Forex Traders

How To Become A Forex Trader in Kenya

1. Get A Laptop & Mobile Phone

A laptop will host your forex trading software & your mobile phone will host the mobile version of your trading software.

A laptop is necessary for forex trading because it has a wider screen & better visuals. Laptop versions of forex trading software are also more sophisticated that mobile phone versions.

You also need a mobile phone as a forex trader because it is handy and can be taken anywhere.

Any trade you start on your laptop can be continued/monitored from your mobile phone.

Even if you are away from your laptop, you can still edit your existing trade or even open a new trade from your phone.

2. Register with A Regulated Forex Broker

As a forex trader, you must have a trading account which you have to open with any CMA regulated forex broker in Kenya.

When choosing a broker ensure you go for any of the best forex brokers in Kenya who at least offer the following trading conditions:

3. Practice on the Brokers Demo Account

Forex brokers offer a demo account to let you learn how to trade by practicing with fake cash. The demo account runs on the brokers trading software which you must download to your phone or computer.

To become a proper forex trader, you must also read forex material, watch tutorial videos & ask questions on forex community forums.

4. Fund Your Live Forex Account

After you have educated yourself & satisfactorily practiced on a demo account you are ready to go live.

Most forex brokers in Kenya allow you to transfer money from your banking app or MPesa, to an account number they will give you. Once the brokers receive the money, they will make it reflect in your trading account.

5. Place Your First Trade

After funding your account, you can select any currency pair you wish & trade it. To profit from rising exchange rates you click on the Buy Button & to profit from falling rates you click on the Sell Button.

To close the trade & exit you must click on the Close Button.

Can I Be A Fulltime Forex Trader?

For you to trade forex as a fulltime job means you must make profits consistently & this is near impossible because the markets are too unpredictable.

Statistics show that about 90% of retail forex traders lose money, so the chances are unlikely that you can be consistently profitable to do forex trading as a means of livelihood.

It is common to see many retail forex traders have 9 to 5 jobs then only trade with money they can afford to lose.

By having a 9 to 5 job, the pressure to win all the time will be less on you & you can actually trade without any emotions like fear, greed, etc.

The only fulltime forex traders are the professional traders who own or work for hedge funds, banks, etc. and even they are placed on a salary.

Why Many Forex Traders Lose Money in Kenya?

Studies have shown about 90% of retail forex traders lose money to the market; but why is this number so high? A lot of factors are responsible & we will discuss the most common reasons why forex traders in Kenya lose money.

1. Over Leveraging

Leverage is when your forex broker allows you trade more instruments than what your account balance can afford.

When trading with leverage your profits are multiplied but so are your losses.

A leverage of say 1: 400 means your forex broker will allow you trade instruments 400 times more than what your account balance could have afforded you to.

A leverage of 1: 400 also means any losses you make will be multiplied by 400 times; so using a high leverage is the quickest way to lose money as a forex trader.

High leverage is meant for experienced traders who understand the markets better; but because of greed, many new forex traders in Kenya select high leverage to make quick profits.

High leverage use by inexperienced or beginner traders doesn't always end well because even if you make a few profits, one mistake will wipe out all your profits and blow their account.

Even if your broker offers leverage as high as say 1: 400, you can always select a lower leverage when opening your trading account.

A lower leverage keeps you in the market longer so you can learn using your live account, but a high leverage can see your trade closed in seconds with no chance for you to learn from the markets.

2. Undercapitalization

Most times before the market goes up, it will go down first & this is what creates a zigzag movement of price on the charts.

The market can remain irrational for a longer time than you can remain solvent.

Most new traders only plan for when the price will go in their predicted direction, but they don't plan for when price will move against them in the opposite direction.

Undercapitalization means when your account balance is too small or just enough to open a trade with no extra money left for the unexpected.

When you are undercapitalized, you will be stopped out of the market once price begins to move against you; meaning your trade will be forcibly closed at a loss.

When you are undercapitalized, you will not be able to set your stop loss far away from your entry price; this means your risk management will be poor & any fluctuation in price will trigger your stop loss.

When your stop loss is triggered continuously (because its too close to your entry price), you keep on losing money till your account is emptied.

It is a good idea to always deposit far above the brokers minimum deposit so you have free margin left after opening a trade, & you can set your stop loss far from your entry price to prevent being stopped out frequently.

3. Poor Risk Management

Losses are inevitable in forex trading but with proper risk management you can reduce the losses you make.

Forex traders with poor risk management are those who engage in things like:

Trading without a Stop Loss (SL) is one way to lose money as a forex trader because you are at the mercy of the market. Price could suddenly surge against you by many pips thus wiping off your account balance in the blink of an eye.

Setting your stop loss too close to the price at which you entered the market is also poor risk management, because the candlesticks on the chart always breathe (fluctuations in price) so price can easily hit your stop loss.

