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Forex Trading in Kenya – What Investors need to Know

The Forex Market involves buying, selling, or exchanging currencies from all around the globe. It determines the exchange rates of all global currencies and is the largest financial market in the world with a daily volume of $6.6 trillion in transactions.

The Forex Market involves buying, selling, or exchanging currencies from all around the globe. It determines the exchange rates of all global currencies and is the largest financial market in the world with a daily volume of $6.6 trillion in transactions.

The participation of Governments, Banks, Global Companies, and Institutional investors make up the majority of this market. Retail Forex Trading is a smaller segment of the Forex Market where retail investors speculate on the exchange rates between various currencies.

How does Forex Market work?

The two main factors that move the forex market are supply and demand. If the supply is more than the demand for a currency, its value will decrease, and vice versa. Other complex factors also affect the value of a currency such as a country’s economic output, FDI inflow, the balance of payments, intervention or pegging of currency by the country’s government, social factors, and political conditions. But ultimately the supply and demand of a currency in the global market determine its price.

Under the Bretton Woods system of 1944, all currencies were pegged at the same value against the US dollar and central banks agreed to maintain that fixed value by buying their currency when it was devalued and printing more currency if it became too strong.

But after the Bretton Woods agreement collapsed in 1971, currencies were allowed to float freely in global forex markets just like commodities and stocks. The US dollar still remained the Base Exchange currency for global trade. And as the demand for one currency became stronger or weakened against the USD, it either valued higher against the US dollar or devalued against the dollar depending on the demand.

What is Forex Trading?

Forex Trading is the process of buying and selling currencies in the Forex market. Your bank, governments, global companies, and speculators use the forex market to exchange currencies. Currency prices continually fluctuate depending on the above factors.

Speculators and investors make up 5.5% of the forex market as small and institutional investors buy and sell currencies intending to make a profit from the difference in exchange rates. This is called retail forex trading.

For example, 1 USD (US dollar) is currently selling at 106.29 KES (Kenya shilling). That trade is called USD/KES in the forex market. The USD is the base currency (that you want to buy) and KES is the quote currency (that you want to sell). So you can buy 1 USD for KSh 106.29 in the forex market.

So, if you want to go abroad for study or travel, you will have to buy USD at the current USD/KES quote from your bank. Your bank will normally add a ‘spread’ or commission to the quoted rate. In this case, you are effectively trading forex in retail and your bank is acting as your broker in the forex market.  

The  Capital Markets Authority began regulating Kenya’s retail forex market in 2018 and allowed retail traders, investors and brokers to take part in this market. This boosted currency exchange & forex trading activities and there are now estimated to be over 70,000 traders in Kenya who regularly participate in the market to speculate on currency fluctuations.

How can you trade forex in Kenya?

Under the Capital Markets Online Foreign Exchange Trading Regulations enacted in 2017, the CMA provides three types of licenses:

  • The Dealing Foreign Exchange Broker
  • The Non-Dealing Foreign Exchange Broker
  • The Money Manager

The Dealing Brokers and Non-Dealing Brokers (a and b) offer derivative instruments on forex but they do not offer investment management to clients. However, the Money Manager (c) can manage the forex portfolio of a client.

The CMA does not regulate individual forex traders but brokerages must get the relevant license from the CMA to offer Forex Trading instruments. The CMA has licensed three Non-Dealing Online Brokerages. Only one company is licensed as a money manager.

You can trade forex in Kenya through any Dealing or Non-Dealing Broker or Money Manager licensed by the CMA. For this, the broker will usually charge you a commission or spread.

The spread of a broker is measured in percentage points or ‘pips’. Brokers can either charge Fixed Spreads or Variable Spreads which depends and varies from broker to broker.

Basic steps involved in opening a forex account:

  1. Compare the types of accounts on the broker’s website. Decide on the type of account based on your needs and resources.
  2. Fill out an application form and complete KYC (Know Your Customer information).
  3. Upon successful completion, you will be given a username and password.
  4. You can log in to the client portal of the broker’s website using the given credentials.
  5. Once you successfully transfer funds from your bank account, you will be ready to start trading.

