This process is instant and moves from one to another. Step 3: Confirmation of documents submitted by you: This process is not instant as the rest are. Before rushing in to open a forex trading account, clients must comprehend the components of fees that can be incurred from them while trading forex and CFDs online. Each broker can charge differently for trading forex. The following components of fees must be checked and compared before choosing a forex broker in Kenya. Spread : Spread is the most important fee that a trader has to pay while trading forex or any other CFD instrument.

It is the difference between the bid and ask price of an instrument. Wider spreads mean higher revenues for the broker and lesser gains for the traders. Trading Commission : Some brokers may incur a fixed or variable commission depending on the trading volume.

Spreads may or may not be incurred while trading with commissions. Most brokers offer a separate account type for commission based trading at low spreads. This commission is incurred while opening as well as closing the position depending on trading volume.

Overnight Charges : Overnight charges are also called as swap fee or rollover charges. This is the fee that is incurred when a leveraged position is kept open overnight. Each instrument has different overnight charges for long as well as short position. Traders who prefer to keep their positions open for more than a week must check swap fees before doing so. Inactivity Fees : Most brokers charge inactivity fees if no trades are executed for a prolonged period after opening the account.

The inactivity period and the monthly charges for inactivity can be different for each broker. Some brokers charge inactivity fees after 3 months of inactivity some for 12 months while many do not charge any inactivity fees. each Deposit and withdrawal method can have a different fee associated with a broker. Clients must check and compare the transaction fees for their preferred mode of deposit and withdrawal.

Currency Conversion Fees : These are the fees that are only incurred if the deposit currency is different from the base currency of the account. Most brokers use nominal currency exchange rates but each broker can have different currency conversion charges. However, some other forex and CFD brokers do charge account opening or regular maintenance charges.

The details of all the trading and non-trading fees can be checked on the official websites of the broker. Clients can also inquire about the fees through customer support services. The following are the important factors that must be considered while selecting the best forex broker for oneself in Kenya:.

Regulations : Capital Markets Authority CMA is the financial regulator in the jurisdiction of Kenya. Clients getting registered under CMA regulation are protected and are exposed to less third-party risk. Traders must ensure that the chosen forex CFD broker must be regulated by CMA in Kenya. The details of the regulation are generally mentioned in the footnote of the official websites of the brokers. Clients can also access the CMA website to cross-check the regulation details of a particular broker.

Currently, there are 7 forex brokers that are licensed and regulated by CMA in Kenya. The higher fee is beneficial for the brokers and costly for the traders. Lower spreads can have a major impact on profits and losses booked by the trader. Available Instruments : The chosen forex broker must offer adequate varieties of financial instruments including the ones that you wish to trade with.

Traders must ensure that their preferred trading instrument is available with the chosen broker or not. Contract specifications on preferred instruments should also be checked before opening the account. Trading Platform : All trading activity will take place on the trading platform.

Clients must be convenient with the trading platform and all its features. Efficient and convenient use of the trading platform will enhance the outcomes of trades.

Traders must check the processing time of deposits and withdrawals along with the fees associated with each method before opening their accounts. Customer Support : The best forex broker must offer quality customer support services through live chat, email, phone, or social media applications.

Easy connectivity with the support staff will enhance the trading experience as traders can resolve any query faced while trading. Trading Conditions : Clients must check every trading condition like leverage, account currency, deposit currency, account types, bonus, etc to choose the best forex broker for themselves.

For example, if a broker does not support KES as the base currency of the account then the deposits made in KES will be converted to base account currency at prevailing rates. For retail traders, it can be difficult to consider every aspect of a broker while choosing them. The best practice for beginners is to start with a demo account and trade with virtual currency. This will not only allow you to comprehend the trading conditions and experience with a broker but will also grant you experience to make better trading decisions.

It is no mean feat to trade and make a profit in the forex market as a retail trader. The market is highly volatile and only those with vast knowledge of market trends are able to trade unscathed. However, there are strategies for trading. A trader does not just open a trade without a background strategy in place. In Forex Trading, there are two strategies for analyzing the market.

We have the Fundamental analysis and Technical analysis. These factors include international trade, GDP, manufacturing, interest rate, employment rate, politics, and everyday national events. These factors are used to determine the real value of the particular currency and project future movements in price.

These factors have proved relevant in determining the movement in the price of forex instruments in the past and in recent times. For example, on June 24, , a day after the United Kingdom voted to leave the European Union, the Sterling plunged to a thirty-year low. Announcements of increases or reductions in interest rates by Central banks also the movement of the prices of currencies in the market.

The idea behind fundamental analysis is that most times, the price of a forex instrument is usually over over-valued or under-valued. Fundamental analysis as a trading strategy is best suited for long-term trades. This is true since the trader should be patient enough to sit out any rally or deep and rely on the information from his indicators.

