As the internet and better tech devices increasingly become available, Kenyans should take advantage of the opportunities on the web. For over a decade now, online forex trading in Kenya has provided regular streams of income for some people. Today, a significant number of forex traders in Kenya are the youth.
Forex trading in Kenya entails taking a position for or against a currency with the aim of making a profit. The primary goal of dealing in forex is to buy low and sell high. For example, if you anticipate that the British pound will appreciate significantly against the dollar, you will bet for the British Pound and against the dollar. Currency trading is in pairs and takes place 24 hours a day in the forex market.
Also, the forex market is liquid (it is easy to convert to cash). But, the market reacts quickly to data and shocks. As such, it is a high-risk, high return investment.
Is forex trading legal in Kenya
Engaging in forex trading is legal in Kenya. However, for the longest time, the market was unregulated. In 2017, the Capital Market Authority introduced legislation that would regulate the sector and also outline the registration requirements. Most forex trading companies in Kenya rely on international registered brokers who offer links to clearing centers in the US, Asia, and Europe. The online forex broker, EGM Securities is the one of the few CMA licensed online Forex Brokers in Kenya.
How to start forex trading in Kenya
If you are planning to venture into forex markets, you first need to research the market and understand the fundamental concepts. Forex trading combination of data and market analysis. Some companies may offer to interpret the numbers for you. But, it is essential to understand at least the basics of the market movements. There are forex trading schools in Kenya like the Royal Business Institute of Business and Kenya Forex School that can train you on forex trading. Alternatively, you can research on the internet. You can also inquire from professionals in the field.Factors to consider when selecting forex trading brokers in Kenya
With requisite knowledge, identify a broker. Here are some factors to consider when selecting forex trading brokers in Kenya:
Find background information about the company.
How long has it been on the market? What services does it provide? How are the customer reviews for it?
Confirm if the brokerage firm has the necessary has the approval to provide forex trading in Kenya.
In Kenya, the Capital Markets Authority is the watchdog in the sector. As stated above, most of the online forex brokerage firms in Kenya rely on the support of international platforms. The international oversight bodies include Financial Services Authority (UK), and Commodity Futures Trading Commission, and National Futures Association (the US).
Check the product/service offerings of the brokerage company.
You can find the information on the websites of the firms. The more the services, the better. While on the company’s site you can research through the links and assess the company. If you see something fishy, do not engage further.
Compare the costs charged per transaction and also factor in bank charges for wiring money.
At the end, select the brokerage firm with a good reputation, customer support, quick response time, transparency, and an easy to use online platform with the best rate among other crucial factors.
The next step is to open an account with the forex broker.
You can either open a personal or managed account. The advantage of an own account is that you will trade by yourself. But if you want the broker to execute the trades, you can opt for the managed account. While opening the account read through the paperwork more so the terms and conditions and the charges. The higher the fees, the lower your returns will be and vice versa. You can activate your account using the link sent to your email.
Analyzing the forex market
Before you begin trading, you can examine the market using various techniques. You can review the charts and data and use the information to predict the future performance of a currency. Alternatively, you can analyze the economy of the country with the money you plan to trade. Lastly, you can observe the current mood in the market. Plus, you can use a combination of the different techniques.
Placing an order in the forex market
Most online forex platforms have a minimum deposit requirement. But, you decide your margin. The advisable margin is investing 2% of your money in a currency pair. You can then instruct your broker to buy or sell a currency at the prevailing market rate. If not, you can place a limit order: tell the broker to buy or sell if and only if the currency hits a certain price. With stop orders, you can buy or sell above or below current market prices.
Forex Trading in Kenya Beginners Video