Forex Trading Tutorial – FX Guide
In Kenya, the forex market is a fascinating and growing one. One of the benefits of trading in Forex is that you can do so whenever convenient for you. The forex market boasts a large size and million players, making it the largest market in the world.
Forex in Kenya is an industry in which hundreds of thousands of people, money changers, banks, hedge fund managers, and many more are involved. Here are the basic principles explained in this Forex trading tutorial.
As measured by the daily turnover, the foreign exchange market (‘FX,’ ‘Forex’ or ‘FOREX’) in Kenya is the largest globally, valued at over $5 trillion each day, exceeding all stock and bond markets combined.
The forex market is measuring a rapid turnover is why so many individuals and private investors want to get involved. Several advantages are available to investors in the forex market that are not available elsewhere. Let’s explore!
What is Forex?
Forex (demonstrated by currency) is also known as currency trading or foreign exchange. The market in Kenya is a decentralised, global exchange where all global currencies can be traded.
Currently, it is the most liquid market of its kind in the world. It is an excellent market for liquidity (more buyers and sellers) and price competitiveness (a small spread between the bid and ask price). Since other markets have been performing poorly, the growth of trading, investing, and management in forex markets is rising.
Why trade forex?
What is the purpose of trading forex in Kenya? You can trade Forex for a wide variety of reasons. The answers you get may differ from one person to another if we ask four people. Generally, it is for the sake of making money that traders trade Forex.
We will now take a closer look at the following factors as to why many people are choosing to trade in the forex market:
Forex market never sleeps
The forex market is live 24/5. There is continuous trading on the forex market because governments, corporations, and individuals worldwide demand currency exchange services. The market activity follows the sun worldwide, from opening the foreign exchange market in Australia to the closing bell in New York. As a result, traders can choose from a wide range of active pairs at any time of day.
Long or short
The forex trader has the option of trading both ways. In Kenya, the forex traders can profit and play the markets regardless of going up, down, or within a tight range. Moreover, forex traders do not care what triggered the movement – regardless of what it was.
Low transaction cost
A forex account is typically free of exchange fees or data license fees and trades with little or no commission in Kenya. Normal market conditions usually yield a retail transaction fee (the bid-ask spread) of less than 0.1%. Large dealers (with massive volumes) may be able to produce spreads as low as 0.05%. In this case, leverage is imperative.
The term “leverage” refers to the ability of traders to take positions much larger than what they initially invested. The ability to leverage your trading is another reason to trade Forex.
Currency traders in Kenya are often unaware of how to use financial leverage to their advantage. For example, in the equity market, the maximum leverage you can get from your stockbroker is 1:2, while in the forex market, the maximum leverage is 1:50, and in many countries, even more. The popularity of forex trading in Kenya can be easily understood because of this.
An individual with a small investment can take part in high-volume currency trading and take advantage of the small movement in the market to make considerable profits. On the other hand, even if your assumption proves to be incorrect, you could lose a significant amount as well. Thus, it is a dual-edge sword, as it is with any other market.
Markets like this are extremely liquid and have a large size. Traders in Kenya can trade with any currency due to the high level of liquidity. Also, there is no limitation on timing so that you can trade whenever convenient for you. As a result, different currencies are accepted globally by buyers and sellers alike. Furthermore, the forex market has 24-hour activity and is only closed on weekends.
As an aspiring currency trader, you won’t be required to spend a fortune, especially when trading stocks, options, or futures.
A minimum account deposit of $25 is required to open a mini- or micro-trading account with some of our online forex t=brokers. Consequently, opening a forex trading account in Kenya with very little capital for an individual with an average income is possible.
Who trades Forex?
The forex market is huge, with millions of participants, and it is the largest market in the world. The forex market is huge, with hundreds of thousands of participants (including us), banks, hedge fund managers, and money exchangers.
When can you trade Forex?
Forex in Kenya is available 24 hours a day, five days a week. It does not necessarily mean that it is active at all times, however. So let’s examine what a 24-hour day in the forex industry entails.
Trading on the forex market in Kenya during four different trading sessions, including those in Sydney, Tokyo, London, and New York.
What is forex trading in Kenya?
Forex trade is simply the process of buying or selling currencies (Dollars, Euros, Pounds, Yen, etc.) following market pricing predictions.
How does Forex trading work in Kenya?
As currency exchange rates change rapidly throughout the world in forex trading, the exchange rates in Kenya of different currencies change.
European countries, which use the Euro, would appreciate value versus Japan, which uses the Japanese Yen, because European economies, which have been stable for the past hours, days, and even weeks, are doing better than their Japanese counterparts.
Suppose you decide to trade the Euro against the Yen in this scenario. Upon selling the euros for the Japanese Yen, the exchange rate will be higher, and you will come out ahead. However, even if you decide to sell the Euros for the Japanese Yen, you will be losing money even if the Japanese economy is doing better than the European one. Thus, forex trading is not so simple as this illustration suggests, as it involves more than just one thing.
