The endless opportunities to earn profits from the forex market have allowed Kenyan traders of different experience levels, including novices who have recently stepped into the financial market to seasoned traders with years of experience, to enter and benefit from forex trading.
Several foreign exchange traders smoothly enter the financial market without any hindrance, but most quit immediately when they start incurring setbacks and losses. This is because the financial markets are extremely easy to access with substantial leverage, relatively lower costs, and 24-hour long sessions.
To avoid such financial losses, we have presented the top five tips to trade in the forex market in Kenya in the most secure manner –
Research the financial markets
There is an utmost need for the traders to continuously research financial markets so that trading decisions are sound and they remain responsive to international developments and the developments occurring in market conditions.
Developing a trading plan as a part of the research process offers the most methodical approach to analyzing and screening products, developing acceptable risk levels, and defining investment goals for both long and short terms.
- Register with a licensed and regulated foreign exchange broker
Before opening an account with a forex broker in Kenya, traders must ensure that they have chosen regulated Forex trading brokers in Kenya.
ECN forex brokers offer competitive prices for trading. Still, brokers must always ensure that their choice of forex broker is either CMA regulated or regulated by any other reputable, globally-known regulatory organizations such as the South African FSCA, ASIC, CySEC, or FCA.
- Use demo accounts to practice trading
Traders can always test their trading strategies without risk on broker platforms offering demo accounts. Creating a demo account provides the ability to experiment with order entries which is one of the greatest advantages of having a demo account for the traders. Note that trading mistakes or mishaps can have substantial financial consequences and cause great emotional turmoil for the traders. Hence, it is highly recommended to practice order entries with digital money first by creating a demo account and trading in a risk-free environment.
- Trade with a small capital amount
Once the traders have adequately prepared themselves, well-tested their trading strategies on the demo account, and are confident with the existing market conditions, they can start trading ‘live’ or, in other words, with real cash.
Note that demo accounts cannot replicate the real trading conditions of the financial markets. Hence, it is essential to start trading with a minimum amount of capital initially. As the traders learn about the market conditions and how the financial tools work, they can start increasing the capital amount gradually without jeopardizing the entire trading experience.
- Be alert while using leverage
A high leverage degree available in foreign exchange trading is uncommon in other financial markets. Many traders may be attracted by the possibility of earning substantial returns on comparatively modest investments in the foreign exchange market. If leverages are used properly, they can be powerful growth tools, but they can also magnify the losses at the same or increasing rate.
Maximization of leverage allows traders to develop a larger position. However, taking a relatively smaller position may reduce the exposure to losses, and this makes controlling the leverage amount in the trading account an important factor.