When your SL is hit, you lose money & have to reenter the market and pay fees again; when this happens continuously, it can wipe out your account balance.

A Trailing Stop Loss is design to adjust itself automatically when you are making profit, so you secure some profits as price goes in your favor.

May new traders do not use the Trailing Stop Loss so if price reverses suddenly, they lose all they lose all the profits they would have made.

Although some traders prefer adjusting their stop loss manually, but sometimes the price can surge ahead & reverse so fast that its impossible to catch it manually.

As a forex trader with proper risk management, only adjust your stop loss to secure profits & not to accommodate more losses. Lowering your stop loss is one quick way to lose money as a forex trader.

If price is nearing your stop loss, it means you are seeing a losing trade & you should not lower the stop loss to accommodate more losses.

Its a good idea to close a losing trade early before the losses accumulate, not doing this means you are trading with the emotion of hope & is one way to lose money as a forex trader.

Another reason why forex traders lose money is trading against a major trend. So if you see that price has been surging upwards with higher highs and higher lows you should consider placing a buy trade instead of a sell trade.

When you trade against a major upward or downward trend, the chances that you will lose money are higher.

4. Trading At The Wrong Time

The world operates in different time zones so when some people are asleep, others are awake.

Many new forex traders lose money because they trade when only few people are in the market so they face higher spread & slower moving prices.

When the spread is too high, it takes longer to make a profit & when prices are changing too slowly, it can cause you to close the trade at a loss out of frustration.

If you're going to trade a European forex pair like EUR/GBP its advisable to do so when European traders are actually awake; this would be during the European/London session around 7 AM to 5 PM GMT.

5. Trading on a Mobile Phone Only

Mobile phone forex trading is meant for checking trades which you had started on the laptop/desktop.

You cannot perform any real technical analysis on your mobile phone forex app because the screen is too small.

Many new forex traders don't realize this, so they trade squarely on their phones & do not analyze the markets properly; thus resulting in losses.

6. Trading on Small Time Frames

When you base your technical analysis on small time frames such as 1 minute charts, you fail to see the bigger picture and this can end is losses.

Smaller time frames contain a lot of noise so there's a higher chance of false breakouts which could mislead you.

it is a good idea to combine both small & high time frames when to give you a better perspective when making trading decisions.

How To Be A Successful Forex Trader in Kenya

1. Treat Forex Trading Like A Business

Do not take unnecessary risks as a forex trader, let risk management be paramount in what you do.

Ensure you only take quality trades, & that your profits exceed your losses.

Even if you complete 10 trades & 6 are losses, let the profit from the remaining 4 trades be enough to cover for the losses.

When a position bringing you losses quickly cut it so that the losses are not too high. The market will always be there but you need to preserve your capital to trade another day.

2. Automate Some Processes

As a retail forex trader, you are up against hedge funds, oil companies, banks & other institutional/professional traders who employ a lot of high end technology.

To become successful in forex, you also have to be open to using technology to automate certain processes & make them faster.

For example, today you can use trading robots, custom technical indicators etc. to trade more efficiently because you cannot do everything manually.

3. Have Sufficient Capital

You need to have sufficient capital to be able to take advantage of trading opportunities once they arise.

trading opportunities can pop up suddenly in form of a breaking news announcement, sudden political changes, etc. & you need to have the money to open a trade immediately.

Having sufficient capital will also allow you enough room to manage your risk properly by setting your stop loss at the right distance, hedging your positions, diversifying etc.

4. Don't Change Your Mind Mid-Strategy

When you set out to execute a strategy, follow it to the end. Don't change your mind in the middle of executing the strategy and begin to do something else- this is called trading discipline.

For instance, if your strategy requires you exit a trade at a certain price, then exit at that price. The market is not running away & you can always trade again.

If your strategy required using a stop loss, then don't adjust the stop loss to make room for more losses. If you keep doing that, it shows a lack of discipline.

How Long Does it Take To Be A Successful Forex Trader?

To become a successful forex trader who makes more profits than losses, it could take you as long as 2 to 3 years if you practice every day with a live account (and not a demo account).

Practicing with a live account lets you experience the real price action & market forces, and lets you master how to control your emotions & manage your funds while trading.

With a demo account you have an unlimited supply of virtual money, so you may not see the need to practice money management.

Who Is The Richest Forex Trader in Kenya?

The richest forex traders in Kenya are institutional or Professional forex traders like Banks & Oil Companies.

For the richest individual forex trader in Kenya, it is hard to establish if the money these traders claim to make is actually from trading or selling courses.

Remember, most Kenyans who claim to be successful forex traders also sell courses, have monetized YouTube channels, own forex trading schools etc.

It is very possible that the source of their wealth may be from these other business ventures & not actually from forex trading.