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Trading increasingly popular in Africa


Trading increasingly popular in Africa

With the option to choose between Forex, stock and cryptocurrency trading, it is no wonder that Africans are actively exploring these investment options.

Trading in Africa

The African continent has witnessed a boom in trading activity in recent years. This is inclusive of Forex trading, cryptocurrency trading and stock trading. The first two are often the starting point for novice traders because they are viewed as more accessible and there are various brokers and training workshops on them. Moreover, in deciding what to trade, the liquidity of each is often a key determining factor. Cryptocurrency is said to carry higher level of risk than Forex, as there are less case studies to predict market activity and it is not as liquid as Forex. Despite the undeniable interest in crypto in Africa, the Nigerian Central Bank recently directed banks to cease their services to cryptocurrency providers, which has reportedly led to significantly less volumes of trading, particularly compared to the activity from before the directive.

Stock trading, on the other hand, is generally the next move for those with a much greater understanding of the markets, the business landscape and lucrative companies. There are also several cases of African investors pursuing international markets, for a chance of really capitalising on market activity. In such cases, it is important to consider popular options like FTSE and S&P 500, which are UK and US indices that contain different companies, have different valuations, and offer different returns.

As at June 2021, approximately 1.3 million Forex traders were reported to be active in Africa, bearing in mind that there are others who are still contemplating the move and educating themselves on how things work. Regardless of which trading option one pursues, it is important to start by clarifying trading objectives and resources, determining risk tolerance, and then choosing the most suitable trading strategy to implement.  

Given the evident interest in trading in Africa, there have been several writings on the possible reasons therefore, including:

  • Readily available market information in the form of online guides and advisors
  • Accessibility through the internet to trading platforms
  • Growing interest in alternative investment options and income streams
  • Tech savvy population

Trading as a career and investment option

Perhaps one of the most notable and talked-about Forex traders in South Africa is Sandile Shezi, who arguably popularised the phenomenon in mainstream media and made it cool amongst the youth. Counted amongst the very few to have reached millionaire status before the age of 25 in the country, he has quickly become the case study and reference point in discussions on how to make a success of trading as a career and investment option. Since then, trading is no longer a foreign concept amongst the African youth, as it appears to be something that is actively researched and explored by both young and old nowadays. However, the emphasis remains on the need to adopt a suitable strategy and avoid making impulsive decisions. Providing his commentary on the phenomenon, INFINOX Regional Director, Danny Mawas was quoted as saying, “Trading based on an emotional impulse often results in traders buying and selling at inopportune times. While trading offers great benefits, it is vital for traders to follow a strategy and to start simple. This will ensure their longevity and prosperity in the game.”