Many Kenyans are interested in trading but don’t know where to start. Once you learn the basics, you will gain the essential tools to start trading with confidence.
Forex trading has become increasingly popular. It gives Kenyans a chance to open up alternative income streams for greater opportunities. Thanks to improving technology and mobile services, more people than ever can access international financial markets.
Before you jump in, you need to know the basics. This involves the first steps, finding the best forex brokers in Kenya and understanding how to develop a strategy. Once understood, you can enjoy opportunities like never before.
Understanding Forex Trading in Kenya
Before trading in Forex, you need to understand exactly what it is. A shortened version of the term “foreign exchange,” forex is the process of buying and selling currency. Due to constant fluctuations, the aim is to use your knowledge of the markets to make a profit.
Forex Trading in Kenya: opportunities, risks, and regulations
There are many different ways to trade but forex is the biggest financial market in the world, with trillions of dollars exchanged each day. For investors in Africa, one of the benefits is that forex runs 24 hours a day, meaning you don’t need to worry about times when global stock markets close.
This offers Kenyan traders flexibility to fit forex around their daily work and responsibilities. The increasingly widespread availability of smartphones and internet access means that more people than ever can flourish with forex trading.
The Regulatory Framework and Choosing a Broker
Trading in forex can come with risks. Not only is there no guarantee of profit but there are some unmonitored brokers out there that can put you at risk of fraud. Thankfully, there is a regulatory body to protect you.
If you have an interest in forex trading in Kenya for beginners, you need to ensure any broker you choose is signed up and authorized by the Capital Markets Authority (CMA). This ensures you will be protected and have a reliable broker who must adhere to strict requirements. Here, you will have transparency and your funds safeguarded.
Once you find a broker authorized by the CMA, there are other factors you need to consider. This includes checking if they use industry-standard trading platforms, such as MetaTrader 4 and 5. These are user-friendly and give you plenty of features.
After this, you want to check other factors such as deposit/withdrawal methods and customer support. You can then follow the registration process, which should be simple enough. Before trading, it’s important to familiarize yourself with the platform and check to see if they have a demo account where you can practice trading.
Building Your Knowledge and Strategy
The next step you need to take is working out how to build your knowledge and strategy. Over time, this will become an individual process. You’ll eventually develop your own method but there are two general approaches that can be used when starting out.
The first is fundamental analysis. This is where you study economic data while supplementing that with following news and events that may affect currency values. With this method, it’s important to understand how the likes of political events in Europe can impact global markets, for example.
The differences between Forex and Stock Trading
The other method used is technical analysis. This is where you will rely more on the price charts and indicators to identify trends and opportunities. This can be more accessible for beginners, as you are relying more on raw data rather than intimate knowledge and experience of news and events.
Along with these, there are different trading strategies. For example, there is trend following, where you simply identify the overall direction of the market to capture large moves. In contrast, you have scalping, which is making many different short-term trades to try and capture minor price moves instead of larger swings.
Along with a trading strategy, you need to consider risk management. This includes managing your trade sizes and not risking a large percentage of your trade capital on single trades. It can be tempting to be carried away by forex trading, but you always need to protect yourself from losing all your money with a few bad trades.
Why Forex Trading is so Appealing to Kenyans
Not all countries have seamless withdrawals and deposits. The best brokers in Kenya have integrated with M-Pesa to ensure Kenyans don’t have this problem. This allows you to both trade globally while managing your funds locally.
You can now also be aided by the rise of the forex trading community in Kenya. There have never been so many resources available. This may be local seminars but also through the internet with social media groups and YouTube channels.
Forex is not a get-rich-quick scheme. It’s a way to potentially make money by making wise moves with your investments. By knowing the first steps and taking the time to learn the basics, you can open yourself up to new earning potential.