What should you look for while choosing a Broker?

As an investor, you should always choose a CMA regulated broker.

The CMA will help to protect your money from fraudulent activities or exposure to an excess of risk by maintaining safe trading conditions.

The CMA also ensures that the broker doesn’t use your funds for their own benefit.

In the case of any disputes, you can approach the judiciary to seek damages.

The CMA makes sure that regulated brokers submit financial reports periodically to keep the investors safe.

There are only three forex brokers that have been regulated by CMA as Non-Dealing Online Brokers in Kenya. They are:

-EGM Securities which operates FXPesa

-SCFM Limited

-Pepperstone Kenya

The CMA advises against using a foreign broker but if you prefer to take the risk, make sure that the broker is supervised by a reputable regulatory body such as the UK’s FCA, the Australian ASIC, or Cyprus’s CySEC. Regulators make sure that proper trading environment & safety is ensured for investors.

It is always best to choose a broker that offers local customer support and local deposit/withdrawal methods for easier transactions.

Whether you are a new investor or an experienced one, always start off by trading on a demo account when switching to a new platform. While most platforms offer the same features, they usually look or feel different. A demo account will help you to get a grasp on all the tools offered by the platform.

Demo accounts also help you to learn the specifics about the platform, like the spread or order entry procedure.

Once you finish trading on a demo account, you can take a look at all the profits or losses you have incurred. This can help you build a new strategy or check the effectiveness of the one you have in mind.

Risks of Forex Trading

Retail Forex Trading is a very risky business, riskier than traditional investments like stocks.

Some common risks are:

High Leverage

Leverage is used to increase the returns on investment by borrowing money from a broker. It increases your market exposure and thus puts you at a greater risk. During market fluctuations, there is a chance to lose your invested capital and even more in some cases.

High Volatility

The forex market is highly volatile and this volatility helps speculators to make a profit. This attracts a lot of short-term traders and speculators but the market is unpredictable and can go against you at any time. The market also remains inaccessible over the weekend so any unfavorable development during this time might lead to significant losses.

Liquidity Issues

The liquidity of a market stands for the ease with which you can open or close your trading positions at the price you are expecting or similar to the same. While the forex market is generally considered to be one of the most liquid markets, there are times when it goes through stages of low liquidity. The forex market exhibits low liquidity on holidays and weekends as banks are closed during this time.

The forex market is considered risky, especially for beginners. This risk increases if the investor does not have negative balance protection or a stop-loss in place.

Negative balance protection prevents your account balance from going negative when you incur substantial losses. So make sure your broker offers negative balance protection and stop-loss as a safeguard against undesirable developments.

Protect yourself against scams

As there was no regulatory body in Kenya to monitor the forex brokers until 2018, there are still many illegal and unregistered brokers in Kenya. Over 100 such companies are yet to get their licenses from CMA.

The biggest Forex scam in Kenya was the VIP Portal. In 2013, the company promised clients to invest their money in forex trading on their behalf. They promised that they would double their money. Moreover, the company also promised investors an additional 5% of the money for every person they would bring in as a new investor. Over 13,000 individuals deposited their money and the losses were reported to be more than $2.9 million from Nairobi alone.

Some common forex scams you need to avoid are:

The Signal-seller scam

Signal-sellers are traders or companies that offer professional recommendations on favorable times to buy or sell currencies in return for money. These signals are often wrong and can result in losses for you.

‘Robot’ Scamming

A ‘Robot’ is an automated trading program. The scammers claim traders would be able to earn even while sleeping. These systems often don’t work and many of them have never undergone a formal review or test.

Fake Broker or Investment Scheme

They claim to double your money or offer big returns without proof. They are not regulated and they keep your money for themselves rather than investing it.

Conclusion

Despite the risks, the forex market is crucial for the global economy. Speculators or traders can use the forex market to invest money but they need to be cautious.

It is important to first educate yourself about the forex market before starting to trade. Learn the basics first, then practice on a demo account, and finally start investing in small amounts.

You should also learn to use risk management tools like stop-loss, negative balance protection, risk-reward ratio to name a few. These will limit any losses and protect you from losing your entire capital.

