Forex trading is the process of buying and selling currencies with the aim of making a profit. While it may seem intimidating at first, Forex trading can be a great way to make money if you know what you’re doing. In this post, we will discuss how to get started with Forex trading in Kenya and provide some tips for success. So, whether you’re new to Forex trading or just looking for some advice, keep reading!
There are a few things to keep in mind if you’re looking to start trading forex in Kenya.
- First, it’s important to understand the concepts behind online forex trading and how it works.
- Next, be sure you have a solid understanding of the risks involved and what can happen if you make poor choices while trading.
- Finally, make sure you find a reputable forex broker who will help you get started and guide you through the process. With the right preparation and guidance, forex trading can be a profitable experience for Kenyan traders.
Can you make money from online forex trading in Kenya?
Yes, you can make money with online forex trading in Kenya. You can even turn online forex trading into your main source of income. A lot of Kenyans are already doing it, and you also can.
But making money with online forex trading is by no way an easy thing to do. Before you get to a point where you can make money in the forex market, you’ll need to invest a lot of time to acquire the necessary skills and understanding of the market.
Is online forex trading legal in Kenya?
Yes, online forex trading is completely legal in Kenya. As a retail trader, you can trade with any forex broker of your choosing. There are no laws in Kenya that prohibit retail traders from investing in the forex market. Additionally, you can choose to invest in the forex market using any forex broker of you choice. There are both offshore and local brokers operating in Kenya. The local forex brokers such as FxPesa are regulated and licensed by the Capital Markets Authority (CMA).
I have personally been involved in the online forex market in one way or another from as way back as 2014.
I have been an introducing broker for XM Forex for the last 7+ years. I have also traded for fun and profit from time to time. So, the information I share below comes from my many years of experience in the forex market.
But I also understand your need for concrete information about forex trading. So, let’s start by seeing why online forex trading gets such a bad reputation in Kenya.
Why Does Online Forex Trading In Kenya Get Such a Bad Rep?
Talk about online forex trading to 100 Kenyans and almost 85 of them will tell you that that’s a no go zone. But why is this the case? Why does online forex trading in Kenya get such a bad reputation? Is it even legit?
Again, the answer to this is a resounding Yes!
However, in as much as online forex trading is legit, it is an industry that is littered with scammers .It is these scam artists that taint the good image of the forex market. This comes as no surprise as forex is the biggest financial market in the world.
It is your responsibility to do due diligence and ensure that you don’t end up getting ensnared in one of the many forex trading scams scattered all over the internet. SO, in the next section, I am going to show you how to identify and protect yourself from forex trading scams.
How to Avoid Online Forex Trading Scams in Kenya
So, before we proceed any further, I’d like to get this nifty topic out of the way. Scammers are everywhere. And you’ll find them in the forex market (just as you’ll find them in real estate, import/export, farming and every other industry known to mankind).
You’ll encounter scammers in the forex market, but when you’re well-armed to counter them, you and your money will be totally safe.
Below are the most common forex trading scams and ways to avoid them.
1. Fake Account Manager Forex Scams
Some scammers in the forex industry will come in the name of account/fund managers. They will entice you with screenshots of photoshopped forex trading results. Or pictures of luxurious cars and lifestyle. Don’t believe them; unless they can back up their claims with verifiable track records.
If someone purports to be an account manager, insist that they show you their trading history from trackers such as MyFxBook or FXBlue. And even then, they shouldn’t personally handle your money.
When dealing with a purported account manager, you are supposed to open an account with a good forex broker such as XM Forex or LiteForex, deposit money into the account, and give the money manager your MT4 logins only.
I repeat, only give out the MT4 login details, please. That way, you’ll be able to keep tabs on every transaction taken in your account. And you’ll avoid being scammed in the name of the ‘account manager has blown my account.”
But a better way of dealing with the account manager fraud is to never deal with one in the first place. Nowadays, most forex brokers have what they call social or copy trading features. This is a feature that allows you to see the most successful forex traders in the brokers platform and copy their trading strategies at an agreed profit-sharing ratio.
