What is Forex Trading in Kenya
What is Forex Trading in Kenya revealed. We verified the best way to invest in Forex for Kenyan Traders.
This is a complete guide on what Forex is in Kenya.
In this in-depth guide you’ll learn:
- What is Forex Trading?
- How to trade forex in Kenya?
- How to make money by trading forex in Kenya?
- How to trade forex as a beginner Kenyan trader?
- How much money do you need to start forex trading in Kenya?
- Learn about Forex Trading in Kenya?
- Which brokers are best for starting with Forex Trading in Kenya?
- Which brokers offer a $5 (582 KES) minimum deposit for Forex Trading?
- Which brokers offer a sign-up bonus for first-time Kenyan Traders?
And lots more…
So if you’re ready to go “all in” with Forex Trading for Kenyans…
Let’s dive right in…
CySEC, FCA, FSA, FSCA, Labuan FSA
FSA, Cysec, FSCA, FSC
What is Forex Trading in Kenya (Updated 2023)
- ✅ What is Forex Trading In Kenya?
- ✅ An Introduction to the Forex Market and Forex Trading in Kenya
- ✅ A Brief History of the Forex Market
- Major Participants in the Forex Market
- What Drives Prices in Forex?
- Who Regulates the Forex Market in Kenya?
- Forex Terms and Definitions you must know
- In-depth dive into Forex Currency Pairs
- How you can start trading forex in Kenya ASAP
- A crash course on Forex Charting
- The Basics of Risk Management for Kenyans in Forex
- The Best Forex Brokers for Trading Forex In Kenya
- Forex Trading Pros and Cons
- How to choose a forex broker
- Frequently Asked Questions
What is Forex Trading In Kenya?
👉 Forex trading is the act of trading various currency pairings to profit from the difference in the pair’s value, which is influenced by several factors and driving forces, like the news.
👉 Kenya, like many African nations, has lately shifted its focus to FX trading. Numerous young Kenyan merchants are interested in starting their own trading enterprise but are unsure where to begin. Do not worry, in this extensive guide, we will cover all that you will need to know and learn about trading foreign currencies in Kenya.
👉 Consider the currency pair of Kenyan Shillings (KES) and US Dollars as an example, expressed as USD in the forex market. At the current exchange rate, 1 USD is equal to over 110 Kenyan shillings, attributable to the fact that KES is not a strong currency in the same way that USD is.
👉 Subsequently, if we purchase 5,000 USD, we will pay over 570,000 KES depending on the exchange rate at the time of the purchase. If, and when, the market value of KES grows, we would pay fewer KES for each USD purchased.
👉 In addition, it also means that you will earn more KES than you spent for each USD you sell. The difference between the KES you pay and the KES you get is the profit you make. Forex trading is lucrative only if you understand how to analyze currency pairings and know when to invest and in which pair.
An Introduction to the Forex Market and Forex Trading in Kenya
👉 Each day (24/7 from Monday to Friday), the foreign exchange market trades $6.6 trillion worth of money, according to a Bank for International Settlements (BIS) report issued in 2019. A currency exchange market is an extremely useful tool since it enables us to purchase and sell currencies both inside and beyond national borders.
👉 Kenyans need currency conversions to participate in overseas trade, business, and travel. To trade currencies, traders must have access to one of the three major segments, which are:
➡️ Asian Session (Tokyo)
➡️ European Session (London)
➡️ US Session (New York)
👉 Kenyan traders can profit from the ability to connect to any of these sessions, depending on their trading strategy and time horizon. Most traders in the forex market tend to focus on three trading periods instead of trying to trade 24 hours a day, every day that the forex market is open.
👉 The lack of a centralized platform or financial market distinguishes the forex market from the stock market, for instance. Electronic over-the-counter (OTC) currency trading takes place around the globe by using advanced computer networks among traders instead of using a centralized exchange.
👉 Volatility and constant price changes define the currency market. The forex market is dominated by commercial and investment banks, but there are also speculative possibilities for millions of professional, institutional, and individual retail traders and investors to trade one foreign currency against another.
👉 In the table below, we have indicated the times for these sessions in Eastern Standard Time and Universal Time (UTC):
|⏰ Session||🕑 EST||🕑 UTC|
|📍 Tokyo||7 pm – 4 am||12 am – 9 am|
|📍 London||2 am – 11 am||7 am – 4 pm|
|📍 New York||8 am – 5 pm||1 pm – 10 pm|
Asian Session Information
👉 Tokyo opens the currency session, and many significant investors utilize the trading momentum in Asia to create their plans and as a barometer of future market dynamics. Around 6% of global foreign exchange transactions occur during the Asian trading period.
