Exploring The World Of Online Trading In South Africa

Like many other nations, South Africa has been quickly opening up to online trading. This is because of various factors, like reduced barriers to entry. Trading is no longer the exclusive domain of brokers in dark suits or investors with deep pockets. People from Johannesburg to Durban can now buy fractional shares, explore global markets and build micro-portfolios, all with just a few taps.

As a result, the industry has grown, making it one of the largest forex hubs on the African continent. Can you imagine that, according to news24.com, it has already hit the $1 billion mark? Ask any of the country’s youth about platforms like MetaTrader 4, and you’ll realise a good number know about them.

And because of this increasing popularity, you can imagine how big the industry will become in the next few years. But what precisely is fuelling the growth?

How are platforms competing to capture the largest share of the market?

Well, if you have such questions, stay around to find the answers.

The power of mobile technology

Just recently, William Kwamba published a report placing the country’s mobile phone penetration rate at 82%. That’s like 54 million mobile phone connections!

In another study by the General Household Survey, over 96% of households were found to own at least one mobile phone. Based on these statistics, one thing is clear: these devices are quickly the norm for everyone in today’s culture.

It also means people are using them to do almost everything, including trading. Now, imagine the pain of frustrating these individuals just because a website is not mobile-friendly. Well, you may end up losing a good number.

Do you actually know that about 85% of internet users expect mobile websites to work as well or even better than their desktop counterparts?

Since traders may want to access the markets using their mobile devices, you want to ensure the website experience is seamless. And that’s precisely what trading companies are doing. They are taking advantage of responsive designs to ensure seamless multiscreen access by using layouts that automatically adjust to fit multiple screen sizes.

This is why when you tap on a trading app in South Africa, you will be less likely to encounter those that require constant zooming or pinching on smaller screens. Interestingly, providing such great mobile-friendly experiences can encourage 74% of users to become loyal, further highlighting why online trading has become popular.

A growing emphasis on digital safety

At a time when over 600 million cyberattacks happen daily, no one wants to interact in an insecure environment. In fact, according to Security Magazine, when about 66% of users know an organisation is breached, they will be less likely to ever transact with it.

Modern internet users are aware of the increasing popularity of cyberattacks and only want to interact with brands that pay serious attention to online safety.

This preference could be more pronounced in the forex sector, especially because a lot of money is involved. Realising this, trading companies have been implementing tight security measures to get ahead of cybercriminals.

Take two-factor authentication, for instance.

As simple as it may sound, it helps protect users from up to 99.9% of targeted attacks by requiring them to provide another verification besides a password login. SSL encryption also comes in handy by securing online communications through a handshake process.

Other companies have gone the extra mile to integrate AI-based infrastructures to improve real-time fraud detection. AI has an unmatched computational ability, allowing it to detect patterns across large data sets in microseconds.

This helps identify and prevent malicious actions before they are launched, boosting traders’ confidence. And the more secure people feel in an industry, the more likely they will be to participate, leading to more industry growth.

The place of payment technology

It shouldn’t be surprising that payment methods have helped advance the South African forex industry. According to Testlio, improving payment efficiency alone can increase retention rates by at least 15%. Of course, before placing their trades, users must first fund their accounts. If there is a lot of friction in doing that, many of them may be discouraged from further exploration.

The same study by Testlio cites such frustrations as the reason over six in ten users abandon checkouts. To avoid such losses, companies have been adopting seamless payments, ensuring traders can transact with ease. They have also been implementing multiple options to cater to the country’s varying payment preferences. While credit and debit cards are among the country’s most popular payment methods, they might not be everyone’s favourite.

Trading companies know this and have diversified the options to ensure there’s something for everyone.

Surprisingly, Clover Dynamics has noted a 30% increase in revenue for companies offering many ways to pay. Many customers often leave if they don’t find their preferred payment method. On the flip side, they will likely remain loyal if they find it, with Monext claiming that adding relevant payments increases conversions by 7%.

Key tailwinds driving online trading

Online trading has grown in popularity due to a number of key benefits that make it more accessible, efficient, and cost-effective than traditional trading methods. Here are some of the most popular reasons for online trading:

• Lower Costs: Online trading platforms typically charge lower brokerage fees and commissions compared to traditional brokers. This is a significant advantage, as it can save traders a substantial amount of money, especially those who trade frequently.
• Greater Control and Accessibility: Online trading gives individuals direct control over their investments. They can place orders, track their portfolios, and manage their investments from anywhere in the world, as long as they have an internet-enabled device. This eliminates the need for a middleman and provides a more flexible, convenient experience.
• Real-Time Updates and Faster Execution: Online platforms provide real-time market data, news feeds, and notifications. This allows traders to stay informed about market movements and execute trades almost instantly, which is crucial for capitalizing on short-term price fluctuations.
• Access to a Wide Range of Assets and Tools: Online trading platforms offer access to a diverse array of financial instruments, including stocks, bonds, cryptocurrencies, commodities, and foreign currencies (forex). Many platforms also provide a wealth of research tools, technical analysis charts, and educational resources to help traders make informed decisions.
• Increased Transparency: Online platforms provide clear, detailed information about all fees and transactions, promoting transparency and helping traders keep a close eye on their investment activities.
• Automation and Algorithmic Trading: Some online platforms facilitate automated trading, where computer programs are used to execute trades based on predefined rules. This allows for rapid analysis of multiple markets and can lead to more efficient execution.

Giving people open access to financial markets

Seeing online trading dominate the South African scene shouldn’t be surprising.

Companies today know precisely what modern consumers want and have been adjusting to provide relevant experiences that keep traders returning. And as you may know, humans rarely remain quiet about positive experiences.

They will often tell their friends about them, causing more people to join the industry. 

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Tags: Finance, Trading, Online Trading, Guest Post