How to Trade Forex? – FX Guide

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1.
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With Blackstone futures, you'll pay low fees and trade under good conditions. So is this broker a good choice for Kenyan traders?
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4.7 stars from 389 ratings

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Markets.com is among the best forex brokers that offer PayPal deposits in Kenya. The Markets.com review discusses the broker in detail.
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69% of retail investor accounts lose money when trading CFDs with this provider.
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4.6 stars from 156 ratings

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Exness is among the best forex brokers that offer M-Pesa deposits in Kenya. We've provided a review to check how good this forex broker is.
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Remember that CFDs are a leveraged product and can result in the loss of your entire capital. Please ensure you fully understand the risks involved.

For Kenyans interested in trading in the forex market, there is good news. Kenya’s forex businesses have been more effectively regulated since 2017 so that retail traders can trade safely. Ideally, a money management component should be included in your trading plan if you are trading forex as a beginner in Kenya.

Additionally, you need a reputable online forex broker. Here is the information you need to know if you want to learn how to trade Forex in Kenya.

Get started with Forex in Kenya

Due to Kenya’s significant business potential and demographics, online forex brokers have established offices in Lagos and other cities in Kenya. As a result, it is relatively easy to engage in Forex trading in Kenya, even if you’re a newbie. Below are six simple steps to follow:

  • You will need an internet-connected device, such as a smartphone, tablet, or computer.
  • Search for an online forex broker accepting Kenyan clients.
  • You can trade forex with that broker by opening a demo or real account.
  • Choose a payment method that the broker accepts if you open a real account.
  • You can download and install the trading platform that the broker provides
  • Start trading!

Forex trading strategies for Kenyans

You’ll have a trading account funded after completing all the steps above, which allows you to trade forex from Kenya. However, to increase your chances of success, you will need to incorporate a profitable trading strategy into your trading plan.

Several strategies listed below have proven to yield positive results for some retail forex traders, based on their experience and expertise in the market. Whether traders are based in Kenya or somewhere else, the strategies listed here will work.

News trading

News trading might be for you if you enjoy keeping up with economic and geopolitical news. After an economic release or another important announcement, a sharp movement in the exchange rate of major currency pairs may provide an opportunity to profit from the strategy.

Scalping

The objective of this strategy is to capitalise on very short-term changes in the market. The goal of scalpers is to take a profit by entering and exiting the market quickly.

Day trading

All transactions in day trading strategies are typically limited to one trading session. A day trader buys and sells throughout the trading session but closes all positions at the end of the day to avoid the additional risk of holding overnight positions.

Swing trading

The strategy is based on momentum indicators for entering and exiting the market. Trading swings are about buying low and selling high, or selling high and buying low when they go long or short. Swing traders can hold positions overnight because they have no time constraints and they have relatively long-term targets.

Trend trading

An important aspect of trend trading is taking a long-term approach to the directional movements of a currency pair. A strategy based on the trend formation identifies the beginning of a reversal. The traders enter and hold the positions until the trend pauses and starts moving in the opposite direction.

Forex trading example

Making trading online on the smart phone. New ways to make economy and trading

Broker
Rating
Regulated
Bonus
Min. Deposit
Max. Leverage
1.
Blackstone Futures Broker Review
4.8 stars from 552 ratings

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FSCA

up to 30%

USD 100

1:400

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2.
Markets.com Broker Review
4.7 stars from 389 ratings

Broker Verified

FCA, ASIC, CySEC, FSCA, BVIFSC

up to 50%

USD 100

1:300

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CFD service. Your capital is at risk.
69% of retail investor accounts lose money when trading CFDs with this provider.
3.
Exness Broker Review
4.6 stars from 156 ratings

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SFSA, FSC (BVI), CBCS, FSCA, FSC (Mauritius)

up to 10%

USD 10

1:2000

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4.
CM Trading Broker Review
4.6 stars from 156 ratings

Broker Verified

FSCA

up to 100%

USD 250

1:300

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CFD service. Your capital is at risk.
Remember that CFDs are a leveraged product and can result in the loss of your entire capital. Please ensure you fully understand the risks involved.

