Financial markets in South Africa are affected by important political announcements, such as when a speech is delivered about budget plans, policies are revised, or there is a reorganization in the cabinet. The outcomes are usually clear and happen quickly. Local dealers see the global financial news as important signals or indicators, not only as new information. Because politics and economics are closely linked in some nations, watching the government’s communications is now vital for short-term investors.
Particularly for intraday traders, the timing and the way political events are presented are important to notice. If a statement is made at a domestic press event, the value of the rand can change in only a few minutes. Such fast changes create chances as well as potential threats. Those who are ready for sudden changes can use them to make a profit. In other cases, the market can move fast in the wrong direction without traders expecting it. For that reason, being attentive during the trading day is now an essential duty for traders.
Unlike investors who invest for months or years, intraday traders try to capture even the smallest swings in price in a single day. As a result, they are often affected by unexpected shocks such as a decision by some authorities or the sudden leaving of an important member. Statements from the president or finance minister can create a shockwave that impacts other industries and changes the value of currencies. Experience plays a big role in such an environment. Traders try to foresee the events that will have the biggest influence and the moments when markets become especially sensitive.
Reliance on technology is increasing to deal with how unpredictable business can be. Most traders in South Africa keep track of news, check calendars and follow social media notifications to be aware of changes. By being able to monitor the market in close to real time, traders can react quickly to each change. In intraday trading, having quick and reliable access to information is very important. Less than a minute of delay might cause a trader to lose out on profits.
The currency market relies on price changes and political news makes them happen regularly. Since uncertainty can rise quickly in South Africa, political cues have grown to be essential for traders. They allow entry and exit at particular times, affect the use of hedging and risk control, and impact traders’ moves all day. Instead of dismissing politics, smart traders include it in their general analysis of the market.
FX Trading during politically difficult times is often heavily influenced by traders’ emotions. When news emerges that worries a nation, people may rush to sell their stocks, while encouraging news can prompt people to be very optimistic. It is important for traders to think carefully and not let their fears guide their trading. In such markets, being calm and acting quickly usually go together.
The number of political changes in South Africa has increased in recent years which means traders there have had to adjust. Political developments that people used to overlook are at the heart of how trading happens during the day. In this environment, FX trading turns into a discussion between how the market works and what is happening politically. Maintaining attention to both throws South African traders into a better position to act and not just to react.
