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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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CMStrader Signals provider, the number 1 signal provider 4 years in a row

CMStrader Signals provider, the number 1 signal provider 4 years in a row.

CMStrader, the number 1 signal provider 4 years in a row, is now offering free signals to new clients!  Reliable trading tools are fundamental part of successful trading.

cmstrader for the Best Trading Signals

cmstrader for the Best Trading Signals

 

CMStrader’s signals success rate is estimated in 91% this should be enough to take a look and decide for yourself. since this is their biggest feature and drives this broker towards success, it is opretty afe to say that they do their utmost to provide you with quality forex signals.

This broker also entered the cryptocurrency market and offers several cryptocurrencies.  in short they act on the market and engage their clients directly.

when you start trading at CMSTrader, you can choose from a extended list of currencies, indices, commodities, gold and oil.

CMStrader Signals for better Trading

CMSTrader sends trading signals to traders’ accounts when there is an opportunity to buy or sell orders at specific points; an overview of the speculated price or loss ratio is included.

CMStrader Signals the number 1 signal provider among brokers

CMStrader Signals the number 1 signal provider among brokers

The signals are sent directly via SMS to a cellphone for major currencies traded on the stock exchange, foreign goods and precious metals.

In addition, signals can be sent to an e-mail address and or traders can be notified directly over the phone.  This service is available 24/5.

Like with Most proper signal services don’t expect 50 signals a day as simply there are not that many. you will get maybe a few good ones a day on which you could and most of the time should act.

Earn profits with CMStrader Signals in the forex market – the biggest trading scene in the world. Enjoy our unique benefits, trading education, minimum margin and best leverage! Start with a demo account and enter the amazing world of forex with CMStrader.

More about CMStrader Signals & Forex Broker

  • Name :CMSTrader
  • Website :cmstrader.com
  • Established :2013
  • Regulation :FSP
  • Country :United Kingdom
  • U.S. Clients Allowed ?  :No

CMSTrader is a leading investment advisor specializing in personal wealth management and growth and is a somewhat a newcomer to the Forex market.

they started in 2013 and since then have won several awards 2 including one for having best customer service in 2013.

CMSTrader “CMStrader Signals” is authorized under the name of CMS Ventures Limited which is a New Zealand Registered Financial Service Provider (FSP).

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Supreme Court Sides With Bits of Gold in Bank Dispute

Supreme Court Sides With Bitcoin Broker “Bits of Gold” in Israeli Bank Dispute

Upon appeal, the Israeli Supreme Court has rejected the closure of Bits of Gold’s banking facilities at Leumi bank, Tel Aviv.

The Israeli cryptocurrency brokerage’s appeal followed a previous ruling against it that has now been set aside by the higher court.

As Israel and many other countries struggle with the accelerated phenomenon of virtual currencies, Leumi Bank recently made the news for being a particularly blunt in its rejection of Bitcoin.

We should of course not be surprised with the banks attitude towards bitcoin or any other cryptocurrency for that matter. keep in mind that the banks become more and more obsolete because of them. Bits of gold versus leumi

They will keep on loosing money which now they make with ridiculous commissions of work that is fully automated. so they will try to see how they are able to make the operation and acquiring cryptos  as hard as possible knowing that they will never be able to stop them.

There is widespread anticipation that the upcoming G20 Summit in March 2018 will produce a global, moderate framework for a regulatory approach. Set against that are persistent hostile stances the world over from banks, asset managers and even governments towards cryptocurrencies.

Now that the countries understand there is money to be made with Taxation in cryptocurrencies they might want to make sure that the banks stay within their lane. 

Apart from the Israeli revenue service opting to tax cryptocurrency assets as “properties” and other more positive developments dating back to mid-2017, Israel remains a strange mix of genteel acceptance alongside wildly opposing voices.

There is thus Hope But no decision

Bits of Gold has fought a David and Goliath battle since their banker decided it wanted to steer clear of all cryptocurrency-related business.

