Hi Guys,
This is my first post on the forum - I am a newbie just hitting the learning curve so please bear with me.
Does anyone here ever trade the USD/ZAR currency pair? Any general comments or advice on this pair?
I realise most brokers don’t offfer this pair but I have found a few that do. I am only looking at longer term trends.
Thanks for your comments! 
If you’re trading long-term, then USD/ZAR could work for you. The spread is much too wide for short-term traders. Keep the carry in mind, though. You don’t want that working against you.
Hello, and ‘welcome on board’!!!
I guessing here BUT I reckon (judging from the ‘vdh’ in your login name and the fact that you’re asking about the ZAR) that you’re right here in South Africa right???
Hi (from Johannesburg)!!!
The USD/ZAR (as a matter of fact ANYTHING ???/ZAR) is still considered an ‘exotic’ pair by most and, because of this, the spread is huge on these pairs (GBP/ZAR for example has a 500 pip spread). Having said that though it’s all ‘relative’ i.e. while the spread might be humungous, so too is the number of pips the pair moves in a day. Any ???/ZAR pair ‘pays out’ handsomely IF you’re on the right side of the trade and, needless to say, they can ‘kill you off’ ‘big time’ if you’re on the wrong side of the trade. I have at one time or another traded them all and have made so good profits occasionally and of course ‘good’ losses (although the losses were no the fault of the ???/ZAR pairs)!!!
I’m curious: why do you say you’re interested in the long term trend of USD/ZAR??? Obviously I monitor the ZAR and from ‘where I sit’ it’s either at ‘$7 something’ or ‘$6 something’ and, other than the ‘fiasco’ a few years back, I don’t remember seeing it move out of this range but, perhaps, I’m mistaken.
One other thing: (and this is obviously my opinion and it depends what you mean by the term ‘long term trend’) I don’t see forex pairs as a long term investment if that’s what you’re looking for (I’ll probably get ‘shot down in flames’ for making that statement). I once read an article somewhere that ‘summed it up’ by saying that no currency gains or loses against another i.e. they all just ‘drift’ up and down together whereas, with something like the Dow, Soybeans, Gold, stuff like that, it’s pretty much a ‘no brainer’ that if you have a couple of thousand USD and bought a couple of lots of ANY of these instruments and forgot about them you’d ‘end up on top’ in the long term without question I think. This is ‘investing’ in the true sense of the word as opposed to ‘speculating’ which is what I believe to be the reason that forex trading was ‘invented’ in the first place. As a matter of fact, I have been ‘toying’ with the idea of opening an account in my sons name (he’s eight years old now) and putting in some USD and buying a few lots of Soybeans and then forgetting the password until he’s twenty one (impossible to do I know but without dreams what are we???)!!! I mean to say that something like Soybeans is a ‘no brainer’ i.e. the more people that get born the more food they need and, while the price might go through a correction every now and then, you can be sure that in years to come it’s no longer going to be at $1300. In 1978 Soybeans were at something like $45 and today they’re sitting at around $1300. Take into account 200:1 (or 400:1) leverage and a couple of lots of Soybeans and I’ll tell you you’d (I’d) be made had I ‘discovered this’ years ago!!! The ‘trick’ of course is to make sure that you have enough funding to ‘ride out’ the inevitable corrections and bad news over the years (and of course ‘hope like hell’ that your broker does not go ‘belly up’) but all of this aside you’d eventually be ‘in the money’!!!
Anyway: I think that’s more than you wanted to know!!!
Sorry John, you ‘got in’ before me!!!
I’m also curious to know why YOU say for long term it’s OK??? Like I said: I’ve never seen it move out of the ‘$6 something’ to ‘$7 something’ range (at least not for a very, very, long while i.e. before I even knew what a ‘pip’ was???
To the best of my knowledge there was once when it was at something like $12 or $18 but that was a ‘fluke’ and if I remember correctly it had something to do with ‘currency manipulation’ by someone at the time.
OK: one COULD say that I’m contradicting myself here by saying that Gold WILL, in the long run, probably go ‘through the roof’ over the years and LOGICALLY this would be good for the ZAR but, having said that, you cannot dismiss the ‘fundamentals’ (yes: believe it or not: when comes to understanding the ‘fundamentals’ here: I DO understand: believe me!!! The ‘fundamentals’ over here at the moment are 'fundamentally fu*ked))!!! Of course, the way things are going and all things being equal, if you were long USD/ZAR then you should do well!!!
Hi Dail
Thank you for your reply. I just spent the last hour reading your excellent Parabolic SAR thread, you have clear explanations that helps beginners like me.
You are rignt I am South African, well spotted! I am currently living in Oxford UK. I will be returning to South Africa in July this year.
Maybe if I explain what sparked my interest in forex it will explain my “longer term” statement. I have been in the UK for 2 years now and been sending money back to SA every few months in �5k to �10k chunks. Doing that I have always tried to catch the GBP/ZAR correctly and I have been very succesful at doing that.
eg I sent money back in Nov at 14.40… If if reversed in JAn at 13.30 and gone back now at 15!! I admit I am very naive and this is just predicting highs and lows. but I am trying to learn eg. the Parabolic SAR method applied to the USD/ZAR.
