amounts can give you a false sense of being a good trader since they can hold you in position for long even if you are in a losing position and then you can make profits after the trade goes your way. This may not be possible when you use a real account because you can get wiped out before the trade goes your way. Let me illustrate this; suppose you do your analysis and forecast that the EUR/USD pair will rise and you go long on the pair. The moment you get into the trade the pair starts going down and it goes down for 150 pips. Since you have a huge balance (of say $100000) you can afford to stay in the



trade and then you may eventually make profits after the pair rises. With real money now this may not be possible as your account may be wiped out when the pair goes down and when the pair rises again it does you no good as you will be out of the trade. You will understand this better when you start trading.

Another downside to the demo account is that it has no emotional aspect to it. The range of emotions you feel when you trade real money is different from what you feel when you trade virtual money. With real money, you feel emotions such as anxiety, apprehension, euphoria (after some good trades of course), dejection even anger! As you will learn when you progress further with trading, controlling your emotions when trading is pivotal to being a successful trader. My point? A demo account is indispensable in your journey towards being a successful trader but it can be misleading, just because you managed to double your demo account in 5 days it does not mean you are ready to ace the real market. Proceed with caution to a real account.

A demo account should be used 1.) to learn a broker’s inter face, and 2) to test ‘strategies’.

Opening a real account

After you have chosen your broker and test driven their demo and you may want take things to another

level by opening a real account. There are some requirements you have to meet to open a real account

(they are not necessary for opening a demo account). Brokers will ask for 1, proof of identification and

2, proof of residence before they can activate your real account. They do this because they want

improve security and they don’t want serve sinister people like terrorists etc.

When opening your accounts please choose a strong password. Ideally you should combine uppercase

and lowercase letters and special characters. One problem I have found when you trade online is that

you sign up on many different sites and you may end up forgetting and mixing your passwords up. You

can get around that by having generic passwords for different types of pages. You can have one generic

password for trading accounts, another one for email, another one for e-wallets etc. You tweak the

passwords such that each of the accounts has a unique password e.g your generic password for trading

accounts can be forex1234 but you then incorporate the first and last letters of the particular website

name into the password. For noafx.com the password would be Nforex!234x, for xm.com the password

would be Xforex!234m and so on. This way you get to have a unique password for every site and you

are less likely to forget your passwords.

For the proof of identity, you send a scanned copy of the front and back of you ID or passport. For proof

of residence they require a scanned copy of bank statement or utility bill (Zinwa, ZESA, Council etc)in

this regard, take precaution when your enter your address when you register your account, make sure

you put an address which you can get acceptable proof of residence for. Unfortunately, affidavits don’t

work online. Usually accounts are verified within 72 days.

3.) Depositing funds and trading

After getting your account verified, you can deposit funds into it and start trading real money, with real

profits and losses.



How to deposit

If you have made a payment online, then making a deposit to your trading account is just the same

procedure.

Using a Visa or MasterCard to deposit funds: you load your card with the funds you want to deposit

plus the amount charged by your bank for the transaction. On your brokers page, you look for the

deposit option and you enter your card details and the transfer should be instantaneous.

What if you don’t have a Visa or MasterCard? You apply for a free international MasterCard on this link

goo.gl/0dWbR4 . You can also get one from some local banks, opening such an account should cost

around $20-$30 depending on the bank. Another local bank also offers a prepaid MasterCard which you

can use as well and you can get it in thirty minutes. A local mobile money transfer service also offers a

virtual and physical MasterCard which you can use for such a transaction. You can cross check with your

mobile e-wallet service provider for this service. You use the virtual or physical MasterCard details to

make the deposit just as you would do with a bank account linked MasterCard.

A word of caution here: brokers, in quest to improve security, demand that withdrawals go the same

way that the deposit came. What does that mean? It means that if you deposit to your account using a

MasterCard, you have to withdraw to that card and not to a different destination eg e-wallets (we will

discuss these just now). If you deposit using a virtual MasterCard from a mobile e-wallet or a prepaid

MasterCard, then you may have challenges withdrawing since those MasterCard’s are only for outgoing

payments and don’t accept incoming transfers.