The best thing about forex copy trading is that you do not pay the strategy provider unless they are making a profit, so they already have an incentive to trade carefully and not lose your money. For more about copy trading and how to choose the best strategy providers, kindly have a look at this article that I did some time ago.
Don’t Get Scammed by Fake Forex Account Managers
As of 2018, the Capital Markets Authority requires anyone purporting to be a forex funds manager to have a license from them. And so far, the only licensed forex account managers are a firm called MansaX.
2. Paid Forex Signal Seller Scams
A lot of beginner forex traders in Kenya have fallen for this trick.
Some individuals and companies purport to sell profitable forex signals. You’ll usually find these scam sellers in Instagram and Telegram channels. They will throw in statistics to entice you to join their premium membership signal groups. In reality, you’re their main source of income as they scam you out of your hard-earned money.
Once the forex signal scammers have identified a potential victim, the next step will be persuading the victim to part with a monthly, weekly, or monthly fee in exchange for information on when to buy or sell a currency pairs.
The best way for forex traders in Kenya to avoid this type of a scam is to learn how to trade by yourself. Or use a copy trading system as earlier advised.
Needless to say, there are genuine enterprises that sell genuine forex signals. Such a seller should be able to at least give you a free trial of their service before they ask for money. A genuine signal seller will also allow you to ask for money back if the signals do not perform as advertised.
Bottom-line About Online Forex Trading Scams
Like every other industry known to mankind, the forex market is flooded by scammers, lazy people trying to reap a dime where they didn’t sow even a penny. But this should in no way keep you from investing in the industry (if you’re passionate about it).
But How exactly do you start to trade forex in Kenya?
How to Start Forex Trading in Kenya
It is very easy to start forex trading in Kenya. Ideally, you want to join the ranks of the most successful forex traders in Kenya. This is very possible if you follow the step-by-step guide below.
Anyone can start forex trading in Kenya and become a successful forex trader. You do not need a special degree or college diploma. All you need is the grit; passion and perseverance to be the best.
Before actually investing your money in forex trading, here are a few things your need to know in order to become a forex trader in Kenya
Steps to Start Forex Trading in Kenya
1. Learn to Trade Forex
Becoming successful with online forex trading starts with acquiring the necessary knowledge and skills. Luckily, you can get all the knowledge and skills online, and mostly for free. There are many incredible resources that will help you learn how to trade the online forex market.
How Long Does it Take to Learn Forex Trading?
It has traditionally been quoted that you need several months to learn how to trade, but I haven’t found this to be the case. As long as you’re a fast learner and determined, you can grasp all the essentials of forex trading in under 2 weeks.
Of course, this will not make you an instantly successful forex trader, but you’ll at least have mustered the basics, awaiting the real test by the live market.
How Can I Learn Forex Trading in Kenya
There are free forex trading eBooks on websites such as pdfdrive.com that you can use to learn forex trading in Kenya. There are tutors and mentors available on YouTube, and there are full courses on forex broker websites, such as this one by HotForex.
You can also learn how to trade from other forex traders in Kenya. Some traders with vast knowledge about forex trading dedicate some of their time to train newbies. Facebook groups are a good place to find such mentors.
2. Choose and Open a Forex Trading Account with a Reputable Forex Broker
While the conventional brokers in Kenya have a reputation for being cutthroat, crass, and greedy, this is not the case with online forex brokers. To trade forex, you need a forex broker. There are no two ways about it.
Forex brokers act as intermediaries between you and the interbank system. The forex broker will show you prices for different currencies from the banks that they have a relationship with.
Every transaction in the online forex market takes place on a broker’s platform. So, you’ll ultimately have to open a forex trading account with a broker if you intend to start forex trading in Kenya
How to Open a Forex Trading Account in Kenya
A forex trading account is like a bank account. To open one, you’ll need to provide paperwork, including but not limited to your national identification document and proof of residence.
Make sure that all the details you’re entering on the online registration form are correct. Most brokers are anal about the correct customer details.
One hitch you’ll probably hit will be on ‘proof or residence’ since many brokers do not accept P.O. Boxes as full of residence, yet in Kenya, that’s what we have on our various documents.