European Session Information
👉 London is the world’s biggest and most significant forex trading session, accounting for around 34% of daily forex activity. Due to the market share, most of the world’s leading banks maintain trading desks in London.
👉 Due to the enormous number of players and the high value of transactions in the London forex market, the London session is more volatile than the other two currency sessions. The influx of liquidity from London has the potential to significantly boost the ‘average hourly movement’ of key currency pairings such as the EUR/USD.
US Session Information
👉 New York is the world’s second-biggest trading market, accounting for around 16% of all currency transactions. Many transactions take place in New York during the US/European currency overlap, with transactions decreasing when liquidity dwindles, and European traders quit the forex market.
A Brief History of the Forex Market
👉 The currency market has been existing for millennia in its most basic form. When it comes to purchasing products and services, people have always traded or bartered their commodities and currencies. In contrast, the contemporary forex market is a very recent development.
👉 New currency markets were opened in 1971 as the Bretton Woods agreement started to disintegrate. Foreign currency trading services track the fluctuating prices of various currencies depending on factors such as supply and demand.
👉 Forex markets are dominated by commercial and investment banks, but there are also speculative possibilities for professional and individual investors to trade one currency against another.
Major Participants in the Forex Market
Retail Forex Brokers
👉 These brokers allow regular traders to engage in speculative trading. This segment of the forex market is quite minor in comparison to the overall amount of currency traded globally.
👉 Forex brokers give traders access to a trading platform via which they may buy and sell foreign currencies. Currency traders may have access to the 24-hour currency market through these brokers.
👉 Central banks attempt to regulate their money supply, interest rates, and inflation by acquiring and selling currencies.
👉 Nations from around the globe often have target exchange rates for their currencies, whether official or not, and their central banks may frequently utilize their reserves of domestic and foreign money to attempt to stabilize the market for their currency.
👉 When a business must acquire from or sell to a foreign entity, a foreign exchange transaction is very certain to occur. For instance, a firm situated in the United States can be required to acquire Kenyan shillings to pay an invoice to a Kenyan company, or the Kenyan company can be required to purchase US dollars to process a payment denominated in USD, which involves selling KES.
👉 Both scenarios need the execution of a foreign exchange transaction. Businesses that do business with overseas clients or suppliers often go this a step further and buy or sell currencies to hedge against future exchange rate fluctuation. By locking in today’s exchange rates, businesses can subsequently eliminate exchange rate risk.
The Interbank Market
👉 The interbank market is the biggest section of the currency market and includes all the trading regions mentioned above. Financial institutions function as both intermediaries and account holders in customers’ foreign exchange transactions.
👉 The lack of a central site for forex trading means that prices and the activities of multiple participants are not controlled by a single entity. New and profitable speculating opportunities exist in the foreign currency market, but investors must be mindful of the hazards.
What Drives Prices in Forex?
👉 Foreign exchange market values may be affected by an enormous number of factors due to the inclusion of currencies from all over the globe. Some of them, on the other hand, might have a significant influence on your transactions. Make sure the following factors are taken into consideration before making a trade:
➡️ Economic News and Releases
➡️ Political News and Other Events
➡️ Gross Domestic Product
➡️ Interest Rates
➡️ Prices of Commodities
Economic News and Releases
👉 The strength of a country’s economy affects the value of its currency. Since economic reports are provided by governments or organizations, they provide a clear picture of how a nation’s economy is doing and allow investors to compare one country’s economy to another.
👉 When it comes to examining this variable, economic calendars are your best bet. You may also check out TradeFW.com, an online broker that goes beyond the industry norms by providing exceptional instructional resources and daily market research to its clients.
Political News and Other Events
👉 Forex prices are affected by political news and events in a variety of ways. There is no better illustration than the dramatic fall in the value of the British pound after the Brexit vote. The GBP/EUR rate fell from 1.34 to 1.241 on June 23, 2016, the day after the UK had its vote, and continued to fall until it registered a 20% devaluation in only two weeks.