Technical analysis as a forex strategy involves analyzing symbols, patterns, and charts. Unlike fundamental analysis, a trader using technical analysis as a strategy is not concerned about the causes of the price movement. Technical analysis is not also concerned with the true value of the currency but uses charts as indicators to determine future price movement.

Technical analysis traders rely on price action, trends, support, and resistance level seen on the chart. Many believe technical analysis is easier to use than the two trading forex strategies. Technical analysis is best suited for short-term trading. Both fundamental analysis and technical analysis offer credible insight into how to enter or exit a trade. It is difficult to state clearly which is better or more preferable, as it depends on the trader.

We will advise traders to choose the strategy that suits them or combine both strategies in their trading. Forex trading is a risky venture. There are so many risks involved in forex trading. The major risk associated with brokers is being Unlicensed in Kenya. In the event of the financial insolvency of such brokers or bad practice, there is a higher chance of protection with a regulated broker.

This is why traders tend to prefer non-dealing desk brokers. Non-dealing Desk NDD Broker: NDD brokers do not take the opposite sides of your trades and they are divided into two.

This type is referred to as an ECN broker. The second type is the STP brokers. Retail forex traders are individual investors who wish to trade in the forex market for personal gain. They account for an estimated 5. Retail traders are in the market mostly for speculative reasons. They hope to profit from differences in exchange rates between currencies.

Their presence in the forex market is to create policies that can affect the currency, intervene and stabilize the currency through increasing or decreasing interest rates, performing Open market operations in some situations, etc. Central banks can also devalue their currency to make exports of their country more competitive to international buyers.

In short, the Central bank plays a major role in deciding the value of a currency. Commercial Banks make up the interbank market where they trade forex with other banks in very large volumes. These volumes are large enough to dictate the bid and ask prices for any currency. They trade on behalf of themselves and their customers. Big companies that operate in different parts of the world have to trade in the forex market to hedge risk and also for business purposes.

A company hoping to buy raw materials from another part of the world may need to convert its currency to be able to pay the supplier at the other end. Big companies who have business operations in other parts of the world may also want to convert and repatriate their profits in a stronger currency to hedge against the risk of currency depreciation. Depending on the currency that you want to trade, some sessions can be better than others. The best time to trade the majors is when some of the major sessions overlap.

At this time, market participation and liquidity are high, and spreads are at their lowest. All the countries participate in the forex market and their currencies are represented as three-letter codes. However, we will focus on the popular currencies here. The popular currencies and their codes are listed below. They usually have the USD on one side of the quote either as a base or quote currency. Examples in order of popularity are:. These are currency pairs involving a major currency and a currency of a smaller economy.

These smaller economies are often referred to as emerging economies. Examples are. The base currency is usually on the left while the quote currency will be on the right. Here is an illustration below. When you go long buy on a currency pair, the base currency is being bought while the quote currency is being used to pay for the base currency. It is the other way round when you go short sell on a currency pair. Currencies are always traded in pairs at an exchange rate.

The exchange rate is how much of the quote currency is required to buy the base currency. The Bid price is the highest price a forex trader is willing to pay to buy the base currency from the broker. Forex brokers quote these two prices on their trading platforms. They are always obvious that you cannot miss them.

Certain terms are widely used in forex trading and understanding is very important. We shall discuss some common terms below. A spread of 0. Variable spreads: As the name implies, variable spreads are spreads that fluctuate.

This fluctuation is due to changes in the condition of the market like high or low volatility. This type of spread is usually offered by NDD brokers as they try to get the best market price for your trades. Fixed Spreads: These are spreads that remain the same regardless of market conditions. They are usually offered by market makers. Market makers determine the price of the currency pairs they offer. So they can keep the bid and ask price stable no matter the market condition.

As seen in the example above, if the spread is 0. This is for a currency up to the fourth decimal. So, the margin that you need to trade depends on the total lots or units that you are trading. If you are trading 2. Leverage in forex trading is essentially taking a loan from your forex broker to trade most lots. The loan is repaid after you sell and make a profit or a loss.

But this is very risky and can result in huge losses. For example, if you lose big on a trade, and if the forex broker does not have Negative balance protection in place, the trader may have to repay more than the initial capital if the losses exceed capital. This is a good faith deposit a trader must keep in his trading account. It is expressed as a percentage and is inversely proportional to leverage.

This is the first and the most important aspect of choosing a Forex broker. Their main tasks are to prevent traders like us from fraudulent companies and ensure a fair market environment for all participants. Being regulated means that your funds are kept safely and securely in segregated accounts so the brokers will not be able to use your funds for their operational activities.

