Growing wealth through forex trading in Kenya is one of the popular ways that individuals and companies choose to make an extra coin. With the Capital Market Authority’s regulatory frameworks, individuals and companies enjoy protection, transparency and fairness when trading. The authority oversees trading in the country. 

Engaging in forex trading in Kenya requires you to have a trading account. You could open a trading account through a licensed forex broker. Licenced forex brokers may be local or international, whom you need to ensure are registered by the Capital Market Authority, besides having a good reputation in serving clients. 

Upon opening your trading account, you would be ready to buy and sell currencies in the forex market. Having a good understanding of how the forex market works is essential to develop the best trading strategy. Forex trading has high risks, so it is best to know how to minimize risks. Some risk reduction strategies you could apply when trading include limiting your leverage or setting a stop-loss order. 

Most importantly, forex trading can be lucrative, especially when you are looking to invest your hard-earned money. However, you can make huge profits from forex trading with careful research, planning and risk management. It is essential to consult a professional financial advisor or investment professional to help you get started. 

What are the best strategies for beginner traders?

Trading strategies help you minimize risks while maximizing profits in forex trading. The best strategy will depend on your goals. So, choose a risk strategy while considering your individual goals. You could use several strategies in forex trading; therefore, choosing the best strategy depending on your goal is essential. 

Breakout trading:

When breaking out, you need to identify key levels of support and resistance in the market and trading when the price breaks through these levels. Using this strategy will require looking for opportunities to buy when the price breaks above resistance levels and sell when the price breaks below support levels.

Following trends:

Trend following requires you to identify trends in the market and trade in the direction of the movement. When using this strategy, you should look for opportunities to buy when the market is trending up and sell when the market is trending down. Trend following might require constant monitoring of the trends and keep yourself updated with any financial or economic trends affecting a given currency.

Range trading:

When using this strategy, you should figure out a suitable range. The range should guide you in buying and selling. Identifying a range in which the price is trading and buying at the bottom of the range and selling at the top of the range will therefore help maximize your profits. Traders using this strategy will look for opportunities to buy when the price is near support levels and sell when the price is near resistance levels.

News trading:

This strategy involves trading based on news events and economic data releases. Suppose you use this trading strategy. In that case, you will need to look for opportunities to buy or sell based on the impact that news events and economic data releases are expected to have on the market.

Scalping:

Scalpers make many small trades quickly to capture small price movements. Using this strategy will typically hold your positions for only a few seconds or minutes. 

These are a few strategies that you could use in forex trading. Choosing a strategy that aligns with your individual goals, risk tolerance, and trading style is essential in increasing your profits and reducing losses. Besides, it helps you manage your risks carefully. 

Which trading strategy suits beginner traders best?

Choosing the simplest and most straightforward trading strategy is essential for a beginner trader. Some of the simple trading strategies might be trend following or breakout trading. These strategies are relatively easy to understand and implement and can effectively generate profits in the forex market.

Trend following requires you to identify the direction of the market trend and trade in the same direction. This strategy can effectively capture large price movements and be relatively low-risk if the trader uses proper risk management techniques such as setting stop-loss orders.

On the other hand, breakout trading entails identifying critical levels of support and resistance in the market and trading when the price breaks through these levels. This strategy can effectively capture price movements when the market is in a consolidation phase and can be relatively low-risk if the trader uses proper risk management techniques.

It would help if you focused on learning the basics of forex trading, including how to read charts, analyze market trends, and manage risk. As you become more experienced, you can experiment with more advanced trading strategies and techniques.

However, it is crucial to remember that no trading strategy is foolproof and always involves a degree of risk. It is essential for beginner traders to start with a small trading account and to manage their risk carefully to avoid large losses.

How to avoid large losses when trading with a small account

By managing risk carefully, you could avoid large losses when trading with a small account. Huge losses could wipe out your account before you figure out a single skill in forex trading. Avoiding such risks require you to know how to manage your risks effectively. Some of the ways that could be helpful include but are not limited to:

Trade with limits: 

Overtrading can lead to excessive risk-taking and quickly deplete a small trading account. Therefore, sticking to your trading plan and avoid making impulsive trades based on emotions or market noise.

Determining and using a proper position sizing: 

Proper position sizing entails determining the amount of money to risk on each trade based on your account balance and risk tolerance. Generally, you should never risk more than one or two per cent of your account balance on any trade.

Setting achievable profit targets: 

Setting realistic profit targets can help you avoid the temptation to hold onto positions for too long in the hope of making more money. By setting profit targets, you can take profits when they are available and avoid holding onto losing positions for too long.

These are some tips you could use to manage your risks while increasing your chances of success and protecting your trading account. Should you understand the best risk management strategies when trading, making forex trading your primary source of income would be a consideration.