So how do you get around that? You can first deposit using the prepaid MasterCard or mobile e-wallet

and then deposit later with a card that accepts incoming transfers or with an online e-wallet before you

request a withdrawal. Crosscheck with support before you deposit. Another way to deposit will be to

use an international e-wallet or bitcoins (if your broker accepts these) to deposit. You can open your

free e-wallet accounts on these two links below and you can use these two e-wallets to deposit to your

broker.

https://goo.gl/ivssRo https://goo.gl/gQ1z4u

https://share.payoneer.com/nav/tPEcRoZecqWUDsYkOe6jlu99TRZaae4G78Hahzfd1nnfllsBL4k0cF5s6H82CzhfnQJwslKpNhOHUPIURZm7zg2

https://goo.gl/ivssRo

https://goo.gl/gQ1z4u



My forex Broker Review

1. https://goo.gl/EblwL3 is the most popular broker with Zimbabwean traders and I highly

recommend this broker. The broker has low spreads and their minimum deposit (for their Micro

account) and withdrawal is $5. Withdrawals to e-wallet take less than 48 hours to be processed.

The best thing about this broker is that they offer a MasterCard linked to your account. The

broker allows you to transfer funds instantly from your trading account into the card and you can

swipe the card in local shops or make online payments. This is very convenient as it gives the

trader easy access to their funds. You can even use the card internationally as well. The card

costs $10 when you choose to have it delivered by regular mail (takes at most a month to arrive)

and $40 when you choose delivery via DHL (10 days) When you open a Micro account I would

suggest you choose 1:300 leverage, the Zip or postal code for Zimbabwe is 0263, there will be a

section which asks you to fill in an Introducing Broker (IB) number and you need to manually

enter this number 301699. This is an award-winning broker and this shows how good they are.

The broker also supports the MT4 platform which you can download to your device.

You can open your free account by clicking here or by manually entering this link in your browser

(case sensitive) https://goo.gl/EblwL3

2. https://goo.gl/GHIqba is a broker who does both forex and binary options trading.

The broker accepts Zimbabweans and they require the id and proof of residence for validating an

account. The broker provides a free demo account and on their website, they have a forex

tutorial section where you can learn the basics of forex trading (I don’t recommend using the

section for anything other than getting basic forex knowledge). The broker offers the MT4

platform which we discussed above and their platform is available for windows, Mac, IOS and

android. They also offer a web based platform. I have found that they have low spreads and the

minimum deposit is $10 for their Ultra account. The broker offers fast withdrawals to e-wallets

and they claim wire transfers to bank account take 5 working days. I have used their online chat

and they respond quite fast they claim to have 24/7 support. The broker offers a wide range of

payment options. You can find can find out more by clicking the link below for opening a real or

demo account. Opening a demo or real account is free. There are some local traders who are

using this broker as well. Minimum withdrawal is $40.

https://goo.gl/GHIqba

https://www.hotforex.com/?refid=301699

https://www.hotforex.com/?refid=301699

http://www.noafx.com/live-account.php?ib=2088921514

http://www.noafx.com/live-account.php?ib=2088921514



Other requirements

Finally let’s look at other requirements necessary for one to start trading.

1. Device

You obviously need a device to trade on. I prefer using a laptop because the screen is big enough

to analyse the charts. I know some who trade using a phone although I don’t know how they

analyse their charts on the screen screens. I guess it’s a case of preference as well. As you

progress along your trading journey you may want to invest in bigger screens.

2.) Internet connection

This is a major consideration if you want to trade. For the average person the only internet

connection we have is usually for WhatsApp and face-book. Getting unlimited fibre Wi-Fi to your

home would be the ultimate solution. However it’s a bit pricey for some of us and hence we have

to look for alternative solutions to trade. One solution used by some is to use Wi-Fi bundles

which are sold by some service providers in towns and they sell $1 for 1 gig data which is enough

to last you a day if you are using them for trading and not downloading songs or movies. If you

happen to stay close to these WIFI hotspots then you are in luck. Word of caution for using the

Wi-Fi hotspots: public WIFI’s are not safe, other people can see the data you send and this is

risky especially when you transact online. Research on the ways to protect your data on public

Wi-Fi.

