Trading Zimbabwean Investment Gold (ZiG)

Written By

Christian Harris

Written By

Christian Harris

Christian is a seasoned journalist with decades of experience. He transitioned from tech journalism to finance to follow his interest in investing. He has been trading stocks, futures, forex, and cryptocurrencies for more than 5 years, becoming an eToro Popular Investor. With hands-on expertise across various assets, he offers valuable trading insights.

» Christian Harris Profile Page

Edited By

James Barra

Edited By

James Barra

James is an investment writer with a background in financial services. He has worked as a management consultant, where he delivered large-scale operational transformational programmes at some of Europe's biggest banks. James authors, edits and fact-checks content for a series of investing websites.

» James Barra Profile Page

Updated

Apr 11, 2024

In an effort to establish a trustworthy national currency, the Zimbabwean Investment Gold (ZiG) has replaced the Zimbabwean Real Time Gross Settlement Dollar (RTGS), which depreciated by three-quarters of its value in 2024 alone.

This guide will help you start day trading ZiG, from understanding the factors that influence its value to devising a short-term trading strategy.

Quick Introduction

• Zimbabwe introduced the ZiG on Monday 8th April 2024 to address longstanding economic challenges, including hyperinflation and currency instability.
• The ZiG exists as a digital token rather than a tangible currency. Its value is pegged to the price of gold, functioning as a digital asset instead of a physical banknote or coin.
• Trading ZiG offers exposure to the Zimbabwean economy, the potential high volatility associated with emerging markets, and given its gold-backing, a hedge against traditional forex markets.

Best Forex Brokers

The ZiG is a relatively new currency and not yet widely supported by forex brokers. However, our tests show these are the 3 highest-rated forex platforms, featuring a wide range of currency pairs:

#1

OANDA US

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Vantage

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IC Markets

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More Forex Brokers For Day Trading

Understanding The ZiG

The ZiG marks Zimbabwe’s sixth effort to create a stable national currency since 2008, the year inflation soared to 231,000,000%. The subsequent widespread adoption of the US dollar (USD) and persistent skepticism have thwarted efforts to reestablish a local currency ever since.

The aim is for the ZiG to achieve broad acceptance and utilization in the economy, mirroring the widespread use of bond notes and the USD. It is anticipated that ZiG tokens will facilitate both peer-to-peer, like transfers among individuals, and peer-to-business transactions.

Further details, including specific platforms, services, and merchants that will accept ZiG tokens as payment, may be issued by the Reserve Bank of Zimbabwe (RBZ).

As custodians of one of the world’s most underperforming economies, Zimbabwe maintains that it will retain the ZiG’s value as it’s supported by 2.5 tons of gold and $100 million in foreign currency reserves.

However, numerous currency reforms and various strategies have been unsuccessful in improving Zimbabwe’s economy over the past decade, as hyperinflation continues to escalate, production is hampered, and the USD is still favored as the primary medium of exchange.

Each ZiG unit is quantified in milligrams, equivalent to 1/1000th of a gram of gold. Its value in foreign currency will be pegged to the international gold price determined by the London Bullion Market Association (LBMA) PM fix.

Christian Harris

Author

Individuals may have the opportunity to get ZiG tokens by applying to the RBZ and exchanging RTGS, other fiat currencies, or digital assets, in accordance with the rules set by the RBZ.

The introductory exchange rate of 13.56 per USD was set for the ZiG on the first day of trading. The daily exchange rate will be subsequently determined in the interbank market.

Why Trade The ZiG?

With hundreds of currency pairings to speculate on, why choose Zimbabwean Investment Gold?

What Moves The ZiG?

The ZiG can be influenced by a wide range of factors, notably these five:

1. Given Zimbabwe’s history with currency instability and hyperinflation, understanding the ZiG’s regulatory framework means assessing the measures put in place to ensure its stability and how it’s being managed by Zimbabwe’s central bank and other authorities.
2. The ZiG is backed by gold bullion and foreign currency reserves, which is a significant departure from fiat currencies that rely on government credit. Evaluate how gold market fluctuations and changes in foreign currency reserves impact its strength and stability.
3. Accessibility of the ZiG in international markets will be critical. Liquidity is vital for ensuring that trades can be executed quickly and at predictable prices. Limited accessibility or liquidity can introduce higher trading costs and increased risk.
4. Zimbabwe’s economic policies, political stability, and economic indicators can profoundly affect the ZiG’s performance. Traders will need to monitor Zimbabwe’s economic health, including GDP growth, inflation rates, and unemployment rates, as well as any political events that could influence economic policy or stability.
5. The international community’s perception of Zimbabwe’s economic reforms and the confidence it has in the ZiG as a stable currency will play a significant role in its trading viability. Confidence, or lack thereof, will lead to volatility and thus opportunities for short-term traders.

Ultimately, while the ZiG operates within Zimbabwe’s borders, its connection to global markets through gold and foreign currency reserves makes it inherently sensitive to a broad range of international factors. This interplay between local and global influences highlights the complexity of managing and trading a currency like the ZiG.

Christian Harris

Author

Similar to many currency pairs, traders must also be proficient in fundamental analysis to thrive, though this skill alone is insufficient. Similar to engaging in short-term trading of any forex pair, those day trading ZiG must also be well-versed in technical analysis.