Gross Domestic Product
👉 GDP is the total value of all completed products and services produced in a nation over a certain period, which is defined as the GDP per capita. A country’s gross domestic product (GDP) is a measure of its economic activity. Before trading any currency pair, you need to verify this statistic.
👉 As one of the most influential elements in the forex market, interest rate fluctuations may have a significant impact on your deal. Since exchange rates tend to favour one currency over another, if you keep a stake in that currency, you will have a better chance of profiting from trading chances.
Prices of Commodities
👉 Interest rate variations, as one of the most important factors in the currency market, may have a substantial influence on your business. As exchange rates favor one currency over another, you have a higher chance of earning from trade opportunities if you hold a position in that currency.
Who Regulates the Forex Market in Kenya?
👉 Kenya’s capital markets regulator, the Capital Markets Authority (CMA), is tasked with ensuring that the public is protected from dishonest brokers and other financial service providers.
👉 An Independent financial regulator CMA is tasked with overseeing, licensing, and monitoring the actions of market intermediaries such as the stock exchange as well as the central depository and settlement system under Kenya’s Capital Markets Act.
👉 To keep the financial industry safe, the Capital Markets Authority sets asset allocation rules. Guidelines for money to be invested in each asset type (equities, government bonds and bills) are stated in ranges in the Cap 485A modified in 2013.
👉 The CMA’s primary aims are as follows:-
➡️ The expansion of all facets of capital markets, with a focus on removing obstacles to and creating incentives for longer-term investments in productive firms.
➡️ To assist the establishment of a countrywide system of the stock market and brokerage services to increase the general public’s involvement in the stock market.
➡️ The establishment, management, and regulation of a market in which securities may be issued and exchanged in an orderly, fair, and efficient way, by implementing a system in which market participants self-regulate to the greatest degree possible.
➡️ Investment interests are safeguarded.
➡️ The establishment of a compensation fund to safeguard investors against financial loss caused by a licensed broker or dealer’s inability to adhere to contractual requirements.
➡️ The establishment of a framework to allow the use of electronic commerce to foster the growth of Kenya’s capital markets.
👉 While any international forex broker can offer services in Kenya, there are currently only 6 online brokers that hold CMA regulations, these are:
➡️ EGM Securities, trading under FXPesa
➡️ SCFM Ltd. trading under Scope Markets
➡️ Exinity East Africa
➡️ Pepperstone Markets Kenya Limited
➡️ HFM Investments trading as HotForex
Forex Terms and Definitions you must know
👉 Some of the most common Terms and Definitions that Kenyan traders will come across are:
➡️ Currency Pair
➡️ Bid/Ask Price
➡️ Lots and Lot Sizes
➡️ Bear Markets
➡️ Bull Markets
👉 All forex transactions are conducted using currency pairings, which include major, minor, and exotic pairs, with the Kenyan shilling coming under the exotic currency category.
👉 However, there is an exception when the quoted currency is given in smaller denominations, with the Japanese yen being the most prominent example. In this case, a change in the second decimal place equals a single pip. Thus, if EUR/JPY goes from 106.452 to 106.462, it has moved one pip once again.
👉 The bid price is the most a trader or broker will pay when purchasing a currency pair. In the forex market, the ask price is the lowest price at which a trader or broker will sell a currency.
👉 When it comes to the bid and ask prices in this case, brokers (or market makers) and price takers (buyers) are distinct entities (or regular investors). The bid and ask prices are used by market makers to purchase and sell. Price takers purchase and sell at the ask and bid prices, respectively.
👉 We can explain it by using the concept of bid and ask prices when you buy groceries from a shopkeeper. A wholesaler’s selling price is equivalent to your purchasing price for a shopkeeper. When you sell the identical groceries to your clients, you will be paid the same as they paid for them when you sell them.
👉 Bid prices are often lower than ask prices. As a result of the sellers’ desire to benefit from a deal, this has occurred.
👉 The forex broker’s spread is the difference between the bid and the ask price. If your broker has a reduced spread, which means cheaper costs for a deal, it is a positive thing for you.
👉 Traders in the forex market must use a broker to carry out their trading activities. These brokers charge a spread, which can be defined as the difference between the buy and sell prices, allowing the broker to collect fees for their service.
👉 In both CFD and Forex trading, the commission is based on the price difference between buying and selling a currency pair. For example, Kenyans with a long order on EUR/USD suggest that you wish to purchase Euros in exchange for US Dollars.