There are however a number of brokers who make it easy to open forex trading accounts. XM Forex, HotForex, TemplerFx, and LiteForex are some of the brokers who don’t make much fuss about account opening documents.
- With HotForex you need to upload two separate proof of residence documents to get approved. These can be your KRA Pin or returns certificate, Mpesa statement, bank statement, or a utility bill. However, you need to make sure that all documents have the same address (doesn’t matter whether it is a P.O. Box)
- With XM Forex (my recommended forex broker), you can get through verification by providing the back side of your National ID document as proof of residence (provided you indicated the same as your address when opening the account)
- With LiteForex and TemplerFx. You do not need a proof of residence document as long as you’ll not be using bank transfer or credit/debit card to make deposits and withdrawals. Of the two forex brokers, I’d recommend you go with LiteForex as they accept Mpesa deposits and withdrawals.
Which is the best forex trading platform in Kenya?
XM Forex is one of the best trading platforms in Kenya. This is because the account opening and verification is very easy. Additionally, XM Forex accepts Mpesa deposits and withdraws.
3. Practice Trading on a Demo Account
Congratulations if you got through the account opening hassle. If you haven’t attempted opening one, I’d recommend you do this before you start practicing on a demo account. The reason for this is because you don’t want to be testing a forex broker’s platform that will make verification a hassle.
Almost every forex broker out there will offer you a demo account (an account loaded with virtual money). If you’re beginner, the demo account will come in handy when you’re learning different forex trading strategies as well as in familiarizing yourself with the brokers trading platform (mostly MT4 or MT5).
Some of the things you can practice on the demo account include opening and closing orders, limiting loses by placing stop loss, and taking profits.
When to Stop Trading on Demo Accounts
Although the popular school of thought is that you should trade on a demo account until you have a solid and profitable trading strategy, I am of a contrary opinion. Get out of demo trading as soon as you have learned the basic mechanics of forex trading.
Here are my reasons.
- Losses on a demo do not feel as real as on a live account.
- Most demo accounts are rigged and are not accurate.
- Demo accounts delay the inevitable and my lead to analysis paralysis
When is Prolonged Demo Trading Okay?
Demo accounts have their place in a trader’s journey. Like I said,
- if you are a complete beginner and just familiarizing yourself with the basics of forex, use a demo account.
- If you just signed up with a new forex broker and you want to test out their platform, use a demo account.
- If you just learned/acquired a new forex trading strategy, it makes sense to first try it on a demo account.
So, as you can see, we can’t completely demonize demo accounts, but do not overstay on a demo account. Instead, open a cent account, deposit at least $100 in the account, and experience real trading conditions. Feel the fear of losing. Work on your trading psychology and become a better trader.
4. Fund Your Account and Start Trading
The final step for you to start forex trading in Kenya is to deposit money into your account and start trading.
Different forex brokers in Kenya offer different methods to deposit money into your account.
For most Kenyans, funding accounts via Mpesa is the easiest and most plausible way. Luckily, there are a few reputable forex brokers that accept Mpesa. Every forex broker in our list of the best forex brokers in Kenya, luckily offers Mpesa deposits.
What is Online Forex Trading?
Not to be confused with changing currencies in a physical bureau somewhere in Nairobi. But the concept is the same.
All currencies of the world fluctuate in value. If you follow the news, you might have seen the Kenyan shilling depreciate against the dollar in recent times.
At the time of this writing 1 USD is worth 109.6500 shillings. 5-6 months ago, one dollar was worth around 101 Kenya shillings.
Assuming you had bought and have US dollars stored them somewhere for those past few months and you wanted to exchange them for the local currency at this time, you’d net at least 8 shillings more for every dollar.
The same concept applies when you’re trading forex online, with only two major differences:
- You don’t have to physically buy or sell currencies. For instance, when you trade EUR/USD you don’t have to buy Euros and sell US dollars. Instead, you’re speculating on whether the value of the respective currencies will go up or down. More of this later.
- Online forex trading is leveraged and traded on margin. With leverage, you only need a small amount of starting capital to control transactions of very huge volumes. More of this later too