Lastly, make sure you trade in a regulated environment so that, if something goes wrong, you can seek redress.

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Neteller Launches Cryptocurrency Exchange Service

Neteller Launches Cryptocurrency Exchange Service

Neteller  one of the most known Digital fiat currency wallet provider , has started allowing its users to buy, sell, and hold cryptocurrencies including BTC, BCH, ETH, ETC, and LTC.

They do this on the large scale with a pilot in 10 countries and soon another 50 countries to join . They understand that if you do this effort it will only succeed if you can do this on a global scale.

Neteller and Cryptocurrencies

Neteller is a service which is operated by Paysafe Financial Services Ltd.,

paysafe

paysafe

founded in 1999, Paysafe Financial Services entered the market with the mission to provide an online alternative to the known traditional payment methods.

Most of the traders aiming us now neteller as one of the companies through which we made our deposits and if we had any profits also our withdrawals. A couple of years ago they left the Forex and Binary industry behind since the charge-back issue became just too expensive.

But as any companies knows, if you do not adept you die. The binary option market is all but dead and the Forex industry has moved also into the directions of the cryptocurrencies. thus, neteller understands that this is where the future is.

So Lasts week they announced that they are now offering a wallet with buy and sell cryptocurrency options.

As of today, Neteller users can buy, hold and sell cryptocurrencies via a recognized cryptocurrency exchange including bitcoin, bitcoin cash, ethereum, ethereum classic and litecoin, purchased using any one of 28 fiat currencies available in the Neteller wallet.

It may not seem so exciting but for many users that love this service it actually is. More and more currencies will be added making them an true exchange in the near future.

Now one is able to fund their neteller account through many different means (Mobile, Epay, Paysafecard, local bank deposits, and bitcoin)

We think that will make the threshold for many people, who would want to buy or sell cryptocurrencies, lower. This in return is a good thing for the overall acceptance of the cryptocurrencies in the mainstream of every day life.

Conditions for buying and selling cryptocurrencies through Neteller

The rates offered are somewhat in the lower middle of the current market making them go for the save route. The average market rates on the major cryptocurrency exchanges differ all in all not that much anyways, as this is not the main reason to choose to buy Bitcoin through Neteller

The minimum cryptocurrency purchase or sale amount is “approximately equal to 10 EUR,” the firm clarified, adding that the maximum amount depends on the transaction limits associated with each account.

When You open an account with Neteller you have to choose your default currency. This is of course for most people in accordance on their geographical locations, people in Britain will go for the pound most Europeans go for the euro and pretty much the rest of the work goes for the US Dollar, thou other currencies are available

The fee is 1.5 percent for purchasing and selling cryptocurrencies from wallets with EUR or USD as the default currency.

The fee rises to 3 percent for wallets with other default currencies.

Neteller  | Why is this a good move for neteller and one that we should expect from other online Payment providers as well ?

At this moment till last week Neteller users can pay, get paid on thousands of sites, and send money around the world through their system.

The company claims to have “millions of point-of-sale, ATM and online locations” for users to withdraw or spend their cash.

Last July 25, Paysafe ( which as you remember is the company that owns Neteller and Skrill)  announced that another digital wallet provider in its group, Skrill ( formerly known as moneybookers), started allowing customers to “instantly buy and sell cryptocurrencies, including bitcoin, bitcoin cash, ether and litecoin, using any one of the 40+ fiat currencies available in the Skrill wallet.”

We could now see that this was like their test run on this concept.

We do not know the numbers that Skrill produced since they offered this service but it must have been encouraging enough for Paysafe to include their flagship brand in this endevour.

We will see where this leads but we are hopeful that this is the next step in global acceptance to the cryptocurrency revolution. Let me know what you think

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The basics of trading that one should know

The basics of trading that one should know

Things you should be aware of before you start

The currency trading industry and now also the cryptocurrency trading industry have gone through enormous volatile times the last couple of years. Now with trump and its trade wars. The fast rise and somewhat recline of the cryptocurrencies and the fast pace of international politics and economies that create high rises and steep fall of the currencies.

