The South African Rand is a very popular trading currency amongst forex traders. The reason for this is that the Rand is highly volatile, making the South African Rand very unpredictable in the market. Trading such an unpredictable currency can be very beneficial if the right strategy is in place, allowing you to know exactly when a buy or sell opportunity is near.
On average the rand can reach incredible highs in the market. On a typical normal day, the Rand can go up to 1000 pips. For the Rand, this is quite high, but convert it to market movement on British Pound graphs you’ll see it’s not that high and rather average. This creates great potential for traders who are trading this pair against the US Dollar, as the Dollar lies in between the Rand and Pound’s value. Since the Rand can also change direction at any time, it’s an ideal currency to trade for a short term.
Rand Based Forex Strategies
A lot of traders who implement strategies for trading the South African Rand say that it’s necessary to monitor market movement of gold, crude oil, and platinum as well. This is because South Africa is one of the top countries in the world that exports minerals such as the above mentioned. And because the Rand is so strongly linked to gold and platinum, the rand’s market movement can sometimes be similar to gold and platinum.
It’s also important that just like other currencies around the world there are economic factors that have a strong impact on the currency’s value. Especially when trading the Rand one should focus on the employment rate within South Africa. Unemployment in South Africa is much higher than most other countries so our unemployment rate is linked directly to the Rand’s value. The higher the unemployment rate gets the more value the Rand loses, and the more people being employed the more value it gains.
The value of the currency is also influenced by a range of different sectors such as vehicle manufacturing, tourism, wholesale trade, and of course mining. These are some top business sectors within South Africa so expect the Rand to struggle if these sectors struggle. Politics also play an enormous part in the Rand’s value, as the USD/ZAR dropped by 7 percent in under a week when the president decided to replace the finance minister.
Successful Rand Trading
With so many factors having an impact on the value of the currency it’s clear as to why the Rand is so volatile. This unpredictable market might be terrifying for big investors and corporate traders who have hundreds of thousands in the market, it’s the personal and independent traders who have discovered the opportunity of trading a volatile currency, because at any moment the trend can swing and the trader with his small investment can profit ten times as much.
But always remember the one rule that applies when it comes to trading any currency pair, is keep a calm mind. Never trade according to your emotions. This is extremely important when it comes to a volatile currency such as the South African Rand which can change direction at any moment.