Trade Forex in Kenya
The Forex market is the biggest in the world with a daily turnover of over US$5 trillion, and Forex trading in Kenya is becoming more and more popular too. Forex trading is the exchange of one currency for another, at a set exchange price through a broker where you trade currency pairs – for example, you could buy Swiss Francs with US Dollars. If the Dollar then devalues over time against the Franc, you would then make a gain by selling your Francs. Since currency fluctuates constantly, trading it can give you gains in short periods of time. As with other forms of trading, forex trading does contain risk and you should not trade money that you can not afford to lose.
Recommended Brokers for Kenyans to Trade Forex
|Broker Name||Visit||Minimum Deposit||Next Step|
|Visit XM||5 USD|
|Visit Etoro||50 USD|
|Visit Easy Forex||200 USD|
What is Forex trading?
The Forex market is divided into three types of trading – spot, forward and futures. Spot is the largest, and is essentially the buying and selling of currency at a set price. This is most likely the market you’ll be trading in as an individual trader, and so this is the one we’ll be focusing on. The reason why the market is called the spot market, is that once parties within the trade make a final exchange on a price for a particular currency, it’s called a spot deal.
Forwards and futures markets do not trade in currencies per se, but rather in contracts that represent future settlements, so we’ll leave these for now.
Why is trading Forex exciting?
Because there is no central location where trading occurs, such as the stock exchange, you can do it from anywhere in the world, and this is what makes the Forex market such an attractive means through which to grow personal wealth. It’s also a 24-hour market and is highly liquid, making it more suitable for short-term investment and for those who want to be able to trade at any time of day. In contrast, stock trading tends to be less risky when done long-term, making it better for those with long-term interests. So if you’re looking for short-term returns and a faster way to grow your wealth, the Forex market is where you should be looking.
Note: liquidity refers to a market in which buying and selling of an asset (currency, in this case) can occur with prices remaining stable – in other words, without causing large changes in the asset’s price. For example, cash is the most liquid of all assets.
Another reason to trade in Forex rather than stocks is the low entry costs. You don’t need a lot of cash to begin trading, so it’s open to anyone. This is especially great if you are a young professional who wants to start growing your money as soon as possible. Do keep in mind that a market as volatile as Forex comes with risks too. Being aware of this will help you to make smart trades.
Is Forex trading risky?
It’s important not to treat Forex trading as a get-rich scheme. This is what leads to rash decisions, mistakes and loss. Just like stock trading, patience, caution and strategic decisions are trading behaviours to follow. Because the Forex market is more volatile than the stock market, you are inevitably dealing with risk when you trade. One of the keys is to start small – trade in small amounts while you are learning the ropes, and once you’ve developed a strategy or trading style that suits you, you can begin to make larger trades.
The liquidity of this market is exciting but it also comes with danger. Since currency value is affected by a number of factors, this means that price is subject to many influences in domestic and global contexts. The price of currency is determined by several factors, including interest rates, countries’ economic situations, political events (and investors’ feelings toward those political events) as well as predictions about the future performance of specific currencies. Keeping abreast with global events will give you some idea of how this works, but no one can predict the future. This is where 24-hour trading is a huge plus – you can make quick decisions and trades when you need to.
Because of the inherent volatility of the Forex market, you should abide by a guideline that is true with all trading and investment: Trade within your means. In other words, don’t trade more than you can afford to lose.
Choosing a reputable broker will also minimise your risk, and you can start looking by reading through our reviews of good brokers in Kenya.