Analyzing charts uncovers trends in price and volume that day traders can leverage to pinpoint trading opportunities. Recognizing support and resistance levels, along with employing technical indicators such as the Relative Strength Index (RSI) and Bollinger Bands, are important components of a successful forex trader’s toolkit.

A Trade In Action

Let’s imagine a scenario where I day traded the ZiG based on its unique attributes and market dynamics.

I started by analyzing the global gold market and noticed that gold prices were expected to rise due to increased market uncertainty and a weaker USD. Given the ZiG’s backing by gold, I anticipated that its value would also increase.

Additionally, I reviewed economic indicators and political events in Zimbabwe that might impact the ZiG. Finding no significant adverse events, I decided it was a good opportunity to go long on ZiG.

The Trade

• Entry Strategy: I decided to buy ZiG when its exchange rate was 13 ZiG per USD expecting the exchange rate to improve due to the forecasted rise in gold prices.
• Investment Amount: I allocated $1,000 for this trade.
• Risk Management: I placed a stop-loss order at 12 ZiG per USD (-7.69%), safeguarding against unforeseen market movements that could have moved against my prediction.
• Profit Target: Anticipating a significant positive shift, I set my take-profit level at 15 ZiG per USD (+15.38%), expecting a substantial appreciation in ZiG’s value.

Execution & Monitoring

Once my trade was active, I kept a close eye on global gold prices, the anticipated economic event’s outcomes, and any significant news from Zimbabwe that might have influenced the ZiG in the near term.

My monitoring was frequent, adapting to market signals and economic indicators.

Outcome

The economic events unfolded as predicted, leading to a sharp rise in gold prices. Consequently, the value of ZiG strengthened, reaching my take-profit point at 15 ZiG per USD.

My day trade was automatically closed, locking in my gains.

Reflection

This example illustrates how anticipating a significant move in gold prices, due to an economic trigger, can be leveraged for day trading the ZiG, emphasizing strategic entry and exit points, risk management, and the importance of staying informed about both global and local market dynamics.

How To Start Day Trading The ZiG

It takes minutes to start day trading the ZiG, requiring three key steps:

1. Choose a forex broker
2. Devise a strategy
3. Place a trade

Choose A Forex Broker

The initial step is to verify the regulation status of the forex broker you are considering. There are a considerable number of unlicensed entities in the market that may pose a risk to your trading accounts.

Then, examine the range of financial instruments the broker permits you to trade. Given the current relatively low interest in trading the ZiG, many brokers may not support trading this currency or associated financial instruments including CFDs. You may have to use a broker based in Africa, which brings its own risks.

For those interested in trading forex with leverage, it’s important to note that the level of leverage offered can vary significantly among brokers and regulatory regions. In Europe, for instance, retail investors often have access to leverage up to 1:30 for forex pairs, including the EUR/USD, GBP/USD and USD/JPY.

Once you’ve ensured these key aspects are satisfactory, assess the broker’s fees, the efficiency of its trading platform, and any extra features or advanced trading tools it provides.

If all these criteria meet your expectations, proceed to open a demo account and get comfortable using the broker’s charting platform and tools. Only once you are happy should you then open a real account and add funds. This depositing process is typically swift and straightforward, achievable through bank transfers or debit card payments.

Highly regulated forex brokers are further required to ask you to complete a questionnaire to evaluate your suitability to trade with leverage.

Devise A Strategy

Devising a currency trading strategy involves several critical aspects that can determine its success. First and foremost, a clear understanding of your trading goals and risk tolerance is essential. This foundation helps in selecting the appropriate trading style, for example day trading.

Economic releases such as Zimbabwe’s GDP growth rates, inflation figures, unemployment rates, and trade balances need to be monitored. Also, keep an eye on announcements from the Reserve Bank of Zimbabwe regarding monetary policy or changes in foreign currency reserves, as well as any significant changes in gold prices.

A robust trading strategy often incorporates elements from both to provide a comprehensive market view. Additionally, risk management cannot be overstated; it includes setting stop-loss orders to limit potential losses and understanding leverage’s impact on trade outcomes.

Lastly, maintaining discipline and a level-headed approach is vital for navigating the volatile forex market successfully. Continuous learning and strategy refinement based on personal performance reviews are key to long-term trading success.

Place A Trade

When beginning, it’s crucial to trade the ZiG only in small quantities and avoid using money that you cannot afford to lose.

Monitoring market trends closely and staying informed about fundamental and technical changes is also essential. Currency prices, particularly for the ZiG, can fluctuate rapidly, requiring swift action to seize potential profits or mitigate losses.

I recommend maintaining a trading journal as well. It can offer insightful data to assess the success of your short-term trading approach and identify areas for improvement.

Bottom Line

Trading the ZiG involves navigating a complex array of factors due to its unique backing and Zimbabwe’s economic landscape.

Short-term traders must monitor global gold prices, Zimbabwe’s economic indicators, and global economic events, as these can significantly influence the ZiG’s value.

Additionally, understanding the regulatory environment within Zimbabwe, market liquidity, and access to trading platforms are crucial for effectively ZiG trading.

Use our ranking of the best forex brokers to get started.