👉 The broker’s Bid price could be quoted at 1.2102, while the Ask price might be 1.2104. Subsequently, the difference between these numbers, which is 0.8 pips, is the broker’s spread. Kenyans must remember that it is an advantage to them when the spread is lower. This means that you will be able to keep more money in your pocket (or at least a lower loss).
👉 However, even if the spread is minimal, the total expenses may be larger due to the broker’s additional fees, such as commissions, withdrawal/deposit fees, and so on.
👉 Pips are the units of measurement that are used to indicate how much the price of a pair moves either up or down. A forex pip is typically comparable to a one-digit change in a currency pair’s fourth decimal place. Therefore, if GBP/USD goes from $1.35361 to $1.35371, it moves one pip.
👉 The decimal places after the pip are referred to as fractional pips, or sometimes pipettes.
👉 Your order’s value will be determined by the number of currency units transacted. The term “lot” is often used to describe these units. If you are purchasing $100,000 worth of anything, it means you will get 100,000 units, which is referred to as a Standard Lot.
👉 There are 4 common lot sizes, and they differ between brokers:
➡️ Nano Lot – 100 Units (not often offered by brokers)
➡️ Micro Lot – 1,000 Units (offered through Cent and Micro Accounts)
➡️ Mini Lot – 10,000 Units
➡️ Standard Lot – 100,000 Units
👉 On the broker’s platform, you will find a drop-down menu where you may choose how many lots you would want to trade. To trade a custom number of lots, most brokers offer up to a maximum of 5.2 micro-lots (five Mini Lots). MetaTrader-compatible brokers like as FxPesa, Exness, and others provide this feature.
👉 Leverage enables investors/traders to acquire exposure to the financial markets with a lower initial capital need, referred to as margin. This is beneficial because it leaves the investor with more funds to experiment with other investment possibilities or to utilize for personal expenses.
👉 Leverage is offered by CFD brokers, and when a leveraged position is closed, the profit or loss is calculated on the entire amount of the transaction. While this increases your earnings, it also increases your danger of experiencing magnified losses – potentially losses that surpass your margin.
👉 Because of the risks involved with leveraged trading, Kenyan traders must learn how to manage their risks effectively. Beginner Kenyan traders should never exceed a leverage ratio of 1:10.
👉 Forex brokers registered with the CMA provide leverage of 1:400 and more, however, traders must self-regulate and never trade with more than 1:10 leverage on any deal.
👉 Leveraged trading relies heavily on margin. When you open a leveraged position, you will need to make an initial deposit. It is important to remember that the margin requirements for forex trading on margin are subject to change depending on your broker and the size of your trade.
👉 Typically, the margin is represented as a percentage of the total position. Thus, a trade on EUR/GBP, for example, may need just 3.33% of the entire value of the position to be paid to open. Thus, instead of investing £100,000, you would just need to deposit £3,300.
👉 These are periods when forex prices decrease, signalling to Kenyan traders that the market is in a slump because of negative economic fundamentals, events, and other causes.
👉 Bull markets are periods when the forex market’s prices rise, signalling that an upward trend is underway because of positive news.
👉 A Contract for Difference (CFD) is a complicated derivative product that enables Kenyan traders to speculate on financial instrument price changes without holding the underlying asset.
In-depth dive into Forex Currency Pairs
👉 The Kenyan shilling is denoted on the forex market by the three-letter code KES, which is allocated to every currency in existence. Even though there are more than 170 currencies in existence, the US dollar (USD) accounts for most of the foreign currency trade, followed by several others:
➡️ Euro (EUR)
➡️ Japanese yen (JPY)
➡️ British pound (GBP)
➡️ Australian Dollar (AUD)
➡️ Canadian Dollar (CAD)
➡️ Swiss franc (CHF)
➡️ New Zealand dollar (NZD)
👉 The EUR/USD may be used as an example to show how a currency pair works since it is the most common pair.
➡️ Traders will view the euro as the base currency on the left.
➡️ On the right, the quote currency is shown on the right-hand side, thus the US dollar.
➡️ How much Kenyan merchants need to buy one base currency to get a single unit of the other currency is known as an exchange rate. Thus, the base currency will always be stated as a single unit, but the quote currency fluctuates according to the current market and the amount required to purchase a base currency unit.
