Hi,
Im a complete novice at FX so I apologise if this is a dumb question!
Im interested in trading this currency against the US dollar…is this possible using MT4? Is it possible to view ZAR/USD chart info and make trades as would with one of the majors?
Thanks!
Hello,
It is most DEFINITELY possible but of course you need to find a broker that offers the pair.
One thing you need to be aware of though: the spreads on USD/ZAR (it’ll be quoted as USD/ZAR and not as ZAR/USD) are normally very high because it’s classed as an ‘exotic’ pair as well as it being an extremely volatile pair.
In addition: be careful trading this pair i.e. WATCH YOUR RISK / MONEY MANAGEMENT!!! It’s not uncommon for this pair to move a few hundred / thousand pips in a day and without proper risk / money management it’s REAL easy for a trade on this pair to ‘slaughter’ your account if the trade goes against you.
Also: this is a pair to be traded only by long term traders i.e. due to the high spreads it’s almost (if not TOTALLY) impossible to scalp this pair.
Lastly: don’t fool yourself into thinking that just because the ZAR is at levels not seen for a very long time that it ‘just HAS to weaken’ now. Your trading system should tell you when to buy i.e. don’t just buy now because of the ZAR’s strength. It COULD get stronger against the USD and stay there for an extended period (and as a matter of fact that’s what all of the local economists are saying here right now for what THAT is worth anyway). And watch Gold. It’s another reason why the ZAR is so strong at the moment. Gold WILL correct at some point in time and at that point it may be time to ‘jump in’ but AGAIN: only on a signal from your trading system!!! WHEN the time comes it may be worthwhile to long USD/ZAR and short Gold???
Regards,
Dale.
Oanda trades it for a “little tiny spread”, just 75 pips:D
Hello again old friend,
ONLY 75 pips??? That’s GREAT!!! I think I should go work for THEM??? LOL!!! Delta’s is 450 pips (although in all fairness: on L2 there is sometimes NO spread but you gotta be quick)!!! LOL!!!
But you know what though: it’s ALL relative I’ll tell ya IF you’re trading the daily timeframes and upwards (in my humble opinion anyway). I mean: the spread on USD/RUB, for example, is 1 500 pips BUT if you trade it LONG term the rewards can be oustanding if you get into one of those LONG trends. And most people ‘shy away’ from those pairs with 20 and 30 pip spreads (USD/TRY and some of the ???/SEK pairs and some of the ???/BGN pairs) BUT some of those pairs trend REAL nice for REAL long sometimes.
I guess ‘at the end of the day’: it doesn’t really matter what ‘your poison’ is. It ALL comes down to RISK MANAGEMENT really. Of all the lessons I’ve learned (the hard way I might add): THAT is THE most valuable one.
Regards,
Dale.
Dale and 99…thank you very much for your replies. I have learned a lot just in your brief responses.
“WHEN the time comes it may be worthwhile to long USD/ZAR and short Gold???”…thats precisely what I was thinking as apparently the ZAR is currently overpriced by 30%. But as you said…WHEN, is the critical factor!
Thanks again for your replies, its appreciated.
With that name are you in Zim? I am in Bulawayo and do some fx trading as well. h2oman
How can it be measured that ZAR is overpriced by 30%?! I can say fuel and energy is overpriced in the UK and has been for ages, doesn’t stop it rising though!
Hi H20man, yep im in Zim, Byo as well. Just starting to look into trading, and only been demo trading so far…bewteen the power cuts and internet downs! What broker and platform are you using, if you dont mind me asking?
Wildchancer, the 30% I quoted was from a business segment on SA TV from a market analyst they had brought in to interview. Im not sure the criteria they used, but the general sentiment is that the ZAR is overvalued (perhaps thats a better description than overpriced) and may (?) correct at some point.
I decided to take a look at USD/ZAR
I sold at 7.00873 and exited at 6.94807
this is a dumb noobie question. How do you calculate pips on this pair?
You earned 606.6 pips, or somewhere very close to that. My head ain’t always the best calculator:P
Ignore that fifth decimal place.
so it’s the four decimal places. That’s what I was thinking but wasn’t sure. Thanks!
looks like this pair is subject to some fairly big pip moves so may be worth trading off the weekly or monthly time frame even with the big spread.
600 pips is not bad for an overnight trade… 
Sometimes I almost think I know what I’m doing… LOL
sell entry are the top two yellow lines on yesterday’s green bar. two entries averaged gave me the average entry of 7.00873
Bottom yellow line on today’s green bar was the exit… I should have held on for more !
Hey,
If you REALLY wanna ‘go for broke’ then why don’t you take a look at GBP/ZAR!!!
Hint: if you look REALLY nicely there’s what could be construed as a double bottom on the weekly charts and I can tell ya that the ZAR is overvalued and everybody here is now ‘squeeling’ because they’re not happy about it so it’s only a matter of time before everthing goes ‘belly up’ again (oddly enough as I type this I’m listening to an ‘economist’, for what that’s worth, on the financial news on one of our national radio stations, saying the same thing)!!! LOL!!!