But, remember that regulated brokers do not guarantee problem-free trading. However, it can at least prevent potential scam issues. Alternatively, you may find this information on other pages, such as About Us, Regulations, and so on.

There are a lot of trusted and prominent financial regulators in the world. They have different jurisdictions and requirements, such as: 👉 Cyprus Securities Exchange Commission CySEC in Cyprus 👉 Financial Conduct Authority FCA in the United Kingdom 👉 Australian Securities and Investments Commission ASIC in Australia 👉 Dubai Financial Services Authority DFSA in Dubai 👉 Financial Market Supervisory Authority FINMA in Switzerland 👉 Financial Sector Conduct Authority FSCA in South Africa 👉 Monetary Authority of Singapore MAS in Singapore 👉 National Futures Association NFA in the United States 👉 The Federal Financial Supervisory Authority BaFin in Germany 👉 Financial Markets Authority FMA in New Zealand Aside from regulators, Forex brokers may also be a member of a compensation scheme or another international organization , such as The Financial Commission, Investor Compensation Fund ICF , and Financial Services Compensation Scheme FSCS.

Client support is an aspect that is actually essential but is usually brushed aside by many traders since they have not needed them yet. You need immediate assistance because you want to open a trade quickly before the market shifts again. But, it turns out that their live chat support is not available at that time and can only help you within 24 hours.

You have no choice but to lose your chance to earn profits since the Forex market is very liquid and can change in a matter of milliseconds. Are the customer support teams friendly, helpful, and professional? Do they tailor their answers based on your questions or do they just copy and paste canned answers? What support channels do they offer? Do they provide various ways to reach out to them, such as call, live chat, web form, email, media social, or chatting apps? What is the average wait or response times of the live chat until you can talk with a human?

You can try to contact them and ask some questions to evaluate their responses. If your broker offers excellent customer service, then you can eliminate one more thing from your mind and focus on your trading.

What are the conditions? Forex brokers usually offer several trading account types with different conditions. There are accounts suitable for beginner, experienced, and professional traders. Therefore, you have to make sure that your chosen broker offers an account type that suits your trading level, needs, risk appetite, and styles. For example, with leverage of , you can trade up to 1, USD just by using 10 USD.

Professional accounts usually have higher maximum leverage, while beginner accounts offer lower maximum leverage. Since leverage is extremely risky , make sure that the offered leverage is according to your needs and use it with caution. The wider the spread, the more difficult to make profits. Thus, popular pairs usually have tighter spreads. There are two types of spread: fixed and variable. As the name suggests, fixed spreads are established for an entire day and will not change, while variable spreads may change depending on the dynamics of the pairs you trade in.

That is why you should check what fees your broker charge for your trading activities. For example, you may encounter trading fees , overnight fees swap , and inactivity fees.

Forex Trading via CMA Regulated Online FX brokers is legal in Kenya. There are six non-dealing regulated forex brokers. In this guide, we will mostly discuss from the point of view of retail traders in the forex market. We will try to cover some of the topics that can help you decide if you should trade, and learn about the risks involved.

Forex Trading is regulated in Kenya by the Capital Markets Authority CMA. The CMA is the statutory regulatory body that oversees Capital markets including the forex market in Kenya. They also issue licenses to market participants like the forex brokers that accept retail traders. There are six regulated non-dealing forex brokers that are authorized by CMA in Kenya. You can trade legally via any of these forex brokers.

Below are the some of the points that you need to know for learning everything about forex trading:. Hence, if you are thinking about trading forex, then you must learn about the risks as well.

The foreign exchange market alias forex or FX market is a global, online over-the-counter OTC market where currencies of about countries are bought and sold. It is open 24 hours a day. It is the biggest financial market in the world and has very high liquidity.

The forex market participants include businesses, banks, speculators, institutions, etc. Some of the trades in the forex market are speculative in nature and a part of it is from retail traders. Retail traders come to the forex market to speculate, hedge against currency and interest rate risk, etc. The activities that take place in the forex market are what determine the exchange rate of any currency pair. The higher the demand for a currency, the higher its exchange rate.

The forex broker is a regulated participant who acts as a bridge between the forex trader and the market. The broker is a middle man who places buy and sell orders for retail traders and some brokers also offer research services as well if required by the trader. The forex broker charges a fee for their services. That being said, retail traders need to pass through a forex broker that accepts retail traders if they are to access the market.

There are several forex brokers in Kenya to choose from. There are two types of brokers. They are classified based on their execution model. Here is the breakdown. Dealing Desk Broker: Dealing desk brokers take the opposite side of your trades. When you buy a currency pair, they sell. When you sell, they buy. Because of this, when you lose a trade, they make money off it, leading to a conflict of interest.

