How To Learn Forex Trading In Kenya

How To Learn Forex Trading In Kenya

The foreign exchange market is a global decentralized or over-the-counter market for the trading of currencies. This market determines foreign exchange rates for every currency. It includes all aspects of buying, selling, and exchanging currencies at current or determined prices.

In this article Keweb. co tries to answer the question by publishing the ways one can Learn Forex Trading in Kenya

Below are the most helpful ways to Learn Forex Trading in Kenya

How to Open Forex Trading Account in Kenya

You need to start by choosing a regulated broker & open an account with that broker. Capital Markets Authority (CMA) of Kenya has made online forex trading in Kenya more regulated now. Trading with a licensed broker with ensure that your funds are protected & you can get compensation of up to Kes. 50,000 in case the broker goes out of business.

To trade forex in Kenya via a locally regulated broker, you need to open an account with any of the forex brokers regulated and licensed by CMA. There are six such brokers who are regulated by CMA: EGM Securities, PepperStone Kenya, ForexTime (Exinity Group), HotForex, Windsor Markets, and Scope Markets.

There are also global foreign-regulated forex brokers accepting traders from Kenya – that are regulated with foreign regulators like Financial Conduct Authority (FCA), Financial Sector Conduct Authority (FSCA), Australian Securities and Investments Commission (ASIC), and the like.

It is recommended that you choose the only brokers that are licensed by CMA. Only this will ensure that you are trading forex legally.

Most brokers now have low deposit requirements of as low as $5 to open Live trading account & start trading. As an example, HotForex has $5 deposit with their Micro Account.

Start with Demo Forex Trading Account

Almost all the brokers provide demo accounts. Demo accounts are like real trading accounts, and your can trade and understand the nuances of trade just like a real trading accounts without risking your real money. Your demo account will have dummy funds, and you can use them to test out your strategies & learn under real market-like conditions.

Note: The market & trading conditions with a broker’s demo account platform would likely not be the same as a Live account. But it is still a good place to learn to trade.

Once you have gained enough experience & are profitable on demo for a consistent period of few months, only then you should move to Open Live Account with real money.

Opening Live Trading Account

Most Forex brokers have a Live Account Opening page on their website. Live this example from FxPesa’s website.

Generally, the steps involved are the same. You need to fill your ‘Account Information’ details, your Financial Adequacy information. Then you need to submit your 2 KYC documents i.e. ID Proof & Address proof to complete the verification.

How can you deposit & withdraw for Forex Trading in Kenya

Regulated forex brokers like FXPesa, Scope Markets Kenya, PepperStone Kenya allow traders the option to fund trading account in KSh. using local bank trasfer via bank account in Kenya. With this method it can generally take upto 24 hours for the broker to credit your trading account.

You can also fund via credit/debit cards & Mobile money like MPeasa, Airtel money etc. Generally both these methods are instant for funding, and it takes few hours in case of withdrawals.

For example, the typical withdrawal time at CMA Regulated FX broker FXPesa is few hours for Ewallets & Mobile money. But it takes few days for withdrawals in your bank account

Risks of Forex Trading

Forex Trading is risky & can result in loss of your invested money, or even more than your actual investment. It is really important to understand the risks, so you can take preventive action to minimize them.

Risks of Forex Trading

The 4 main risks involved in forex trading are:

Forex Market can be highly VolatilityForex deals with exchange rates and currency pairs. Forex market is quite volatile. As per the global financial markets, the fluctuations in exchange rates could be various economic, geopolitical, social, etc. factors. The currency pair which can give a profit today may incur a loss tomorrow.Therefore, to cover the volatility risk, one has to study the exchange rates and currency movements very carefully.

Poor Risk Management and High LeverageIn forex trading, the risks of incurring huge losses should be covered using hedging instruments like derivatives. High leverage means trading on the capital which is not owned or is borrowed. So, if the leverage is high then the losses on that becomes a double burden on the investor to pay off.

Risks of Forex Trading

The 4 main risks involved in forex trading are:

Forex Market can be highly VolatilityForex deals with exchange rates and currency pairs. Forex market is quite volatile. As per the global financial markets, the fluctuations in exchange rates could be various economic, geopolitical, social, etc. factors. The currency pair which can give a profit today may incur a loss tomorrow.Therefore, to cover the volatility risk, one has to study the exchange rates and currency movements very carefully.

Poor Risk Management and High LeverageIn forex trading, the risks of incurring huge losses should be covered using hedging instruments like derivatives. High leverage means trading on the capital which is not owned or is borrowed. So, if the leverage is high then the losses on that becomes a double burden on the investor to pay off.

The following Economic indicators could impact a currency:

  • Country’s Central Bank’s Interest rates decision
  • Inflation rates
  • GDP
  • Unemployment data

Technical Analysis

Technical analysis involves trading based on the charts, reading the patterns, using charting tools, indicators etc. to figure out the currency’s movements.

Traders that use technical analysis read the chart using methods like candlestick patterns, Supply Demand, trendlines, support resistance etc. Below is an example of how a trading chat looks like. A technical trader would analyse different time frames as well during analysis.

How much do you need to start forex trading in Kenya?

Even without much start-up capital, forex trading is accessible to the average individual. FXPesa offers trading accounts with only $5 minimum deposit for our Executive account, $100 minimum deposit for our Premiere account, and leverage up to 1:400 is available*.