Forex trading is the selling of currencies in the international market. It happens at the current exchange rate of a currency against the other. The aim is usually to buy currency at lower price and sell it at a higher exchange rate to make a profit. There before, only only banks, governments and financial institutions could take part in forex trading.
Currently, retail traders and speculators can take part in forex trading. In this article, we will show you how how to start forex trading in Kenya. We will also provide you with a list of forex trading platforms in Kenya.
How Forex Trading Works in Kenya
To start forex trading, you need at least $5. However, the amount is not enough to give you good returns. As such, you need to invest enough cash like $250 to earn some good returns. Using small amounts to trade will force you to take riskier trades where you may end up making losses.
Once you have capital, the next thing is to identify a reliable online forex broker. There are many Kenyan and international online forex brokers that you can use. Make sure that the broker is licensed by Capital Markets Authority or any other regulator, is reliable and trustworthy.
Open a Demo trading account. You need a demo trading account so that you can gain experience in forex before investing your money. You can open a demo trading account with most of the online forex traders. Once you have mastered the art, you can go ahead to use a live account.
Open and fund your trading account. You need to use a reputable online forex broker. Some brokers like LiteForex, XM and HotForex allow one to fund or withdraw from the account using Mpesa.
An Example of How Forex Trading Works in Kenya
The Kenyan shilling usually has the code KES and is divided into 100 units known as cents. The currency is issued by the Central Bank of Kenya.
Assume the exchange rate between the dollar and shilling USD/KES is 103.6. With that, you can buy 1000 U.S dollars against the Kenyan shilling. Assuming that the exchange rate rose to 104.6, you can calculate the profit you will have earned this way.
1000 USD X (104.6 – 103.6 KES/USD) = 1000 KES
On the other hand, if the currency exchange rate dropped to 102.6, you will have made a loss. This is how you can calculate the loss.
1000 USD X (102.6 – 103.6 KES/USD) = -1000 KES
Best Online Trading Platforms in Kenya
If you are planning to start forex trading, you can consider the following online forex brokers in Kenya.
- FXTM. The platform is regulated by CMA, CCA, CySEC, and SFSCA. Its offers two types of trading accounts. It has a minimum deposit of $100 for its Standard account and $200 for its ECN account. You can use Mpesa to deposit and withdraw from the account.
- FX Pesa. It is regulated by the Capital Markets Authority and has a minimum deposit of $5. You can use the platform on a desktop or you can use its app. You can use Mpesa to deposit and withdraw funds from the platform.
- Scope Markets. It is regulated by CMA and FSCA. You need at least $20 to start trading on the platform. It offers two types of trading accounts, Gold and Silver accounts. You can use Mpesa to trade on the platform.
- HotForex. It is regulated by FCA, FSCA and FSA. It is not regulated by CMA but it is also a good forex trading platform. It accepts Mpesa transactions. You need at least $5 to open a micro account. With a premium account, you get 1.2 pips for EUR or USD. New customers from Kenya get a 100% deposit bonus while existing customers enjoy loyalty programs.
- PepperStone Kenya. It is regulated by CMA, FCA, ASIC and CySEC. The minimum amount you need to start trading is $200. It has an excellent customer support and a local office in Nairobi. Some of its trading platforms include MT4, MT5 and cTrader.
- EGM Securities. It is regulated by CMA and you can start trading on the platform with a minimum deposit of $200. You can use the platform to trade on other commodities apart from forex. The platform accepts payment methods like Mpesa, Lipa na Mpesa, Airtel Money, eLipa and Eazzy Pay.
Read also: How to buy bitcoin in Kenya using Mpesa.
Online Forex Brokers that Accept Mpesa
The following are forex brokers that accept Mpesa in Kenya.
- XM Forex
- Scope Markets Kenya
How Much Do I Need to Start Forex Trading in Kenya?
Most online forex brokers Kenya have a minimum balance that you need to start forex trading in Kenya. Most of the brokers require that you have a minimum balance of $5, but we recommend that you start with $50. This will give you a chance to learn how to trade in forex. Make sure to trade online with the best forex brokers in Kenya.
Summary of How to Start Online Forex Trading in Kenya
Online forex trading is one of the ways that you can make money online in Kenya. You even don't need a bank account since you can use forex brokers with mpesa to trade. Before you can get started with forex trading in Kenya, you need to learn the skill. Then you need to select the best platform you will be using for online forex trading.