Forex exchange market also referred to as Forex or FX market is the largest financial market worldwide making a daily average turnover of US$4 trillion. Foreign Exchange” is the buying of one currency and selling of another simultaneously. In this market, currencies are traded in pairs; examples include US Dollar/Japanese Yen (USD/JPY) or Euro/US Dollar (EUR/USD). A 5% of the daily turnover is obtained from companies and governments that buy and sell products and services from foreign country or convert profits made in foreign currencies into their domestic currency. The remaining percentage is got from trading for profits or speculation.
For us speculators, we get to believe that, the best trading opportunities are from the most traded (most liquid) currencies, referred to as the Majors. More than 85% of all daily transactions involve trading of the Majors, which include the US Dollar, Japanese Yen, Euro, British Pound, Swiss Franc, Canadian Dollar and Australian Dollar. A true 24-hour market that begins from Sunday to Friday, Forex trading begins everyday in Kenya and moves around the globe as the business day begins in each financial center.Compared to any other financial market, an investor can respond to currency fluctuations caused by social, political and economic events, any time they occur. Forex trading in Kenya is considered to be an Over The Counter (OTC) or ‘interbank/interdealer’ market, because all the transactions are made between two counterparts via an electronic network.Forex trading is not centralized on an exchange, as it is with the stock and futures markets.
How Is Forex Trading In Kenya Different From The Stock Market?
Due to its global dimension it is operatinal 24hours everyday therefore, allowing investors to correct their position at any point in time. Forex market has narrow spread given the large number of players and virtually has no price gaps. As a result of its lack of price gaps it enables investors to count on non-slippage order execution but in an extreme volatile market there is a possibility of slippage.With the large volume of participants there is reduction of opportunity for any insider information. In other words there has NEVER been a case of complete currency collapse in Kenya. In rare cases do volatility of leading rarely exceeds 1% per day, in contrast with the volatility of stocks, which may fluctuate by up to 10% on one trading session. The Forex market in Kenya generally provides more opportunities for leveraged trading.
What Are The Benefits Of Forex Trading In Kenya?
There Are No Short Selling Restrictions
Since Forex trading always involve buying of one currency and selling another, traders can easily trade in a rising or falling market. There is no Zero Uptick rule or any other restriction against shorting a currency.
At $4 Trillion Per Day, Forex Is The Most Traded Market In The World
The sheer volume of Forex helps to facilitate the stability of prices in most of the market conditions. The most interesting thing is that, almost 85% of all currency transactions involve the 7 major currency pairs.
Respond to Changes in the Market
Forex trading in Kenya being a true 24-hour market opens continuously from 5:00pm on Sunday to 5:00 pm on Friday. With three distinct trading sessions in the US, Europe and Asia, anyone can trade on his/her own schedule and respond to any breaking news. Regardless of the traders base of operations he/she can put on or take off positions literally any time of the day or night. This creates enough time for many Kenyans who might not otherwise have the time available to trade. For example, the working person with a 9am to 5pm type of job he/she cannot be expected to operate effectively as day traders in a market such as stocks. They cannot spend the requisite time watching the market during trading hours. With forex, though, one could theoretically day trade in the evenings after work, or in the mornings beforehand, the forex market is never really closed (yes, in some cases you can even trade on the weekend!).
Up to 200:1 Leverage
You can easily increase your total returns on investment with less cash outlay when you have got more buying powers. Increase in leverages leads to increase in risks. With $1,000cash in a margin account that allows 200:1 leverage (.5%), you can trade up to $200,000 in notional value.
Low Transaction Costs
Forex marketing in Kenya also offer the benefits of low or no transaction costs to most traders. Most of the forex brokers do not charge commission and in case they do the charges are relatively very small. There is the bid offer spread that can be viewed as a transaction cost. The reality of the situation is that most traders buy at the offer and sell at the bid in whatever other market trade therefore there is no difference. In forex trading, forex spread can actually be small in the major currency pairs.
Low Account Minimums
Forex trading is open to a wider trading demographic in that there are many opportunities to open smaller accounts than is the case in other markets. Actually there is at least one broker with no minimum account size. They also have low minimum account size. With this kind of flexibility many doors opens to who wants to explore forex trading in Kenya. This is not to say that all brokers are flexible. There are, some who offer the so-called mini-contracts.
Multiple Trading Vehicles
Forex trading can be done in different ways. Many people tend to think of the spot market only. Though it is the largest components, it is not the only one. This is because with the expansion of e-mini currency contracts the, futures market has become more attractive. Other trading options have been coming up therefore, providing traders with more ways to take position in the forex market in Kenya.
The biggest attraction to forex trading in Kenya is that there is always something moving. A good number of primary currencies are involved and each is continuously interacting with all the other currencies. Chances are, at any given time, there is movement in at least one of those exchange rates based simply on the sheer volume of trading and the number of global news events providing impetus to action.
Easily Trade Long or Short
There is no market restriction as it is the case with the stock market. It is just as easy to taking a short position as it is to take a long one.
Do I Need A Lot Of Money To Start Trading Forex In Kenya?
You don’t really have to start forex trading with a lot of money. Actually with as little as UD$200 you can realistically start trading. It is not how much money you have to trade with but how much skill you have to trade. If you attempt trading without the risk management strategies taught, the likelihood of your losing money is very high.
How much time do I have to dedicate to Forex trading?
In our forex trading in Kenya strategies, we do not have to spend a lot of time trading. One can decide to dedicate two to three hours in a week evaluating candidates and a few minutes monitoring the trades. The amount of time required by an individual depends on the type and number of trades he/she initiate.
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