So what does it all mean and what can you do before start to trade on these news headlines.

Good brokers like LegacyFX and UBCFX provide the traders with the latest market news and updates on a continuous basis but if you are new to trading you still have no idea what to do with this.

You start by understanding that the involves a high degree of risk, including the risk of losing you hard earned money. Besides the ones that were lucky enough to have bought Bitcoin a couple of years back and cashed in in the end of 2017, most people don’t get rich overnight.

You have to understand that you only trade with money that you are able to lose, going hungry because you want to open a trade is not the right wy to go about it.

So, What is Forex?

You should by now understand that the value of currencies goes up and down every day.

This in general becomes apparent the moment you go on vacation and what you bought last year with your money now is not the same amount you get today at the exchange.

This is on a large scale, what a lot of people do not know is that there is a foreign exchange market – or ‘Forex’ for short – or “FX” for even shorter, where you can potentially make a profit from the movement of these currencies.

The most known Trader is George Soros who made a billion dollars in a day by trading currencies. This is of course on a scale that we are not able to reach and you need a huge amount of money to begin with. Still he made a billion in one day!!

The internet has played a huge part in making trading in currencies accessible for the masses. You also do not need huge amounts of money to actually do this. Now keep in mind that if you make 10% profit on your investment but the investment was just $50 you basically just end up with $55. still no bank will give you 10% interest on your money.

Many people and I am talking millions are now trading every day, most do this on the side and don’t do this as a full-time job, but there are today enough people that are full time traders and making enough money to live comfortably.

Retail forex market needed Brokers

The Forex market for the retail market was born, it started around 15 years ago to become more serious as technologies advanced and the stream of information became almost instant, this is important for trading as one second can make the difference between profit or loss.

So, the moment the technology was there the people that wanted to trade were there all that was needed were the Forex brokers that offered the platform for trading.

There are latterly hundreds of companies of not thousands that offer this service and there are good ones like LegacyFX and there are scams (these tend to not last long)

Forex explained in short

The Forex market is the largest financial market on the planet and has been for many years now.

Its average daily trading volume is more than $4 trillion. (just let that number sink in for a second). Of this total amount around 5% is the retail market meaning traders like you and me. Still 5% of 4 Trillion is still a number with a lot of zeros behind it.

If you compare that with the New York Stock Exchange, which only has an average daily trading volume of $55 billion. You truly see the size.

To give you another example:

if you were to put ALL of the world’s equity and futures markets together, their combined trading volume would still only equal a 25% of the daily Forex market. Insane right?

Why does this even matter?

It matters because there are so many buyers and sellers that transaction prices are kept low. To explain how trading the Forex market is different than trading stocks, here are a few major benefits.

  1. Most Brokers don’t charge commissions – you pay only the bid/ask spreads.
  2. There’s 24hour trading – you decide when to trade and how to trade.
  3. You can focus on your currencies and become experts in only those pairs that you follow instead of following and selecting out of 5000 stocks
  4. You can trade on leverage, (something to be very aware of as it can magnify potential gains but also your losses).
  5. Forex is accessible for almost everyone– you don’t need a lot of money to get started
  6. In the Forex market you can trade on Demo accounts to learn before you commit your money

How is Forex traded?

The mechanics of a trade are virtually identical to those in other markets. The only difference is that you’re buying one currency and selling another at the same time.

This is also the reason as to why the currencies are quoted in pairs, like EUR/USD or USD/GBP.

The exchange rate represents the purchase price between the two currencies.

Example:

The EUR/GBP rate represents the number of GBP one EUR can buy (relevant now with all the Brexit issues going on) . If you think the Euro will increase in value against the British Pound, you buy Euros with British Pounds. If the exchange rate rises, you sell the Euros back, and you cash in your profit.

Now the same works for strading Bitcoin, ethereum, Litecoin or other cryptocurrencies. this has become an entire new market and has introduced many people to Forex . you should here be also aware that trading cryptocurrencies is like regular trading so you will be able to lose great sums of money.

the Best thing i found about trading cryptocurrencies is that the Leverage by default tends to be very low which makes the risk of losing it all much smaller.