Kenya’s currency is the Kenyan Shilling (KES), known by the symbol KSH. One Kenyan Shilling can be divided into cents, which has 100 units. The Central Bank of Kenya (CBK) is responsible for issuing and managing the currency through monetary policies.

Suppose the current USD/KES exchange rate is 106.50 Kenyan Shillings for one US dollar. Then, depending on your market analysis, you might be able to gain 100,000 US dollars by buying the Kenyan Shilling at that 106.50 exchange rate if you expect an increase in the USD/KES rate.

Using the following calculation, you can determine your trading profits if the USD/KES rate rises to 107.50:

100000 USD x (107.50-106.50 KES/USD) = 100000 KES

Using the following calculation, you could then convert the Kenyan Shillings profit into US dollars:

100000 CAD/107.50 KES/USD = 930.23 USD

Money making with Forex trading

Developing a profitable trading strategy that can be incorporated into a sound trading plan is essential to making money in the forex market from Kenya.  A social trading platform allows you to easily copy successful traders‘ transactions if you are new to trading.

Your forex trading success will be greatly influenced by how well you execute your strategy if you decide to develop your own trading plan. Also, it depends on your discipline to follow your trading plan in the long run. No matter what strategy you prefer to use, whether you are looking for long-term profits or you are trying to scalp the market intraday, successful trading can be incorporated into your trading plan.

A profitable trading strategy should incorporate objective criteria, a system for analysing risk and reward, and a formal approach to managing money into a plan that you can realistically implement in a disciplined way. It is important to remember that, though many strategies appear to work well at first, they may eventually appear to yield lackluster results as market conditions change.

Best Forex Brokers in Kenya

Kenya’s capital market regulator, the Capital Markets Authority (CMA) of Kenya, supervises the country’s financial sector. It is responsible for improving the safety of Kenya’s capital markets for Kenyan investors under the Capital Markets Act founded in 1989. Kenyan forex brokers must be authorised and regulated by the CMA to offer access to the market.

For Kenyan forex traders, the best online brokerage can be found among the well-regulated brokers listed below.

  • com: Minimum deposit $100, 80+ currency pairs offered.
  • eToro: minimum deposit $50, 47 currency pairs offered.
  • Avatrade: Minimum deposit 100 EURO, 50+ currency pairs offered.
  • FXTM: Micro account (min deposit $50) and ECN Advantage & ECN Advantage Plus (both with a $500).

Forex terminology

Before you start trading forex, you’ll probably want to learn the terminology used by forex traders. Forex traders use the following common terms:

Arbitrage: A simultaneous trade that attempts to leverage minuscule price differences between the same asset in different markets.

Base currency: It is the denominator currency in a pair. It is a currency that you already have.

Counter-currency: It is a nominator currency in a pair. It is a currency that you want to acquire.

Future: An agreement by which a buyer commits to buy a specific asset at a specific price in the future. A buyer can cash out of a future contract early and pocket the difference between the current asset and contract prices.

Going long: Investing in a rising-value asset.

Going short: Prematurely selling an asset in anticipation of its decline in value.

Lot size: In forex, one lot is equal to 100,000 base currency units. Online brokers also support smaller lots, including mini lots representing 10,000 base currency units and micro-lots representing 1,000 base currency units.

Margin calls: A broker can issue Margin calls for depositing additional funds to cover your trading positions when a requirement for margin exceeds the number of funds in your account. Some brokers may automatically liquidate your trading positions if you find yourself in this situation.

Orders: A forex broker will use these instructions to execute positions on your behalf. Limit, stop-loss, take profit, and market orders are all types that can be used on the forex market.

Pip: It is a basic unit to measure the change in the price of a currency pair.

Is trading Forex in Kenya right for you?