Of course: then there IS Gold and the Dow … LOL!!!
Regards,
Dale.
hmm I don’t see GBP/ZAR listed on my Alpari demo…
Hello,
I subscribe to a local (South African) website called ‘MoneyMorning’ and I received this article a little earlier in the week. It may be of interest.
[I]"Dear reader[/I]
[B][I]What will be the catalyst to trigger ZAR’s depreciation?[/I][/B]
[I]The South African Rand (ZAR) is close to its long term trend line of depreciation[/I]
[I]
[/I]
[B][I]Every decade of the past 50 years has been defined by a specific investment theme:[/I][/B]
[I]In the '60’s, we had large cap growth stocks[/I]
[I]In the '70’s - inflation and gold[/I]
[I]In the '80’s - the Japanese boom[/I]
[I]In the '90’s the US IT boom[/I]
[I]And the 2000’s - were driven by a run on commodities[/I]
[I]The ZAR has been a big beneficiary of the commodities boom. But even so SA has struggled [/I][I]with low productivity and high unemployment throughout the decade. Tax revenues going forward are not going to be sufficient to cover Government’s infrastructure ambitions and delivery programs to the mass population for electricity, water and housing.[/I]
[I]SA has a very small tax base which is expected to support the very high social demands of the general populace. As a result the likelihood of higher debt issuance is guaranteed. This will put pressure on the ZAR as investors will demand a higher interest rate or a cheaper entry, and the cheaper entry is a weaker currency. [/I]
[I]And it’s clear there is a global currency war at the moment, with revolving depreciation and intervention by central Banks to weaken currencies to promote exports. [I]Read FT Sept 28th article by Martin Wolf page 11. “Currency wars in [/I][I]an era of chronically weak demand.”[/I][/I]
[B][I]Technical picture on the ZAR: [/I][/B]
[I]From an Elliot perspective, ZAR looks to be in a 5th wave, which is the last wave of a trend. [/I]
[I]Looking at the long term trend line we are also at a critical level of support. Is this the final thrust lower in the Rand’s strength? [/I]
[I]What has occurred with the ZAR in the past is it tends to lower every time there’s a large investment into the country. For instance, Barclays buying ABSA at R6.00, and now Wal-Mart buying Mass-Mart at R7.00. [/I]
[I]
[/I]
[I]It’s inevitable that we will see more political pressure in SA to create a weaker currency to promote growth and job creation. [/I]
[I]South Africa used to have a dual exchange rate to encourage investment - the Financial Rand and the Commercial Rand. [/I]
[I]It wouldn’t be surprising if something like a dual interest rate were imposed - with lower interest rates offered to foreign accounts to discourage the carry trade, which is a large factor in the Rand’s strength.[/I]
[I]The excessive amounts of optimism towards the emerging market sector so late in the decade’s cycle is also a contrarian indicator.[/I]
[I]Global investors seem desperate for emerging markets to pick up the baton of global growth from the fallen developed markets. [/I]
[I]Momentum is behind emerging markets but this can change rapidly and when it does there will be significant downside opportunities in both stocks and exchange rates.[/I]
[B][I]To Sum up: [/I][/B]
[I]After a large appreciation over the past 2 years in the exchange rate, the ZAR is at critical long term resistance levels. [/I]
[I]With currency depreciation the new global theme, SA officials will not be the exception and are likely to act sooner rather than later to try and engineer a weaker exchange rate. [/I]
[I]Add historical and cyclical factors to the commodities boom, the prospects for SA going forward are[/I]
[I]challenging and likely to put pressure on the exchange rate. The exit window is narrow due to the ZAR’s liquidity and is subject to one way flows, which can be seen in its historical volatility. [/I]
[I]Timing will be crucial but you should look to sell both rand’s and emerging stocks.[/I]
[I]Good Trading[/I]
[I]Kevin Wides[/I]
[I][I]Macro Analyst, Atlas Macro Trading"[/I][/I]
Regards,
Dale.
P.S.
I’ve also just heard on the radio RIGHT NOW that our Finance Minister made a statement yesterday that our Fundamentals do not support the ZAR strength.
P.P.S.
New traders please note that the above article was written in South Africa so when they talk about ‘selling’ the ZAR they’re meaning long USD/ZAR and not the other way around!!!
all that fundamental stuff is confusing. I was just playing with usd/zar on demo. I sold yesterday at 6.9125 and 6.9004 and just closed out at 6.8634
approx 600+ more I’m beginning to like this pair.
sell USD/ZAR at 6.925
TP 6.880
TP was just hit… Trade Closed
That was quicker than I expected.
No demo this time. That was on the live account.
Well done my good friend!!!
Just remember it’s not going to go down forever!!! LOL!!!
Regards,
Dale.