Other reasons i prefer longer term in the ZAR the spread and my limited knowledge is better on the SA economy and currency.
Thanks again for the help. my brain is starting the ache from all the new info…
Brendon
I’d like to pipe in, if you don’t mind the interruption to the reunion. I’m not South African, but I am a USD/ZAR “investor” at the moment. I shorted USD/ZAR a few weeks ago at 6.98, and have since been averaging in to a losing position. Right now I’m sitting on about a 50% loss (unrealized) and at one time I had 0.00 NAV.
My account only has USD100 in it, so it’s not a big loss. I’m still trying to figure out forex, and $100 is enough to trade reasonably at Oanda with their ultra-tiny positions.
With that said, my trading of USDZAR was anything but reasonable since I know nothing about the economy (the electrical power problems and mining disruptions nearly killed my account!!) and traded way too large.
From my experience, the carry interest isn’t worth pursuing with ZAR because the trading range is so large and the trading margin is smaller since it’s an exotic. If you think you can buy low and sell high and have an above average understanding of what affects the Rand, then you should be able to make a penny or two.
As for me, I’m looking for a chance to get off this roller coast and unwind my excessive exposure, so I recommend you start off with a small position of a few percent of your account, and be sure to use stoplosses (I didn’t use SL because I wanted to pick up the carry interest. Dummy.)
Best of luck,
DZ
Hi Dr Zues
I agree it is suicide to go into the pair blind. You were very unlucky to get in at 6.98. There was an article that I read that referred to January as a “perfect storm” of bad news that made the ZAR devalue something like 13% to the USD.
I am always following South African news and currency and when it got to over 7.70ish to the USD I knew it was undervalued and expected it to correct to some extent. It has already done so and is still correcting as we speak. How much more I don’t know but I reckon it should be below 7.50 atleast and maybe even 7.20/30 in a month or two. Not sure that it will make it back to 6.98 but I hope so for you.
Have a look at this graph below comparing the USD/ZAR to other similar exotic currencies, it shows nicely how the ZAR has differed from the rest. I think this move was was not sustainable and hence the ongoing correction.
I went short the USD/ZAR around 7.80 and have mode nice profits (in demo).
Looks like things are moving in ZAR’s direction - five straight days of positive price action! According to some of the analysis I’ve read, a break of 7.44 will lead to a target of 7.17. My average price is 7.30, so that would put me well within positive territory. The bounce off of 7.45 looks like profit taking, so I hope that within a month or so my trade will be in the money.
Lessons learned, forex-gods! Please don’t kill my account.
Hello! Newbie here.
I wanted to short the ZAR over the long haul and still have the following questions.
forex.com told me they don’t market the ZAR and I can’t trade it.
How can the ZAR ever recover or gain value? I read recently about Jacob Zuma, how is it possible to lose shorting the Rand?
Could someone explain to me the 500 pip spread, what it is, and how that would work/cost with a hypothetical $10,000 account and market price for USD/ZAR at 8.000?
If someone put $10,000 in an account betting the Rand will one day devalue almost totally, like Zimbabwe, then how is it best to execute a trade on this belief, even long-term?
If I deposit $10,000 in an account, short the Rand, can I earn interest on the $10,000 like in a savings/moneymkt. account?
Since many people are bailing out of SA and moving to Australia, wouldn’t the best bet be the AUD/ZAR?
Thanks,
serious newbie here!
- Could someone explain to me the 500 pip spread, what it is, and how that would work/cost with a hypothetical $10,000 account and market price for USD/ZAR at 8.000?
The USD/ZAR is roughly $1.24 US per pip = so a 500 pip spread will cost you about $620.00 for 1 standard lot.
Though IBFX spread at the moment is 210 pips or about $260.00.
I dont think a $10k account is big enough to carry a USD/ZAR trade for example it moved 2514 pips (~$3,117.00) on a single day this week, so you would have to trade minilots to be safe or safer to handle the swings. Make that 2944 pips (~$3,651.00)
If the market price was 8.0000, you would start out in the negative, the amount of the spread at the ask price.
- If someone put $10,000 in an account betting the Rand will one day devalue almost totally, like Zimbabwe, then how is it best to execute a trade on this belief, even long-term?
You have to short the rand to gain the positive interest swap.
If it were to totally devalue, i would think you would want to go long not short and then you have negative interest roll over.
- Since many people are bailing out of SA and moving to Australia
I dont think this has any relevance where the people are moving, though I would assume if people are moving out of SA to anywhere, it will point to a weaker economy where the USD will gain strength against the rand, and that is bad news if your looking for a long term carry trade.
That is my opinion, of course i am no expert on this currency pair, as i am just looking at it myself now to, with a simular thought in mind. So anyone with a bit more experience with this currency, please chime in to let me know if I’m way off base here.
hello, please I would like to know if this chart is concurrency strength chart, it looks like the tool I’ve been looking for, can you please send me the format or the link, thanks
I find USDZAR intimidating because of political and economic instabilities involving South Africa. It’s volatile as well.
