As more Kenyans get into forex trading, below are some of the tips on how to succeed in Forex trading in Kenya.
Although forex trading has been around for decades, the activity has remained low in the country. This is mostly due to low access to information, computers, and technology. However, this is changing fast as these key ingredients become available.
Currently, there are thousands of forex traders in the country with over 75% of them struggling to make consistent profits. Some of these tips will help become more profitable consistently.
What is Forex trading?
Forex trading involves buying and selling of currencies. The trader is supposed to anticipate the correct future price movement to make a profit if correct. Price movements are affected by several factors such as both economic and political factors.
Trading of forex happens through a broker who provides a platform that brings both buyers and sellers together.
Tips on how to succeed in Forex trading in Kenya.
Below are some of the key tips on how to succeed in forex trading in Kenya.
1. Focus on Learning
Due to the robust nature of the forex market, you need to focus on learning to become profitable. Understanding the market is key to making market decisions. Hence, you have to spend a considerable amount of time learning.
On average, it takes a minimum of 1 year to understand the market. However, this could go up to 3 years to become a profitable trader consistently. I have previously analyzed in detail the key approaches how to learn forex trading.
Hence, the more you invest in learning the higher your chances of success. There are various ways to learn forex trading. Some of these include;
- Taking formal lessons
- Learning from a mentor
- Learning online
It is up to you to decide the best approach that suits your needs. Even after becoming a good trader, you still have to keep learning as the market dynamics keep changing.
2. Develop a trading strategy
As a trader, you need to have a market strategy that guides your trading. A trading strategy involves elements such as;
- Currency pairs to trade
- Stop loss and take profit parameters
- Technical tools to use
- Trading lot size
Having a working strategy helps you avoid making emotional decisions in the market. A key source of losses.
As an example, if you have a good strategy, you will know when to get into the market and when exactly to exit. In short, it helps avoid gambling and trial and error during forex trading.
A trading strategy is developed from rigorous back testing until you get a winning formula. Luckily, most brokers have a demo platform that traders use to fine-tune their strategies before going to the live market.
You only go to the live market once sure the strategy works. However, you need to know that a strategy keeps changing as market forces and technicalities change. Hence, it is necessary to keep checking your strategy regularly to ensure it remains relevant to the current market conditions.
3. Get and reliable broker
As a forex trader, you need to get a reliable and licensed broker to facilitate your trading. Brokers are the intermediaries that facilitate both buyers and sellers in the market.
Brokers offer trading accounts and trading tools that you need to use in the market. There are various brokers in the country. These are both local and international.
However, you should consider using a broker licensed by the capital markets authority to ensure your investments are protected.
Some of the brokers available in Kenya include;
When settling on a broker, there are various key factors to consider. Some of these include;
- Trading costs
- Customer support and training
- Trading platform
Trading costs involve elements such as overnight lending, spreads, joining fees, and account maintenance fees. You should ensure these costs are minimal to increase your income gains.
All licensed brokers in Kenya are required to offer free training and continuous support. By doing so, the broker makes your trading journey easier. The most common forex trading platform in the market is the MetaTrader. Normally, it is availed to you by the broker upon registration.
The platform is customizable and has all the indicators you require in the market.
4. Choose the right trading currency
Forex trading involves the buying and selling of currencies. It happens by taking a combination of 2 currencies. This enables you to either buy one or sell the other.
Currencies are broken into various categories depending on their prominence. The top currencies are known as major currencies. These include currencies such as;
- US Dollar (USD)
- Euro (EUR)
- Pound (GBP)
These currencies are the most traded and hence create the most opportunities for traders. However, you need to first understand each currency independently to identify those factors that affect it.
This forms part of the trading strategy. As an example, the US Dollar will always be affected by American economic news. These include factors such as politics, inflation, and interest rates.
Hence, to trade profitably and comfortably, you should ensure to have a good understanding of the current news of the country’s currency economic affairs.
5. Control your emotions and greed
Successful forex trading requires you to have a big sense of emotional control. As humans, we have a natural susceptibility to factors such as greed. However, those who manage this better have a higher chance of succeeding in the long term.
Emotions mostly come when you don’t follow your trading strategy. In most cases, traders tend to let loss trades run for a long while closing profitable trades soon. This is also visible when a trader gets into trades that do not conform to the strategy or the set entry criteria.
Another key example of emotions is when a trader quits trading due to short-term losses. With good emotional control, a trader understands that losses are part of the game and hence as long as you follow the rules, you become profitable in the long term.
Below is a recap of the tips on how to succeed in forex trading in Kenya.
- Focus on learning
- Develop a trading strategy
- Get a reliable broker
- Choose the right trading currency
- Control your emotions and greed