Can I make money online with forex trading?
At first glance, it may seem simple to trade Forex in Kenya, but this is rarely the case. Instead, the forex market is very complicated, and many traders have lost a lot of money because they did not invest the required time to learn how it works in detail.
What is “spread” in Forex?
When you are talking about the spread in Kenya, you usually mean the difference between the” bid” (buying) price and the “ask” (selling) price. Those brokers who help execute trades will make some of that difference into profits.
In general, a currency pair with more liquidity and stability will have a smaller spread in Kenya. Conversely, a highly volatile pair will have a steeper spread.
In addition, to spread trading, this term can describe a strategy that involves simultaneously placing short and long trades. As a result, you can take a slightly bullish or slightly bearish position that will minimise your losses and maximise your potential gains.
What is “scalping” in forex trading?
Short-term trading is called scalping. This trading strategy can be used no matter what the market is: Forex, stocks, or futures. Scalpers usually exit their trades as soon as they become profitable. The process usually takes only a few seconds or minutes.
Is forex trading in Kenya a scam?
There is no scam associated with forex trading in Kenya. There has been a forex market for years now, and it is considered the largest market in the world. Forex trading becomes a scam when you deal with bogus or fraudulent brokers and trainers. It is up to you to choose the right Forex trader and trainer for you. However, we will provide suggestions below.
Genuine and successful forex brokers ideal for Kenyans
Following your decision to participate in forex trading, the next step is to find a broker who can provide you with a platform to trade on. Once you have thoroughly studied the forex trading concept, you are well on your way to becoming successful.
There is value in choosing a broker that provides a trading platform and provides other forex trading resources like PDFs and videos. The following is a list of the top forex brokers in Kenya that accept MPesa and PayPal payments.
- Country: St. Vincent & the Grenadines
- Leverage: 1:1000
- Minimum deposit: 5 USD
- Website: hotforex.com
- Country: Ireland
- Leverage: 1:400
- Minimum deposit: 100 USD
- Website: avatrade.com
- Country: Australia
- Leverage: 1:500
- Minimum deposit: 200 USD
- Website: pepperstone.com
- Country: Cyprus
- Leverage: 1:500
- Minimum deposit: 5 USD
- Website: xm.com
Some advantages exist between trading forex and other market instruments like equity and derivatives. Some of the advantages of forex trading in Kenya include:-
There is no clearing, exchange, government tax, brokerage, or commission in the forex market. Retail brokers in Kenya generally make their money on bidding and asking spreads, which are transparent to users.
Intermediaries are not involved in forex trading in Kenya. Instead, you can trade directly with the market responsible for the currency pair’s price (EUR/INR).
No fixed lot size
Forex market trading doesn’t have a fixed lot size, though if you are trading forex futures or options, you will be required to trade a fixed lot size. Trading forex is said to be advantageous in this way.
Typically, brokers offer clients the option to purchase multiple lot sizes, depending on the client’s needs. Different brokers offer different lot sizes – standard lots, mini lots, micro-lots, or nono lots. This allows you to start trading with as little as $50.
Low transaction costs
Transaction costs (bid/ask spread) are typically as low as 0.1% for retail, as low as 0.07% for larger dealers.
No one can corner the market
The foreign exchange market in Kenya is large and crowded, and no one participant (even a central bank) can control the market price for a long period. Thus, the chances of volatility escalating suddenly are extremely rare.
24-hours open market
Forex trading does not require us to wait until the opening bell rings to begin. Instead, beginning with the opening of Sydney’s session on Monday morning, the forex market rests until the close of New York’s session on Friday afternoon. By doing this, we can trade whenever it is most convenient for us, without worrying about the time.
Use of leverage and margin
A lot of traders gravitate towards forex trading because of this factor. The forex market permits traders to trade using leverage by using low margin and leverage, which allows traders to make a profit by trading with more funds than they have in their accounts.
The forex market in Kenya permits traders to trade using leverage and for higher values. Depending on the broker, you may have the option of investing 50 to 100 times your initial investment. With $100 in your account, you can therefore take a position between $5000 and $10000, resulting in bigger profits for you if the trade goes your way.
On the other hand, avoid taking very-high leverage without risk management unless you are a seasoned trader since this can wipe out your entire account within minutes.
Very high liquidity
Forex trading in Kenya is extremely liquid because its size is so large. The advantage of this is that you can buy or sell currency whenever you want under normal market conditions. Moreover, it is always possible to find someone who will accept the other side of your deal.
It’s essential to have a forex education if you want to trade effectively. For more information about forex trading, there are many websites, books, and other resources available. But, in the end, experience is the best teacher, and if you are interested in learning forex trading, the experience can help.
Table of Contents
Heinrich is a forex and CFD enthusiast with a passion for writing good informative quality content. He strives to showcase the best forex brokers in Africa. Join him on his Journey!
Content Writer | Market Analyst
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