➡️ For example, if the currency exchange rate between the EUR and the USD is 1.2, it indicates that it will cost traders 1 EUR to acquire 1.20 USD, or it will cost them 1.20 USD to purchase 1 EUR.
➡️ In addition, Kenyans must know that rising exchange rates indicate that the base currency has appreciated while falling rates signal depreciation.
How you can start trading forex in Kenya ASAP
👉 To get started, you will need to choose a reputable broker and fund an account with them. Kenya’s Capital Markets Authority (CMA) has implemented new regulations for online currency trading in the country.
👉 You may obtain up to 50,000 KES in compensation if the broker you are trading with goes out of business or is otherwise unable to fulfil its financial obligations when you use a licensed broker.
👉 Open an account with a forex broker registered and regulated by the Kenyan Capital Markets Authority to trade forex in Kenya. EGM Securities (FXPesa), Pepperstone Kenya, Exinity East Africa Limited, HFM Investments (HotForex), Windsor Markets, and SCFM Ltd. (Scope Markets) are all licensed by the CMA.
👉 In addition, international authorities such as the Financial Conduct Authority (FCA), the Financial Sector Conduct Authority (FSCA), the Australian Securities and Investments Commission (ASIC), and others supervise forex brokers across the world that allow traders from Kenya.
👉 You should only work with brokers who are licensed by the CMA and other reputable entities such as FCA, FSCA, ASIC, and a few others because this is the only way to assure that you are trading forex lawfully.
Learn about Forex
👉 To be a successful forex trader, you need to have an in-depth knowledge of the markets. To meet the demands of both novice and seasoned traders, most brokers provide a wide choice of industry-leading training materials in several languages.
👉 eBooks, daily market analyses, a wide selection of films, and more long-read guides like this one are all included in these resources. Some of the most popular tools and widgets offered to Kenyan traders are:
➡️ Margin calculators
➡️ Economic Calendars
➡️ Trading Alerts
➡️ Currency Converters
➡️ Live Rates
➡️ Live Quotes
➡️ Market Updates, and more.
Choose a broker and set up an account
👉 Most Forex brokers provide a link on their website where you can open a live account. The process is much the same from one broker to the next, with only a few differences here and there.
👉 Two important components such as account information and financial adequacy data must be entered, alongside your address and country of residence, trading experience, and so on. To complete the verification, you will need to provide your ID and proof of physical residency.
👉 To complete the KYC process, you must provide valid documentation. This will ensure that your account is approved and that withdrawals will go smoothly.
👉 During KYC, you can provide a copy of your passport or another form of government-issued identification as verification of your identity. In addition, you can use your phone bill or any other utility bill as confirmation of your address.
👉 Both ECN and STP brokers can be used for live trading accounts, however, only ECN brokers can offer Direct Market Access (DMA). Investors can trade directly with other investors in the Forex markets using ECN (Electronic Communications Network) brokers, whose fee is determined by the trading volumes of clients and the broker overall.
👉 In STP, the broker sends transactions to liquidity providers for execution and provides access to the interbank market structure. It is difficult to locate reputable brokers who provide DMA, even though it allows you access to markets with more rewards and dangers.
👉 You should avoid brokers that are market makers, since these brokers, especially those who do not have a good reputation, could have a personal stake in harming your capital. This is because a market maker forex broker is profiting from whatever losses you incur while trading.
👉 All CMA-licensed online forex brokers are ‘Non-Dealing,’ which implies they do not have a dealing desk, and they are therefore not market maker brokers.
Develop a trading strategy
👉 A trading strategy will help you build broad principles and a trading road map, even when it is hard to forecast and time market action. Based on your present financial and personal position, a sound trading plan is essential.
👉 To determine how much risk you are prepared to take without losing your investment, it considers how much money you are willing to put up for trading. A significant degree of leverage is normal when trading foreign exchange.
👉 Subsequently, individuals who are prepared to take the risk will be rewarded more than those who are not.
👉 Use a practice account to test your trading strategy in real-world market circumstances. You will be able to try out your trading strategy without risking any of your own money by trading currency pairs.
👉 An important thing for all Kenyans to remember is that they can practice forex trading without putting any of their money at risk. A forex trading account may be opened if, after a few practice transactions, you are certain that you can make money.
👉 While forex trading is not tough, it is a unique endeavour that requires specific knowledge. Currency trading differs from stock market trading in that it has a higher leverage ratio than equities trading, and the factors that influence currency price movement are different from those that influence equity market price movement.