You can also use daily data bundles provided by local network providers. Your location would

determine the quality of connection though. Others use dongles and buy daily bundles which sell

for $2 for 1 gig data. If you have the dongle you can trade from your bedroom depending on the

network strength to your house.

If you have Wi-Fi at work or school you may try to put it to better use (during breakfast and lunch

of course), instead of spending all that time on face-book and twitter, you may want to research

more on trading. If you have Wi-Fi at school even better.

Be resourceful. Where there is a will there is a way.

3.) You should also network with fellow traders on WhatsApp, Facebook, Telegram etc. trading isn’t

a one-man game, you need to share strategies, indicators, signals etc. It’s safer to hunt in packs

in the forex jungle.



Scams to look out for I almost forgot about this part until I saw someone in our trading group complaining that she had

been scammed and lost $70. Some have lost more. So how does it happen?

When you get interested in trading forex, you usually want to interact with people who have

been trading already so that you learn from them. You may be struggling in your demo account

or you might have opened a real account and blown it a couple of times then you see someone

uploading screenshots (like two below) of how well they are doing and you approach them and

ask them to trade on your behalf and they vanish after you give them your money.

All those green lines indicate profitable trades and there is a profit of $449.



As you can see, these two images show very good profits and you may be tempted to give your

money to the trader so they trade for you.

Sometimes these people promise 100% return on investment (R.O.I) in a week or 2, and they

may pay up for a couple of times until you invest a larger amount with them then they vanish. I

don’t know of anyone who had someone trade for them and it worked out well in the end, but I

have heard of a couple of people who lost money. My advice is don’t attempt these kinds of

deals. Ultimately seek to learn to trade for yourself. Even experienced traders sometimes make

losses and the trader you invest with may suffer big losses and they may not be able to pay back.

Another way of getting scammed is to have someone sell you an ‘indicator’. An indicator is a set

of technical tools does analysis automatically and sends you signals to buy or sell a certain pair.

Indicators take away a lot of pressure that comes with trying to analyse on your own, they make

life as a trader easy. The problem is that you can buy an indicator that’s useless in the long run

i.e it makes you more losses than gains.

The same scenario may also happen with trading robots which are supposed to do automated

trading for you. They may cost as much as $700 to buy and in the end, they may prove to be

unreliable. Do your research and exercise due diligence, don’t trust strangers in the trading

world.

Subscribing to signals is another way that people may get scammed. Ideally subscribing to a

signal service has the advantage that you do not do any analysis on your but your signal provider

will tell you to either buy or sell certain pairs and you just follow them. The problem is that some



signals are not reliable yet you would have paid for them. I think a good signal service should

have a free trial before you pay for them.

Some brokers are also shady and may give you problems when you want to withdraw. Try to

research a broker fully before depositing funds with them. Treat South African brokers with

extreme caution.

CONCLUSION I hope I have managed to make sense in this e-book and I have made you understand at least the

basics of forex trading from a Zimbabwean perspective. Use this e-book as the beginning of a

learning journey that’s life long. Patience, persistence and determination will take you there.

Forex is not a get-rich-quick-scheme, there’s a lot to learn and be patient enough. When you

start trading you are most likely to blow your account (lose all your invested capital) more than

once ( I don’t think there is a trader who hasn’t blown his account especially during the early

days), but blowing your account should not be seen in a negative light, rather it should be seen

as a learning curve, sit down and note the factors that made you blow the account and learn

from them. Winners never quit, quitters never win.

I hope by this point you are at least curious to want to know more about forex trading.

We provide forex coaching to students all over the world and if you are interested get in touch

using the contact details below.

You can freely distribute this e-book.

About Tay Consultancy

We are a growing consultancy firm with a passion for helping people (Zimbabweans in particular)

start and grow their online businesses and achieve financial freedom. There is a general

misconception that making an income online is a preserve for the first world countries and we

seek to show people how this can be done. We can show you how you can get free training to

build a sustainable online business around your passions. We also seek to inspire people around

us to growth to be the best they can be.

Kindly get in touch with us on the contact details below to learn more. Thank you.



Connect with us!

+263774746242

like us here or follow this link https://www.facebook.com/TayConsultancy/

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Introduction to forex trading: A Zimbabwean perspective€¦ · exchange your US$ for the Rand and you can do this in a bank. This process is itself participation in Forex market-