Here’s all you need to know about forex trading and how to make money with a click of a button

Many Kenyans may be familiar with the stock market and its successes, but many are blissfully unaware just how small it is in comparison to the forex market.

Here’s all you need to know about forex trading and how to make money with a click of a button (nairobibusinessmonthly)

As the deadly coronavirus pandemic is spreading like bush wildfire across the globe, wreaking havoc on the global economy and financial markets, currencies are coming crashing down in its wake.

Stocks are in freefall, commodity currencies are getting hammered, and even safe havens like gold are slowly losing their shine. Pushed to the wall, major funds are resorting to deleverage by liquidating assets in the face of a market meltdown

The Kenyan shilling has been on a free-fall as foreign inflows dwindled, since the country announced its first case of the coronavirus disease (Covid-19) two weeks ago. The big winner from all this mayhem is the US dollar, which has exploded higher amid a dollar liquidity shortage of huge proportions.

Amidst the coronavirus pandemic, some investors are smiling all the way to the bank as others watch year’s work fortune hammered hard and go down the drain.

How’s that even possible? welcome to the world of forex trading where if you play the game right, master the rules of the game and bide your time, it’s only a matter of when not if, when you will be swimming in money.

How forex trading works

Many Kenyans may be familiar with the stock market and its successes, but many are blissfully unaware just how small it is in comparison to the forex market.

Foreign exchange (also known as forex or FX) is one of the largest financial markets, with an estimated global daily turnover of more than US$5 trillion.

Unlike the stock market and future markets that are housed in central physical exchanges, forex is conducted over-the-counter market (OTC) where traders, investors, institutions and banks, exchange, speculate on, buy and sell world currencies.

Trading is then conducted over the ‘interbank market’, an online channel through which currencies are traded 24 hours a day, five days a week.

How to make Money on Forex trading

The objective of forex trading is simple: exchange one currency for another in the expectation that the price will change. More specifically, that the currency you bought will increase in value compared to the one you sold.

All transactions made on the forex market involve the simultaneous purchasing and selling of two currencies. These are called ‘currency pairs’, and include a base currency and a quote currency.

A spread is the difference between the ask price and the bid price. In other words, it is the cost of trading.

For example, if the Euro to US dollar is trading with an ask price of 1.0918 and a bid price of 1.0916, then the spread will be the ask price minus the bid price. In this case, 0.0002.

While forex has the potential to make one an overnight millionaire especially in times of global crises such as the Covid-19 pandemic which we are living through now, to make real money in forex one will need to bring their A game.

Before one even dreams of all the riches within a click of a button, one needs to possess good training by market professionals so as to fully understand how the global market works and in the process perfect the trade. It's not only currencies one can trade in but rather also indices, commodities, shares and precious metals are up for grabs literally and each requires full comprehension of Contract for Difference (CFDs) trading.

Armed with that, a lot of patience, discipline and lack of greed will also come handy.

There are many benefits of trading forex, among them convenient market hours leaving a trader with more space to engage in other businesses, high liquidity and the ability to trade on margin. The best has to be the forex market never sleeps so there is no waiting for the opening bell to trade.

Once you have a computer, Internet and necessary skills you are good to go.

Forex trading in Kenya

As of 2016, there were about 50,000 people, including brokers, dealers and money managers, according to Kenya’s Capital Markets Authority.

FXPesa is the trading name of EGM Securities Limited which is authorised and regulated by the Capital Markets Authority to practice as a forex and CFD broker in Kenya.

EGM Securities EGM Securities launched the country’s first locally regulated foreign exchange electronic trading platform in July 2019.

FxPesa offers over 60 currency pairs, many of which are majors, minors and exotics. You can open a trading account at FXPesa with just $500 minimum deposit, and leverage up to 1:400 is available.

After that, all one needs to do is open a free forex demo account to practice forex trading and learn the ropes.

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