👉 Having the ability to manage one’s emotions when trading might be the difference between success and failure. Your mental state has a huge influence on your trading choices, especially if you are new to trading, and maintaining discipline and emotional control is critical for consistent trading.
Make Trades in the Live Market
👉 Before entering a trade, you must choose whether to go short or long, how much the deal will cost, and how wide of a spread it will have (difference between ask and bid price). This information will assist you in making an informed decision about which trade to engage in.
👉 When trading forex, Kenyan traders will come across Bid and Ask Prices:
➡️ The ask price is the price at which you may purchase the currency
➡️ The bid price is the amount at which you may offer to buy it back
👉 The fact that you may trade both long and short in forex is an important consideration if you are just starting in the market and want to learn all there is to know about it.
👉 Buying a currency with the hope that its value would rise and then selling it for a profit on the difference in value is known as a long trade. With a short trade, the idea is that the currency’s value will fall, so you sell it and then purchase it back at a cheaper price, making a profit.
👉 Based on current exchange rates, the price of the currency pair is calculated by determining how much of the other currency you would receive for a unit of the other currency.
A crash course on Forex Charting
👉 When examining the exchange rate on live Forex charts, Kenyan traders who use a trading platform or other trading software have three typical chart options:
➡️ Line Charts
➡️ Bar Charts
➡️ Candlestick Charts
👉 A line chart links the period’s closing prices. Thus, while examining a daily chart, the line links each trading day’s closing price. This is the most fundamental chart style employed by traders. It is primarily used to highlight broad patterns but, in comparison to some of the other chart styles, does not provide additional information.
Open, High, Low, and Close (OHLC) Bar Charts
👉 Each bar on an OHLC bar chart corresponds to a certain time that the trader is examining. As a result, each vertical bar on a daily chart represents a single trading day. The OHLC (open, high, low, and close) values of a bar are only available on a bar chart, making it a superior tool to a line chart.
👉 The initial price is shown on the left, while the ending price is shown on the right. The price at which the market reached its all-time high during the given time is represented by the high of the bar. For a certain period, the bar’s lowest point represents the market’s lowest point.
➡️ Because the closing price is higher than the beginning price, the green bars are known as buyer bars.
➡️ The closing price of the red bars is lower than the starting price, making them seller bars.
👉 In addition, OHLC bar charts can be used by Kenyan traders to determine if buyers or sellers dominate the market. Candlestick charts, which are the most common form of Forex charting, are based on these bars.
👉 Historically speaking, rice sellers in Japan were the first who employed candlestick charts, and these are often comparable to OHLC bars because they display the open, high, low, and close values for a certain time. Candlestick charts, on the other hand, provide a box between the open and close price values, also referred to as the candlestick’s ‘body.’
👉 When examining live Forex charts, many Kenyan traders find candlestick charts to be the most aesthetically pleasing. They are also quite popular since they supply traders from all over the globe with a range of price action patterns.
The Basics of Risk Management for Kenyans in Forex
👉 The most typical risks that Kenyans will face in the forex market are:
➡️ High Volatility
➡️ Poor Risk Management and High Leverage
➡️ Risk of using an Unregulated Broker
➡️ Unpredictable Markets
👉 Forex is concerned with currency exchange rates as well as forex currency pairings. The forex market is a very prominent global financial market, and it is therefore extremely volatile at times. According to the global financial markets, exchange rate variations may be attributed to a variety of economic, geopolitical, and social causes.
👉 A currency pair that is profitable today could suddenly start depreciating tomorrow. Thus, to hedge against volatility risk, one must closely monitor exchange rates and currency fluctuations.
Poor Risk Management and High Leverage
👉 In forex trading, the risks of sustaining massive losses should be mitigated using hedging products such as derivatives. Leverage trading entails trading with capital that is not owned or borrowed. Thus, if the leverage is excessive, the investor’s losses become a twofold burden to repay.
Risk of using an Unregulated Broker
👉 Regulated brokers ensure that your money is utilized just for trading purposes, therefore reducing risk. Unregulated brokers may misappropriate investor funds and may mislead innovators with bogus schemes.
👉 To protect one’s investment and to protect oneself from unscrupulous tactics, it is critical to always deal with registered brokers.
👉 Before investing, the risk-reward ratio should be established, since markets are volatile, and an investor should be certain of the amount of money anticipated to be won and the maximum loss that may occur.
