This archive report was first published on 24 July 2021.
Online Trading in Africa: A Growing Phenomenon ¶
Published on July 24, 2021, a report by Forex Brokers SA highlighted a significant surge in online trading volume in Africa, with a 120% growth in 2020. This growth was driven by demand for speculation and growth investing in global financial instruments, with the number of retail traders in Africa increasing from 1.3 million in 2019 to 2.1 million in 2021.
Local African stock exchanges, such as the Johannesburg Stock Exchange (JSE), Nairobi Securities Exchange (NSE), and Nigerian Exchange Group (NGX), have also reported their highest ever trading volumes in 2020 and 2021, as demand continues to rise. NGX reported a 62.42% growth in market capitalization from N12.97 trillion in 2019 to N21.06 trillion in 2020, while NSE reported a 43% growth in the past three months.
Pros of Online Trading ¶
- Access to Financial Markets: Online trading has made it possible for retail traders to access financial markets that were previously restricted to institutional investors and banks.
- Lower Commission Costs: Many online brokers have reduced their fees, making online trading more attractive to new traders.
- Monitoring Trades: Sophisticated trading software and tools have made it easier for traders to monitor their trades and track their performance.
- Availability of Trading Tools: Online trading platforms have made it easier for traders to access a wide range of trading tools and software, including MetaTrader 4 and cTrader.
Cons of Online Trading ¶
- Unregulated Brokers: The rise of online trading has also led to the emergence of unregulated brokers, which can pose a risk to traders.
- Gambling Tendencies: Online trading can be a high-risk activity, and traders need to be aware of the risks involved and take steps to manage their risk.
- Risk of Phishing & Cybersecurity: Traders need to be cautious when submitting sensitive information online and verify the genuineness of websites before providing any information.
- Overtrading: Traders need to be aware of the risk of overtrading and take steps to manage their risk and avoid making bad trades worse.
