“Volatility breeds opportunity” says CMTrading CEO Daniel Kibel who shares advice for traders in South Africa.
Pandemic-induced shutdowns, low consumer interest... It has been a tumultuous time for the South African economy.
Yet even as the country deals with the third wave of COVID-19 there have been bright spots in the local financial arena. The rand for example was trading below R14/USD for the better part of 2021.
Millions are being made by traders each day and with discipline and training. You too can grab your share of the financial markets.
CMTrading CEO, Daniel Kibel, shares advice for local traders.
Q: What’s behind the recent strengthening of the dollar?
“Traditionally over the last couple of years, we have seen that when the stock markets are flying high, the dollar weakens. What we're now seeing, however, is perhaps due to inflows into the stock markets that the US dollar is strengthening heavily. People are also looking at the issues around the world. The dollar is seen as a safe haven at the end of the day. With COVID things are not clear in terms of the markets. We're seeing an inverse of the normal situation with the stock market strengthening, as they have this year, and the dollar strengthening as well.”
Q: How has the new COVID Delta strain affected markets?
“I don't think it fully has yet but I believe it will. We are in uncharted territory right now. We don't have a clue about the strains and are on the backfoot; there are rumors of numerous strains which the current vaccines can't protect against. I don't think the market has priced in the effects of the COVID wave at all right now.”
Q: Why is the dollar considered a safe haven and is this still the case?
“The dollar is a safe haven because it is American; their stock market and economy are the strongest in the world. It's the one that all investors look at. It's the most entrepreneurial society. It's where people want to go. When things aren’t going well around the world, people will want to travel somewhere that is safe. Perhaps they don't want to invest in their own country or they want to invest in specific areas. Overall, when it comes to wanting to invest, America is a safe bet because at the end of the day the American economy is the strongest in the world.”
Q: What are trends you have seen in the Forex market?
“This is interesting because we’re not really seeing a trend other than seeing dollar strength; we have seen that dollar/rand go from below R14 up to now R15,22. That's an incredible move. So, there is a lot of dollar strength in the market. Possibly the strains of Delta and Beta are negatively affecting the South African economy and subsequently the rand.”
Q: Why trade Forex? Is it lucrative?
“Is it Lucrative, absolutely! But these are times where there is a lot of volatility. When there's a lot of volatility and things are not noticeably clear, prices move quickly. You just need to look at how the dollar/rand moved from below 14 up to R15,22. It is a time where people can make vast amounts of money but there is also a lot of risk in the market. This is a market which is really interesting. There are people making a fortune, we are seeing life-changing profits. On the other hand, there are obviously people who are losing money, and that is what people need to be aware of; this is a market where you can make a lot of money but you can also lose.”
Q: What advice do you have for traders in South Africa?
“My advice for traders is very much to jump in but don't put yourself at too much risk. Understand what you're getting into. However, now is the opportunity to make money in this market due to the volatility. So, I would say to everyone, get involved. Invest in a small amount of money if you're not sure and trade minor positions. Hopefully, with time and discipline, you’ll make some great profit out of trading.”
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