How Much do I Need to Start Forex Trading in Kenya? – FX Guide

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Forex brokers offer some traders the opportunity to start trading as little as $1, but trade with a broker offering nano or micro lots; you will need to deposit at least $12 or $120. If you want to start trading, you will need money depending on your broker’s minimum deposit required. You may also need to consider minimum position size, maximum leverage, risk management strategy, trading style, average stop loss required, and overall financial situation.

A Kenyan Forex broker who is CMA regulated is the best way to trade Forex in Kenya. Forex trading through a regular bank account or money changer is too slow and costly to be realistic. Therefore, we must first know how much I need to start Forex trading in Kenya and how much a Forex broker requires as a minimum deposit to answer this question.

Forex Kenyan brokers usually require a minimum deposit of $100 before you can trade real money, and they won’t let you do that until you deposit that much. Although Forex brokers have no minimum deposit requirements, it is theoretically possible to start trading with as little as $1. However, it is not advisable to trade Forex with such a small investment, as you will run into several problems, starting with minimum positions sizes and maximum leverage.

How much capital is required to start Forex trading?

Several Kenyan brokers offer a variety of options for opening an account. However, each of these accounts requires a minimum balance.

Typically, brokers require a minimum deposit of $5, but we recommend opening your trading account for at least $500. By doing so, a substantial amount of position can be taken in a trade, and decent profits can be made.

However, keep in mind that the effectiveness of a position depends on the amount held and the leverage provided. Generally, day traders shouldn’t risk more than 1% of their forex account on a single trade. Therefore, if your trading account has $1000, you shouldn’t risk more than $10 per trade.

The lot size you choose also affects your trading positions. In addition to Standard lots (10000 units), Mini lots (10,001 units), or Micro lots (1000 units), you can also trade in Micro lots.

USD is listed second in a currency pair, like EUR/USD or AUD/USD, and your account is funded in USD. You are given a pip per lot value. Therefore, one pip is worth $0.1, $1, and $10 for a Micro, Mini, or Standard lot. This information is very useful as it allows traders to determine how much risk they can tolerate and when to enter into trades.

If you have $500 in our account and want to trade euro/dollar mini lots, the rate is 1.2000 at the moment. For EUR/USD, the Kenyan brokers offer leverage of 100:1 and a spread of 0.4 pips. It is possible to buy 1 mini lot of EUR/USD for $120 if you have $12000 x $1.2000 = $12,000 / 100 leverage = $120 capital.

If you invest $500 into an account, you take up 40000 units or four Mini lots of EUR/USD, resulting in a capital investment of $480. You will gain $1 per lot if EUR/USD is moved by one pip. This would result in a gain of $4 on our position.

You should start out with a reasonable amount like $500 to trade, as trading with low capital is very risky using high leverage.

It’s common for most liquid forex pairs, such as EUR/USD or GBP/USD, to fluctuate by 100 pips or less. Therefore, if you invest wisely with low leverage, you can make a good return. However, it would be best if you always considered your risk appetite before making a big investment.

Leverage and minimum position size for forex brokers

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Broker
Rating
Regulated
Bonus
Min. Deposit
Max. Leverage
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FCA, ASIC, CySEC, FSCA, BVIFSC

up to 50%

USD 100

1:300

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up to 10%

USD 10

1:2000

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up to 100%

USD 250

1:300

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Most Kenyan Forex brokers do not allow you to trade smaller than one micro lot (0.01 lots). One micro-lot represents 1,000 units of the base currency. A micro lot for the USD/JPY currency pair, for example, is $1,000. Therefore, you will need leverage to trade the USD/JPY currency pair with a deposit of less than $1,000. For instance, if a broker offers a 30 to 1 maximum leverage on USD/JPY, you would need at least $33.34 just to transact one trade. In Kenya, for example, you may need to deposit at least $20 to make a USD/JPY trade if the maximum leverage is 50 to 1.

As a trader, you have a lot of leverage at your disposal, but that doesn’t mean you should take advantage of it. You require a minimum amount of money for making just one trade in Forex based on these factors:

It would help determine the maximum leverage your Forex broker will offer you (different leverages apply to different assets and countries).

The minimum position size depends on your broker (usually 1 micro lot).

Forex brokers sometimes offer positions as small as 1 micro lot. This smaller amount equals 0.001 lots, which is the size of one nano lot. Thus, a margin deposit of $1 would be sufficient to open a trade of 1 nano lot using the leverage of 100:1 for the USD/JPY currency pair.

Forex brokers offering Nano lot trading

Traders at FXTM can trade in nano lots because the broker is regulated. Maximum leverage of 1000 to 1 is offered, and a deposit of $10 is required. Several other Kenyan brokers offer nano-lot trading as well. You can trade with $1 without using any leverage at all with Avatrade, for example, which allows you to place a trade with a position size of just 1 unit of any other base currency.

