Forex trading wisdom (For South African Traders)

There is a lot of wisdom and advice shared among traders and usually believed to have originated from so-called market experts. While some of it may be true, others are simple myths with no serious value behind them.

8 wisdoms for successful forex trading

Low risk/high reward 

Many experts make day trading seem simple and highly profitable, but the reality is quite different. It’s fast-paced, stressful, and challenging—though it can be rewarding for those who approach it with the right strategy and discipline. You’ll often hear financial analysts / experts talk about how easy it is to use day trading indicators and make money, but if you were to ask them for a verified track record of their own success, most wouldn’t have one to show.

While there’s no definitive right or wrong way to trade, focusing on longer timeframes can offer a more stable and balanced approach compared to the unpredictability of short-term market swings.

Knowledge is Power—But Discipline is Key

Simply having knowledge isn’t enough; having the right knowledge is what truly makes a difference. When it comes to trading, simplicity often works best, and many traders achieve success by keeping their strategies straightforward. However, the real factor that determines long-term consistency is discipline. You can have the most effective trading system in the world, but if you fail to follow the rules, you’ll still struggle to succeed.

It’s easy to look at others who are doing well and think that copying their strategies shall make you successful. However, considering the ever-changing nature of the market, traders only thrive when they develop their own approach and find what works for them.

The Myth of 'Buy Low, Sell High'

One of the biggest misconceptions in trading is the belief that buying at the lowest point and selling at the highest is the best way to make money. While this sounds logical in theory, the reality is much different. If a market is trending downward and reaches a support level, many traders may be tempted to go long. However, with the prevailing momentum still bearish, there’s a good chance the price could drop even further. While buying at a low price might offer an attractive risk-to-reward ratio, the odds often work against this strategy.

A better strategy is to wait for signs that the price is actually reversing, then enter early as the move gains traction. Never worry about missing out on a trend—it’s far better to enter late at the right moment or not enter at all than to jump in too soon and get caught in the wrong trade. In many cases, buying high and selling higher is a more reliable strategy.

Why Relying on News Can Be Costly

Trading based on news releases is one of the quickest ways to lose money. In most cases, market prices already factor in known information before official announcements are made. No matter how much research you do—whether analyzing forecasts, economic data, or past trends—predicting the market’s exact reaction to news is nearly impossible.

Furthermore, over-reliance on expert opinions in the media can be risky. Many analysts offer insights based on what should happen, but where the market actually moves is an entirely different matter. The best way to approach trading is to trust your own analysis. 

The Benefits and Pitfalls of Demo Trading

Demo trading is an excellent way to get familiar with the markets and sharpen your skills without putting real money at risk. It allows you to practice strategies and gain confidence without heavy financial consequences.

However, staying in a demo trading account for too long can create a false sense of security. When real money isn’t on the line, there’s no emotional pressure, and traders don’t experience the psychological factors—such as fear and stress—that come with actual trading. While it’s important to learn in a risk-free environment, real experience only comes from trading with real money, even if it’s just a small amount.

Today, many brokers allow traders to start with minimal capital, giving them a chance to build a psychological immunity while gradually adapting to live market conditions.

The Risk of Moving Stop Losses Too Quickly

Trailing stops can be useful in locking in profits, but using them too aggressively can work against traders. While the idea of securing gains early may sound appealing, it can often lead to prematurely closing trades before they reach their full potential.

Many traders become overly focused on protecting their positions, only to miss out on the larger moves they initially aimed for. Trading inherently involves a certain level of risk, and giving trades enough room to develop is essential. If your original analysis is solid, you should allow the market to move naturally rather than tightening stops too soon out of fear.

Indicators: Useful, but Not Essential

There’s nothing wrong with using indicators—many traders rely on them and find success. Trading Indicators can make price action easier to interpret and offer valuable insights into market trends.

However, it’s important to remember that all indicators are ultimately derived from price movements. This means that if you learn to read price action effectively, you can make well-informed trading decisions without relying on indicators alone. While indicators can serve as a helpful tool, they should complement your trading strategy rather than define it.

Figure 1

Again, if you feel you need another way of looking at price, use indicators but it’s only a personal addon to your success and not a real factor that could make a trader profitable in the markets.

See what others are doing

This is a broader topic and one that can be misleading to most traders. At times, most traders, especially beginner forex traders, are positioned on one side of the market, as evident by data released by different forex brokers and you will see the market going the opposite way. 

For a while, this continues, and these traders are likely sitting on heavy losses. Suddenly, you see the market reversing and you assume they are making money. This is a possible scenario and it’s also common to see traders on the wrong side of the market.

Nonetheless, is this enough to assume the other side when such a scenario arises? Not necessarily as the trend could be short-lived and others could be on the right side of the market from the beginning.

Let’s delve deeper into South African Forex Market Landscape 

Forex markets worldwide are highly dependent on few factors including a country’s political and economic conditions, agriculture and commodity price shifts including the price movements of their exported goods and services. South Africa is one of the biggest exporters of gold and other metals, value of Rand (ZAR) is highly influenced by commodities price movements.  

Why tracking USD/ZAR is crucial? 

The USD/ZAR currency pair is crucial for traders due to its high volatile nature. It is highly dependent on the economic and political situations of both U.S and South Africa.  U.S Dollar’s high demand makes it a challenge for forex traders in South African market to manage risk and optimize their trading goals according to the price movements..