Sounds simply enough?

Why does not everyone Trade.

The same could be asked as to why not everyone plays poker, you can make money. The comparison between the 2 is actually closer than you might think.

All traders that are successful will tell you that 80% of successful trading is psychology and the other 20% is research. It takes time to get the research down, but it can take a lifetime to master the psychology.

People tend to do things differently when real money is on the line and are accepting losses in the hope that the trend will reverse or taking out profit too early because they don’t want to lose what they just have gained. In short, the psychology is the hard part.

One should be aware that you can loose real money and a lot of it very fast if you don’t know what you are doing.

Now most Good Forex brokers offer some educational tools, some more than others that will teach you how to trade. There is also something that is called social trading that will allow you to follow other traders and see what they are doing in order for you to learn and make money at the same time.

So here are some ground rules for those that look to start trading

  1. Get involved in the market, watch read and listen to the news to understand what is happening
  2. Go through a trading course ( a good one is here)
  3. Open a demo account and trade at least a month (my advice to do this even longer)only on this before you even think about trading with real money.
  4. Check out social trading, there are some options for this, this broker offers this also.
  5. Try with an amount that you are able to afford losing. See this as your tuition money.
  6. Take it slow, don’t become greedy and follow the basic rules

Basic Rules (there are many more but start with these)

  1. The trend is your friend
  2. Don’t add money to a losing position
  3. Don’t trade on too many different currency pairs
  4. Trade only with a good broker
  5. Don’t open to many positions (no one needs 100 positions a day)
  6. Develop your strategy and stick to it.
  7. Know that NO ONE is 100% of the times right, everyone loses some.
  8. Last but not least, don’t trade with money you cannot afford to lose.

Now all that I want to say is good luck.  😊

 

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Wanted Cryptography Experts in China

 Wanted Cryptography Experts in China

The sooner we get to the official launch of China Digital Money. the more Cryptography Experts are needed.

it almost is surreal as they pushed against this from the beginning but now S China digital money may soon be a reality.

The Bank of China (PBOC) is hiring cryptography experts by the masses as reported by the South China Morning Post (SCMP)

this is the latest in the Chinese efforts to have a state controlled cryptocurrency for its own means.

The institution is one which worries a lot about the effect of investor activity in the cryptocurrency market. this in great contrasted to the directive issues in 2014 by the PBOC  that Bans any activity related to the cryptocurrency market.

Yet the Central bank of china started to build their own work force for building and developing their crypto in 2017.

something like if you can beat them , copy them.

in 2017 the Yicai Global reported that this targeted workforce would work from central Beijing as was to be names the  digital currency research institute

This research institute would primarily focus on the latest in digital currency technologies and all the different applications that would benefit from cryptocurrencies.

the former deputy director of the PBOC’s science department, Mr Yao Qiann would be in charge of the overall project

since then they are expending with opening a new research institute expanded in Nanjing . the idea for this center is to create more interest n the technologies and its possible applications.

the pilot programs are to be implemented by state controlled banks and academic institutions which should result in blockchain hubs that would attract new developing talent and additional capital to further develop the cryptocurrencies.

“Beijing’s ideal digital currency must ensure the smooth running of monetary and financial stability policies and at the same time protect consumers.”

Apparently, the ultimate goal for the Digital Currency Research Institute (DCRI) was to clear the path for a national cryptocurrency. Reports indicate that the fintech hubs will serve a purpose higher than initially believed. Reportedly, the hubs will serve as testing ground for China digital money. Here, the currency will undergo tests from prototype phase to future mass production.

and thus we get to the point that they are looking aggressively for new talent in the cryptographers and computer scientists sectors. now that more and more student have said good bey to the united states in the last couple of months after feeling they were less welcome this drive for finding new employment has only intensified and is answered by the large amount of brilliant young people coming back to live in chine after their education abroad.

The salaries are even higher then what they would have earned if they would stayed in the US and gone of to work in some of the companies in the Silicon Valley.

So we could expect that China is now also looking to become a world player in this industry as they have become the leaders in so many other fields.

 

 

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