This is why traders tend to prefer non-dealing desk brokers. Non-dealing Desk NDD Broker: NDD brokers do not take the opposite sides of your trades and they are divided into two. This type is referred to as an ECN broker. The second type is the STP brokers. Retail forex traders are individual investors who wish to trade in the forex market for personal gain.

They account for an estimated 5. Retail traders are in the market mostly for speculative reasons. They hope to profit from differences in exchange rates between currencies. Their presence in the forex market is to create policies that can affect the currency, intervene and stabilize the currency through increasing or decreasing interest rates, performing Open market operations in some situations, etc. Central banks can also devalue their currency to make exports of their country more competitive to international buyers.

In short, the Central bank plays a major role in deciding the value of a currency. Commercial Banks make up the interbank market where they trade forex with other banks in very large volumes.

These volumes are large enough to dictate the bid and ask prices for any currency. They trade on behalf of themselves and their customers. Big companies that operate in different parts of the world have to trade in the forex market to hedge risk and also for business purposes. A company hoping to buy raw materials from another part of the world may need to convert its currency to be able to pay the supplier at the other end.

Big companies who have business operations in other parts of the world may also want to convert and repatriate their profits in a stronger currency to hedge against the risk of currency depreciation.

Depending on the currency that you want to trade, some sessions can be better than others. The best time to trade the majors is when some of the major sessions overlap. At this time, market participation and liquidity are high, and spreads are at their lowest. All the countries participate in the forex market and their currencies are represented as three-letter codes.

However, we will focus on the popular currencies here. The popular currencies and their codes are listed below. They usually have the USD on one side of the quote either as a base or quote currency. Examples in order of popularity are:. These are currency pairs involving a major currency and a currency of a smaller economy. These smaller economies are often referred to as emerging economies. Examples are. The base currency is usually on the left while the quote currency will be on the right.

Here is an illustration below. When you go long buy on a currency pair, the base currency is being bought while the quote currency is being used to pay for the base currency. It is the other way round when you go short sell on a currency pair. Currencies are always traded in pairs at an exchange rate. The exchange rate is how much of the quote currency is required to buy the base currency.

The Bid price is the highest price a forex trader is willing to pay to buy the base currency from the broker. Forex brokers quote these two prices on their trading platforms. They are always obvious that you cannot miss them. Certain terms are widely used in forex trading and understanding is very important. We shall discuss some common terms below. A spread of 0. Variable spreads: As the name implies, variable spreads are spreads that fluctuate.

This fluctuation is due to changes in the condition of the market like high or low volatility. This type of spread is usually offered by NDD brokers as they try to get the best market price for your trades. Fixed Spreads: These are spreads that remain the same regardless of market conditions.

They are usually offered by market makers. Market makers determine the price of the currency pairs they offer. So they can keep the bid and ask price stable no matter the market condition. As seen in the example above, if the spread is 0. This is for a currency up to the fourth decimal. So, the margin that you need to trade depends on the total lots or units that you are trading. If you are trading 2. Leverage in forex trading is essentially taking a loan from your forex broker to trade most lots.

The loan is repaid after you sell and make a profit or a loss. But this is very risky and can result in huge losses. For example, if you lose big on a trade, and if the forex broker does not have Negative balance protection in place, the trader may have to repay more than the initial capital if the losses exceed capital.

This is a good faith deposit a trader must keep in his trading account. It is expressed as a percentage and is inversely proportional to leverage. Once you lose the deposits in your CFD trading account, the brokerage system automatically closes all your positions. It limits your loss to just your capital and ensures that the forex broker does not take the risk of your position.

Negative balance protection is offered to only retail traders and not institutional traders. Some regulated forex brokers in Kenya like Hot forex, Avatrade, and FXPro offer negative balance protection. CFDs are derivatives. Derivatives are complex financial instruments that derive their value from other underlying assets such as Stock, Currency, Commodities like Gold, precious metals, etc.

When trading CFDs, a trader does not own the underlying asset and is only speculating on the price of the instrument. Traders sometimes trade derivative instruments such as currency futures and currency options to hedge against currency and interest rate fluctuation risk.

Day traders are usually speculators and use derivative products like CFDs to try to profit from the rise or fall of the price of an asset. To open a forex trading account, you need to first choose a reputed broker that is regulated by the CMA. After you have done your research and decided on the forex broker that you want to trade with, then you should proceed with opening your trading account.

Market-makers buy at the bid price and sell at the ask price. The popular currencies and their codes are listed below. The search locks for LAN The you get the networking retrieved from is the affected device. Performance Performance. With over 50, words of research across the site, we spend hundreds of hours testing forex brokers each year.

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