On record as recently telling another bitcoin-related trader that they simply don’t want the business, Leumi Bank’s hard-line stance is accumulating bad press. The second-largest bank in Israel appears as discriminatory when analyzing virtual currency traders and other digital coin businesses.

During 2017, a customer made a bank transfer to the Kraken exchange site for buying bitcoin worth $1000. The bank identified the request, halted it, and started investigating.

The elated CEO of Bits of Gold, Youval Rouach said that “The court’s decision enables us to focus on the growth of the Israeli cryptocurrency community.”

 

The February 26 Supreme Court ruling granted Bits of Gold a temporary injunction against their account closure pending further scrutiny by the bank and other parties. The presiding bench declared that the company had “acted transparently and did not violate any provision of law.”

Calling the bank’s concerns “speculative” and turning an unsympathetic ear to the plaintiff, the ruling does, however, allow for the bank to still close the account on any small technical detail that defies legislation. As a record of a public spat around cryptocurrency’s right to be recognized in many ways, the ruling is seen as a victory for the local cryptocurrency community.

One Small Step Forward

Although not as absolute as nations like China that has opted for draconian bans, Israel is a front line for digital coins’ right not just to exist, but also become assets in the true sense of the word. The Supreme Court noted in its written ruling that Bits of Gold had not made itself guilty of the violation of any standing laws since opening its doors for business.

 

The Bits of Gold v. Leumi Bank case might become something of a test case once the bank applies its mind in scrutinizing the company’s accounts against the backdrop of existing legislation. The outcome will also be informed by sentiment post the G20 Summit due in March as well as other global regulatory trends.

Now that the countries understand there is money to be made with Taxation in cryptocurrencies they might want to make sure that the banks stay within their lane.

This was First Published by coindesk

 

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easyMarkets launches Ethereum and Ripple.

easyMarkets launches the crypto-markets’ best kept secret – Ethereum and Ripple.

The crypto markets are the new frontier of trading, we have seen unprecedented movement – from astonishing peaks to abrupt crashes – behaviors and easyMarkets launches Ethereum and Ripple.movements no other instrument experiences or has experienced previously.

Bitcoin was immensely popular when we introduced it to our customers in 2017. After closely following the innovative cryptocurrency markets we found two more immensely interesting (but less visible) cryptos to add to our offerings – Ethereum and Ripple.

easyMarkets launches Ethereum and Ripple.

Ethereum is a blockchain based cryptocurrency like Bitcoin, whereas Ripple is a cryptocurrency payment protocol, touted as a solution to perform payments for institutional clients. Although Bitcoin was undeniably the markets’ star in 2017 – these two crypto-counterparts had equally impressive movements.

Ripple towards the end of 2017 had a notable 33014% overall climb with a market cap of $83.6 Billion. This was assisted by Ripple’s collaboration with institutional users like American Express.

Ethereum had climbed an astounding 8,885% from the beginning of 2017 until the end of that year with a respectable market cap of 69.3 billion. Purely as a cryptocurrency it seemed to even outdo its forefather – Bitcoin – by completing transactions quicker and more effectively.

they have also lowered our spreads on Bitcoin!

Of course, all of their cryptocurrencies include easyMarkets great trading conditions:

Trading Conditions

  • There’s  zero slippage on the easyMarkets web platform meaning your Ripple trades will be executed at the price you see on your screen.
  • You can trade Ripple during its most active times, around the clock, five days a week.
  • They got you covered with an in-depth eBook and plenty of other trading education resources.
  • Make sure you have an exit plan in place by taking advantage of our 100% guaranteed Stop Loss and Take Profit.
  • They cover your deposit and withdrawal fees, so that the amount you deposit or withdraw is the amount you receive.
  • Negative Balance Protection means you can never lose more than you invest when you trade Ripple CFDs at easyMarkets.
 easyMarkets launches Ethereum and Ripple.
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