With the advancement of technology over the years, Kenyans have had the opportunity of engaging in online business as a means of making money.
One of the most common ways through which Kenyans are making money through the internet is Forex trading also referred to as FX trading. While many think of forex trade as a complex thing, it is simply trading in currencies with the aim of making a profit.
"One makes profit by buying a currency that gains value in a buy trade and selling a currency that its prices drop in a sell trade. Losses occur when the opposite happens," the Capital Markets Authority (CMA) defined.
However, many Kenyans have lost money through trading with dubious companies and individuals who have orchestrated schemes to fleece innocent Kenyans who are often not well informed in FX trading.
Here is a list of things that Kenyans should know before investing their money in online trading platforms:
Do Research
Just like any other method of trading, it is vital to do research both on the market trends and the trading platforms.
Most importantly, Kenyans should do research on the market to have information on the state of the various currencies that they wish to trade in. Traders are also advised to understand the economic activities that are likely to affect the prices of currencies.
Events such as elections can affect a country’s currency because of the uncertainty that comes with it. Situations, where a country may experience election disruption, may hit the currency market causing a change in their value.
While many opt to use brokers, the lack of knowledge makes them vulnerable to cons. In an interview with an FX trader, Sam Otieno, the trader revealed that he was fleeced unknowingly because he did not have information on how the trading works.
"When I began, I used to trade through someone who used to take 50 percent of my profit and also take my share because I had no idea that it was important to check on the transactions. From then, I started to do my own research and that is how I learned the craft," he stated.
Trade through credible platforms
Because of the increasing surge in Forex trading in the country, CMA began regulating the market in 2018. Additionally, the government agency noted that there was an increase in the number of brokers who were fleecing innocent Kenyans.
On numerous occasions, government agencies have come out to warn Kenyans of the rising cases of fraudulent schemes orchestrated by dubious forex trading companies. In November, CMA published a list of approved and licensed online entities which can be accessed through their website.
"Kenyans are warned against engaging in online forex trading through platforms of licensed entities as they risk losing their investment and may not be protected by law," CMA advised.
Trade small
Before mastering the art of trading on the platforms, online traders are often advised to trade with the lowest amount of money they can. This also helps in the event that they incur a loss through trading.
In most of the platforms, the minimum amount for trading is usually $1 (Ksh112) but it can go up to down to Ksh100 depending on the platform.
Additionally, Kenyans who are beginners are advised to trade with one pair of currency for example Kenya shillings and US dollars or Kenya shillings with Euros.
