A guide to managing foreign exchange risk DHL Kenya

Online Forex trading is legal in Kenya & regulated by the CMA (Capital Markets Authority of Kenya). There are estimated to be around 100,000+ forex traders in Kenya currently, and this number is growing. Forex trading in the country can be profitable, helped by the high levels of leverage that are available. Hedging is about protecting your business from future exchange rate movements by using financial tools. It’s especially useful if you have large, predictable transactions and need to ensure price certainty. This is a collaborative strategy where you and your international partners agree to split the currency risk.

Commission-based spread-free trading is considered ideal for large-volume traders and scalpers. Yes, forex trading is 100% legal in Kenya when done through CMA-regulated brokers. The CMA regulates all non-dealing online forex brokers operating in the country to ensure safety, transparency, and financial integrity.

Risk of using an Unregulated Broker

Additionally, forex trading offers significant return potential, especially when leveraged properly. TradingBrokers.com is for informational purposes a man for all markets only and not intended for distribution or use by any person where it would be contrary to local law or regulation. We do not provide financial advice, offer or make solicitation of any investments. Trading and investing in financial instruments comes with a high degree of risk and you can lose money.

👉 This is true for most markets, but the foreign exchange market is more blatant. If they want to make money exchanging currencies, traders must keep up with the constantly shifting market circumstances. 👉 The foreign exchange market (Forex) is the biggest in terms of the trading volume. Since this is the case, traders may expect an elevated level of liquidity, particularly when dealing with large currencies. 👉 For this reason, automated trading tactics work well in the Forex market.

The availability of high leverage is perhaps the main reason why forex trading appeals to so many people. It enables you to place a higher trading order with minimum capital. Technical analysis traders rely on price action, trends, support, and resistance level seen on the chart. The idea behind fundamental analysis is that most times, the price of a forex instrument is usually over over-valued or under-valued. And the only way to determine its true value is to assess the various factors that determine the state of a country’s economy. A trader does not just open a trade without a background strategy in place.

• Let’s say that the Central Bank in Japan (BoJ), decided to hike their interest rates, it will likely cause massive price movements in all JPY currency pairs.
• A forex trading account may be opened if, after a few practice transactions, you are certain that you can make money.
• The ‘body’ of a candlestick is a rectangular box between the open and close prices.
• As a result, each vertical bar on a daily chart represents a single trading day.
• Choosing the right broker, taking informed decisions, technical and fundamental analysis, and other precautionary measures will reduce the risk factor.
• Forex trading in Kenya is regulated by the Capital Markets Authority (CMA), which is responsible for overseeing and regulating all financial markets in the country.

Traders MBA

Another most common scams are related to influencers, trading gurus, who claim they have cracked the code of trading. CFDs on currencies are much more riskier than other forms of trading, because one is trading derivatives on very high leverage. So, there is no guarantee of making money from trading forex, consistently. You should avoid brokers that are market makers as these brokers take position against you.

For beginners it is better to gain experience and test suitability through demo trading account before opening live account. In today’s globalized marketplace, businesses of all sizes are increasingly engaging in cross-border transactions to expand their reach and tap into new customer bases. However, one of the most significant challenges they face in international trade is managing foreign exchange risk.

In conclusion, forex trading in Kenya is a popular and lucrative way to invest in the financial markets. However, it is important to remember that it is a high-risk activity and should be approached with caution. Traders should only invest what they can afford to lose, and should choose a reputable broker that is licensed by the CMA.

Swing trading is ideal for traders with other engagements and can only spend a few hours analyzing the market. The majority of scalpers and day traders do this as a full-time job. It is key to note some risks exist by trading with unlicensed brokers. For a beginner, it is better to settle among on a broker under government regulation. However, other brokers operate in the market both local and international but lack the CMA license.

• 👉 The tables below show the many time zones that affect the opening, closing, and overlap of the forex market sessions.
• For some, it’s a full-time job, while for others, it’s a side hustle to supplement their income.
• Day traders are usually speculators and use derivative products like CFDs to try to profit from the rise or fall of the price of an asset.
• Networking with others can offer new perspectives, strategies, and even emotional support during challenging trading periods.
• If you fund your account in KES, your deposit will be converted to the broker’s base currency.

Kenyans can use automated strategies

Yes, you can legally trade forex via any of the 7 non-dealing CMA regulated forex brokers if you are a retail trader in Kenya. This being said, forex traders should resist the urge to open an account with brokers outside Kenya who offer higher leverage. After you have done your research and decided on the forex broker that you want to trade with, then you should proceed with opening your trading account. Leverage in forex trading is essentially taking a loan from your forex broker to trade most lots. Local traders have also expressed a growing interest in international equities, leveraging online platforms to invest directly in shares from leading global corporations. The trend towards stock trading is driven by increased financial literacy, broader internet access, and the accessibility offered by multi-asset trading platforms.

To place a buy order of 1 standard lot in EUR/USD, the following will be the calculation of the required account balance. So, you go to this big market, and you find someone who wants to trade their euros for your dollars. You agree on a price, make the trade, and now you have euros instead of dollars.

What are Forex Brokers, and what is their role in Forex Trading?

👉 This implies that currency pairings will see more volume during certain trading sessions. Traders focusing on dollar-based pairings will find the maximum activity during the US trading day. They mimic the live market and help a trader to test the trading strategies. Once you are successful on the demo platform, you can now move to the live platforms to begin trading with real money. The value of one currency in return for another keeps on changing due to multiple reasons at every minute. It is quite complex for retail traders to calculate the valuation of one currency in terms of another.

FREE TRADE ALERTS?

Forex Trading via CMA Regulated Online FX brokers is legal in Kenya. In this guide, we will mostly discuss from the point of view of retail traders in the forex market. We will try to cover some of the topics that can help you decide if you should trade, and learn about the risks involved. Mobile trading platforms have revolutionized how forex trading is conducted in Kenya.

So, if you are a trader trading high volume, it would be right decision to open your trading account with Zero Account for saving on the broker’s trading fees. Note that it is important to choose the right account currency based on which instruments you trade the most. This is because most brokers charge account currency conversion charges. These apply when they convert your profit & loss in your account’s native currency.

It is also best and safest to trade with a broker regulated in Kenya, that offers negative balance protection and requires little deposit. As a the pivot point beginner, you should also not use high leverage as it will increase your risk and potential losses. Most retail traders trade forex because of leverage, and this can cause losses to escalate very quickly.Let us discuss some risks. There is an advanced form of the stop loss order called the guaranteed stop loss order (GSLO). This order makes sure that your stop loss order is executed at the exact price you choose so you don’t lose more money. Though it is not offered by all brokers, GSLO can be very key to your risk management strategy.

A market analyst at FXPesa explained that CBK uses the foreign currency reserves to facilitate the actual buying of crucial imports. Wycliffe Musalia has over six years of experience in financial, business, technology, climate, and health reporting, providing deep insights into Kenyan and global economic trends. 👉 Forex trading for beginners is riddled with emotional difficulties and unresolved issues. Such preoccupation with unsolved concerns might lead to a road of uncertainty.

Traders that use this form of analysis often consider the impact of bigger economic developments on the value of currency pairings. 👉 Every day, significant participants like banks, Doble techo trading hedge funds, and other huge financial organizations trade more than US$5 trillion on the global currency market. 👉 In addition, Kenyan traders could direct the platform to trade based on certain price changes or market circumstances.