👉 Always ensure that the predicted loss is smaller than the expected profit. In addition, Kenyan traders must ensure that a limit stop-loss order is in place to keep losses to a minimum.
Tips to Manage Risk when Trading Forex in Kenya
➡️ Always keep an eye out for economic developments that may impact currency prices. The forex market and currency prices are influenced by a variety of economic variables.
➡️ Utilize sound money management techniques and never risk more than 1% of your funds on a single deal.
➡️ Forex and CFDs are high-risk products that should be thoroughly researched before trading them.
➡️ Never trade with leverage more than 1:10 if you are a beginner and while trading Forex & CFD products.
➡️ Always use a Stop Loss and adhere to your trading plan and strategy.
➡️ Always keep a record of your trades, regardless of whether they are wins or losses so that you can improve your trading strategy and your trading experience overall.
The Best Forex Brokers for Trading Forex In Kenya
👉 This section is a comprehensive study of several CFD and Forex brokers in Kenya, carried out by our staff in April 2023. This article has guided more than 350 algo traders in Kenya in making informed trading decisions.
👉 To verify that all data is current, our forex research team double-checked it on the platform and provider’s official websites and datasheets. Based on the results of the case studies, we examined the data we had and selected the best brokers based on several key metrics.
👉 For your convenience, we have provided the information in a scannable format.
Best CMA-Regulated Forex Broker in Kenya Overall
👉 HotForex is our choice as the best CMA-regulated forex broker in Kenya because of its selection of retail accounts, ultra-low trading fees, range of bonuses and promotions to get Kenyans started, and its dynamic trading environment that caters for all types of traders.
Best True ECN Broker for Kenyans
👉 We chose IC Markets because it is one of the few true ECN brokers in the industry, offering some of the best spreads across several asset classes and financial markets.
Best STP Forex Broker for Retail Traders in Kenya
👉 Pepperstone Markets Kenya Limited is the best STP broker in Kenya and offers both beginner and professional traders unique, tailored solutions and services.
Best $5 Minimum Deposit Kenyan Broker
👉 FXPesa offers Kenyan traders live trading accounts and access to a large range of markets from only $5, opening the world of forex and CFD trading through powerful web, desktop, and mobile trading software.
Best MPesa Kenyan Broker
👉 Pepperstone Markets Kenya Limited offers reliable deposit and withdrawal methods and it is the best broker for MPesa, ensuring that Kenyan traders can easily transfer funds and receive funds through mobile solutions.
Best No-Deposit Forex Broker for Kenyans
👉 XM is at the top of our list as the best No-Deposit forex broker, offering $30 in trading credit when new traders register an account, allowing them to start trading risk-free.
Best MetaTrader 5 Kenyan Broker
👉 MetaTrader 5 is a powerful trading platform offered by several brokers, including Scope Markets which offers Kenyan traders tailored solutions, competitive trading conditions, and reliable market execution on trades.
Forex Broker with the lowest trading costs
👉 We chose Exness because it is one of the best brokers in the industry that offers some of the lowest zero-pip spreads, commission-free options, a choice between retail accounts, and access to powerful trading platforms.
Best Low Spread Forex Broker in Kenya
👉 Tickmill is not only a reputable broker, but according to our research, it is one of the lowest spread brokers, giving Kenyans the best trade execution, minimal slippage, and no requotes.
Best CFD broker in Kenya
👉 IG is one of the oldest brokers in the industry and we chose it as the best CFD broker because it offers a massive portfolio of over 17,000 financial instruments that can be traded.
Best Cent Account Broker in Kenya
👉 RoboForex offers a range of account options, including a Cent account that allows Kenyan traders to trade micro-lots. This is ideal for both beginner traders who are still learning to trade and professionals who want to test their trading strategies risk-free.
Best Mobile Trading App in Kenya
👉 AvaTrade offers several trading platforms including its proprietary AvaTradeGO, which is one of the best mobile trading apps in Kenya.
Best Social Trading Platform for Kenyan Social Traders
👉 eToro is not only a well-regulated and reputable forex broker but also the leading social trading platform in Kenya, offering proprietary software that offers endless access to several financial markets and instruments and the ability to copy the trades of professional traders.
