2019 marked the end of the multiple currency system in Zimbabwe. The country reintroduced its native dollar with a new system to avoid the hyperinflation of the past. Moving forward from 2020, the Reserve Bank of Zimbabwe adopted a managed float exchange rate system. Although the currency still faces fluctuation, it is nothing like the 500 billion percent inflation rate pre-2016.
Retail forex traders in Zimbabwe have a refreshed opportunity to participate in the global financial markets. The Securities and Exchange Commission of Zimbabwe (SECZ) says very little of regulation in the retail trader space, but Zimbabwean investors can still take advantage of brokers regulated through neighbor entities.
Get Started with Forex in Zimbabwe
The international forex market can be a great opportunity for Zimbabweans looking to stabilize and grow their financial portfolios. As with any kind of investing, a certain amount of skill is a must — no profit is guaranteed. The lack of government oversight forces successful traders to be much more diligent in protecting their investment.
Getting started with forex in Zimbabwe means setting yourself up for success. Here are the steps to follow:
- Get a good Internet connection. Forex trading is often based on timing, and it’s definitely an advantage to have real time updates to news and financial charts. You need a strong Internet connection to receive this information and execute trades in a timely fashion.
- Choose your broker. Regulated international brokers service the Zimbabwe market through the Cyprus Securities and Exchange Commission (CySEC), the Financial Services Commission of the Republic of Mauritius (FSC), the Financial Conduct Services of the Republic of South Africa (FSP), the Financial Conduct Authority of the United Kingdom (FCA), the Dubai Financial Services Authority (DSA) and the Seychelles Financial Services Authority (FSA).
- Open an account to invest. Once you choose a regulated broker, that broker will have instructions for you to connect your bank account and verify who you are.
- Secure funding. You may need to trade Zimbabwe dollars into another currency as your base depending on the broker you choose. Fund your account through a bank account or a debit or credit card.
- Choose your trading interface. You need a familiar trading interface to minimize input errors and optimize your timing. Your broker may have a proprietary interface, but if not, test 3rd party trading apps until you find 1 you are comfortable with
- Trade. Now that your trading infrastructure is ready, you can immediately begin trading.
Zimbabwe Forex Trading Strategies
The traders who trade forex successfully have a working knowledge of major strategies. Here are a few of the most important strategies you need to know:
Scalping is for traders who like quick entries and exits. Scalpers don’t give the market any time to move against them — they usually take the 1st opportunity to profit from a trade. The individual profits are usually smaller, but the risk associated with time in the market gets reduced.
If you want to be a serious short-term trader, you may need to inform yourself about automated software that some investors use to increase the frequency and accuracy of trades. Because these trades may last for only seconds, they must be incredibly precise.
Swing trading is a precise art like scalping, but it’s not as fast. The “swing” refers to changes in price that form swing shapes on forex charts. Swing traders learn ranges (movements up and down between 2 price levels) and trends (directional moves) and use the mantra “buy low, sell high” to profit.
Swing traders are known as mid-term traders because of the length of time they hold trades. You may only hold a trade for an hour or you may hold it for a few weeks.
A position trader likes to understand the underlying macroeconomic conditions behind currency price movements. Profit taking in position trading may occur in a few weeks or it might take a few years. The profits are usually bigger than with scalping or swing trading because the corrections have more time to take place.
Short-term moves should not bother you if you choose to be a position trader.
Forex Trading Example in Zimbabwe
Z$/USD is trading at 0.003105/0.003305. You think that the price will go up in the near future and you are looking to buy Z$500,000. The margin rate of this currency pair is 7.89%, so you will need a total of $126.44 cash actually in your account to control a Z$500,000 investment. Trading on margin means that your broker will lend you the rest of the money to make the full investment.
The Z$/USD price moves up and is trading at 0.003705/0.003905 after 3 hours. The value went up by 4 points and you made (Z$500,0000.003705) – (Z$500,0000.003305) or $200 on the trade.
Make Money with Forex in Zimbabwe
The forex market gives you many ways to profit. Here are a few of the most important you should know about:
- Short selling: you don’t have to wait for a currency to increase in price to make money in forex. Short selling involves profiting from a downward movement in a currency’s value.
- CFDs: Contract for differences (CFDs) track currency prices. You don’t buy or sell the currency itself, but you make or lose money based on the price of the underlying asset.
- Binary options: The binary option gives you a simple win or lose scenario. If you pick the right direction of an investment, you take home money. If the direction is wrong, you lose a large percentage of the investment.