Forex trading requires deep knowledge of the market, a viable trading strategy, and sufficient discipline to follow your overall trading plan unless you use a social trading platform. However, you will likely become a successful forex trader if you meet all of those requirements.

If you decide to start trading forex from Kenya, you should make sure your broker is reputable and well-regulated. Then, you can choose from our list of brokers that accept Kenyan clients and open an account with them.

Managing your risks

Investing in foreign exchange entails high risk by its nature. Therefore, every trader must fully understand the risks involved in forex trading.

To manage risk effectively, you need to implement effective techniques. Traders can benefit from risk management techniques by lowering the risk they face and minimising or avoiding potential losses.

Risks of Forex trading

High leverage

Forex brokers generally offer a high level of leverage. Thus, traders have the option of trading with much more money than they have invested. It is, therefore, possible for traders to make higher profits, but it is also possible for them to lose more than they have invested.

High volatility

It is common for currency exchange rates to fluctuate rapidly. In the forex market, traders can lose more money more quickly because it is one of the most volatile financial markets.

Risk management tools

It is important to check the risk management tools that a forex broker offers before starting to trade. Check if your broker offers the following risk management tools:

Safe custom leverage

In most brokers’ trading platforms, you have the option of choosing the leverage ratio. For example, you can choose your leverage in Kenya, but most brokers offer 1:400 leverage. This gives you the ability to manage your risk. It is not recommended to go over 1:10 leverage.

Stop-loss orders

Any buy or sell order can be accompanied by a stop-loss order. This means that if the currency moves unfavorably, and this unfavourable movement crosses a certain limit, the trade will be automatically terminated at the set price.

Therefore, it gives you the ability to set the maximum loss you are willing to endure on each trade. Every trade should be entered into with a stop-loss order.

Guaranteed stop loss

Under any condition, a guaranteed stop loss will prevent you from losing more money than the stop-loss order. Slippage occurs when a currency value changes quickly. Stop-loss prices may not match the exact price at which you exit the trade. When market conditions are very volatile, a guaranteed stop-loss can help prevent slippage.

Negative balance protection

Protecting negative balances means traders cannot lose more money than they have deposited. Brokers interpret negative balance protection differently. If a trader wants to understand how their negative balance will be protected, they should review the fine print of their broker’s terms and contact them.

Deal cancellation

The cancellation of a deal can be performed within a certain period after it has been entered. If your broker offers it, you can cancel a deal before entering the trade. But all brokers do not provide this feature.

Common mistakes to avoid

Oops, girl avoiding eye contact not to be caught on lying. Silly young girlfriend shrugging with hands spread sideways, smiling guilty look away, trying convince she has no idea what happened

Traders who are new to the forex market should avoid certain common mistakes. For example, high leverage is not recommended, especially if you are a new trader, since you can incur much greater losses.

A trader should not invest more money than he is prepared to lose under any circumstances. The forex market is highly unpredictable, and it is inherently risky to trade or invest in it. Traders must therefore be ready to lose everything.

It is never advisable to trade with unregulated brokers. You may lose all the money you deposited in your trading account if you trade with these companies. There is also the possibility that unregulated brokers may engage in fraudulent practices, which could negatively affect a trader.

The following of trading advice blindly should never be practised by traders. Instead, before investing their money, traders should conduct their research.

The Kenyan traders should trade with a leverage of not more than 1:10 or trade on the risk to reward ratio of at least 1:2. In addition, one should educate themselves on the fundamentals of forex trading.

Before investing real money, a trader should test and check his compatibility and trading strategies by using dem accounts by different brokers’ accounts.

Bottom line

In the crux, all Kenyan traders who want to start their trading career in forex should check the forex strategies allowed by the brokers. In addition, you must check the legitimacy of the brokers in Kenya. Also, check whether CMA Kenya regulates the broker or not. Also, you should deposit your extra money, which you are prepared to lose. Finally, it would be best if you were as cautious as the FX market is risky.

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