Forex Trading Pros and Cons
|✔️ Pros||❌ Cons|
|24/5 access to the forex market, from Mondays to Fridays with several overlapping trading sessions||Most traders lose money because they either use too much leverage or they fail to apply risk management techniques|
|Leverage, which allows you to borrow money from your broker to open larger positions||There is high volatility in the forex market and traders can lose money quickly|
|You can use smaller trading sizes, such as nano, micro, and mini lots, making forex scalable||Between 60% and 90% of retail traders lose their money|
|The trading costs are very low, especially on major pairs such as EUR/USD because of the liquidity in the forex market||Retail traders compete with professional and institutional traders|
|There is a plethora of trading tools and resources to improve and refine your trading||There are times of low liquidity during some sessions, which means that you can struggle to sell or buy currency pairs|
|There is a choice between different trading platforms that have a wide range of features and functions to support different trading strategies and styles||The forex market is not as centralized and strictly regulated as the stock market, leaving a lot of room for scams and fake brokers who can trick traders|
|You can hold positions overnight or practice day trading strategies such as scalping|
|The initial investment amount is extremely low|
How to choose a forex broker
👉 Kenyan traders must evaluate the following components of a forex broker to decide whether the broker is suited to their unique trading objectives and/or needs.
Regulations and Licenses
👉 This is the first important component that traders must thoroughly evaluate. Reputable brokers are regulated by market regulators such as CMA, FCA, ASIC, CySEC, FSCA, and others. Kenyans must beware when dealing with brokers that only have offshore regulations such as FSA, SVG BVI, FSC, and others.
👉 Account Features include leverage trading and margin requirement, commissions and spreads, initial deposit, additional features on retail investor accounts, and so on.
Deposits and Withdrawals
👉 Kenyans must evaluate the payment options available, the processing times on withdrawal requests, deposit currencies offered, the withdrawal fee, deposit fees, and minimum withdrawal limits among other trading and non-trading fees.
Range of Markets
👉 The range of markets offered refers to the number and range of tradable instruments that the broker offers. Kenyans must consider what they wish to trade and what is available.
👉 Customer Support is another crucial factor and Kenyans must check the availability of support (trading hours), the quality of support, and the promptness with which the customer support team responds to queries.
👉 A trading platform is the Kenyan trader’s portal to the financial markets. Traders must ensure that the trading platform has the necessary technical indicators, fundamental analysis, technical analysis, economic calendar, charting, newsfeed, and other tools they may need.
Education and Research
👉 Education and Research come in handy to both novice traders and experienced investors. Education includes some of the following:
➡️ Trading guides
➡️ Trading knowledge on leveraged products
➡️ A risk warning on complex instruments
➡️ Educational videos
👉 Research can include some of the following:
➡️ Trading tools
➡️ Status of International Markets
➡️ Price movements
➡️ Market sentiments
➡️ Whether there is a volatile market
➡️ Exchange Rates
➡️ Expert opinions and several other resources can help experienced traders make informed trading decisions.
Frequently Asked Questions
Is forex trading legal in Kenya?
Yes, Forex trading is permitted in Kenya and is regulated by the Capital Markets Authority, the country’s financial regulator (CMA). It was established in 1989 under the Capital Markets Act. The CMA’s objective is to regulate and enhance the Kenyan capital market’s security for local investors.
How much capital will you need to deposit to start trading in Kenya?
You can start trading with 500 KES (equal to $5). However, the recommended amount is much higher to ensure that you can cover the margin requirement of trades.
What is the best trading session to trade forex as Kenyan?
Kenyan traders can consider the overlap between the London and New York Sessions at 11 am and 5 pm Kenyan time. This provides traders with high liquidity, allowing them to quickly buy and sell at a lower cost.
Will my Forex profits be taxed in Kenya?
Yes, you must declare your wins and losses when you submit your taxes every year.
Is forex trading gambling?
No, it is not the same. When you trade forex, you are speculating on price movements of currencies while employing risk management tactics to reduce your loss. Forex does not have a “house” to beat, and you are buying from, and selling to, other market participants in the market.
👉 Now it is your turn to participate:
➡️ What inspired you to start trading forex?
➡️ What have your experiences been in trading forex?
➡️ Which risk management strategy can you share with other traders?
👉 Regardless, please share your thoughts in the comments below.
👉 No matter how diligently we strive to maintain accuracy, all financial markets feature a volatile environment that may change at any time, even if the information supplied is correct at the time of going live.