To date, we have only considered how much money you need to start trading Forex based on how your broker limits you. We must also consider risk management, stop losses, profitability significance, and different trading styles to answer this question.

How risk management affects deposit size?

Earlier, we discussed the minimum amount of money required to enter a single trade. But forex trading involves numerous trades.

Even those who approach trading as a long-term investment may expect to take at least ten positions over a year, even if they intend to stay in winning trades for a few weeks or even months. Swing traders and scalpers of Kenya, who trade on a shorter-term basis, have many more trades than that.

Losing trades are part of forex trading. It is impossible to avoid this inevitable truth: any trader, even the best Forex trader, will lose at least a third of every trade he makes. The market tends to go through winning and losing streaks, and winning and losing trades are not evenly distributed.

Consequently, every Kenyan trader must plan for a worst-case scenario of at least twenty consecutive losing trades. In addition, it is also important for traders to plan for the worst possible drawdown (peak to trough account decrease).

The harder it becomes to reach the peak after your account is down by more than 20% because the gain to achieve it grows exponentially. In other words, if you lose 50% on your account, you must make 100% from what remains to put yourself back on level ground.

If you never want to lose more than 20% of your trading account, and you don’t want to lose more than 20 trades straight, that’s what your worst losing streak will probably be. In other words, traders shouldn’t exceed 1% of your account.

However, even if you only ever lose 20 trades in a row, the number of net losing trades will likely be approximately double that number within a major drawdown, with a few winners mixed in. Consequently, you should probably not risk more than 5% of your account on one trade.

As a result, if you need $1 for a single trade (minimum position sizing, leverage, and trade stop loss requirements), you must multiply it by 200 to get the amount you require for Forex trading. It is also important to consider the size of your typical stop loss.

The trader also has to watch out for wild, sudden price movements that can cause massive slippage beyond a stop loss. Currency pegs or manipulations, such as the Swiss Franc in 2015, usually lead to this.

A small percentage of your account is another good reason to risk only a small portion of your capital. It should also help trade major liquid currencies, including the US Dollar, Euro, and Japanese Yen.

How do stop losses affect deposit size?

It is never a good idea to enter a trade without a hard stop loss. A hard stop loss instructs your broker to close the trade immediately when the trade goes against you by a given amount.

Stop losses are a very important way of limiting your risk and controlling your losses, even though they are not always executed at a price stated when volatile markets.

It is always better to decide your stop losses based on technical analysis rather than how much money you have in your trading account.

Make sure that your stop-loss is not too small because you cannot afford it within the account size. If you don’t have enough money in your account, switch to a type of trading that requires tighter stop losses, or place more money in your account at a Forex broker who allows nano lots.

Do I need a lot of money to start position trading?

Since the average trading position takes several days or even weeks, it is common to have stop losses between 100 and 150 pips. Therefore, suppose that you want to risk no more than 0.5% of your account on any trade.

In addition, you never want to lose more than 20%. Therefore, at a Forex broker offering micro lots, you should deposit at least $2,500 to $3,750, or at a Forex broker offering nano lots, you should deposit at least $250 to $375.

How much is required to start swing trading?

Swing traders in Kenya usually use stop losses of about 30 to 60 pips on trades that take one to eight days to complete. Taking into account that you do not wish to risk more than 0.5% of your account.

Furthermore, you are not willing to lose more than 20%. At a Forex broker offering micro lots, you should deposit no less than $720, and at a broker offering nano lots, no less than $72 to $144.

How much is required to start Scalp or Day trading?

The goal of day traders or scalpers is to find trades that take only seconds, minutes or even a few hours to complete, so stop losses tend to be around 5 to 10 pips.

Let’s assume that you are not willing to risk more than 0.5% of your account on any trade. Also, you don’t want to lose any more than 20%. So it would help if you started by depositing at least $120 to $240 at a Forex broker providing micro-lots, or at least $12 to $24 at a Forex broker providing nano lots.

Is it worth trading Forex with a minimum deposit?

Worth It?

Another aspect to consider is the question of whether a small amount of money, such as $50 or $100, will be enough for you to trade Forex in Kenya safely? The amount of time and effort you put into trading Forex will depend on how much you value these sums of money.

Imagine you doubled your money in a year. For any trader, this is a great result that will probably require a lot of work. However, you will only have $200 if you start with $100.

Perhaps it’s not worth it for you if, for example, other changes in your life could save you that amount of money (such as saving more) without placing your capital at risk. Maybe, it makes more sense to wait until you have more money to invest since then such profits will feel more meaningful to you and be worth the effort you put into them.

Bottom line

Using a Kenyan Forex broker that offers nano lots or smaller, trading day trades, scalping, or swing trading is possible, even with a $100 initial deposit.

Forex should never be traded with money a trader can’t afford to lose, but if you trade with money, you aren’t concerned about the result; you may not stay motivated for very long. So a balance needs to be found that fits your trading style, emotional state, and financial circumstances.

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