Lastly, Kenya, which is a relatively new regulated market have an estimated 90, retail traders. The COVID pandemic fueled the growth as people started trading forex, commodities, indices and gold for various reasons:. Before the CMA regulator brought regulations, it was estimated there were around 50, retail traders who were investing in forex through foreign brokerages illegally.
So, to tighten the market control and ensure safety of the investors and to increase oversight on brokers, CMA proposed to regulate the industry.
This bill proposed to have effective and safe online forex trading environment for Kenyans. With these regulations, the licensing was made mandatory for all forex brokers in Kenya and it is illegal or criminal offence to operate without such license. According to the guidelines in these regulations, the broker has to have these qualities to be eligible for providing online forex trading services to retail investors in Kenya:. A dealing online forex broker functions similarly to a market maker.
The broker licensed as a dealing online forex broker has the following characteristics:. A licensed non-dealing FX broker means CMA has authorized the broker to act as a link between the foreign exchange market and traders in return for a commission or mark-up in spreads.
Guaranteed Profitability
The majority of online brokers in Kenya are non-dealing FX brokers. A licensed money manager FX broker chooses and invests prudently in the forex market on behalf of their clients. Since then, retail forex trading has picked up in whole world including Africa. Last year, despite the COVID pandemic woes, the online forex trading in Africa registered a tremendous y-o-y growth. According to the latest statistics and report published by Trade Forex Kenya there has been on an average approx.
There are now 1. The growing retail interest can be explained in four points: small capital requirement, ease of access to global markets via internet, 24X5 availability and low barriers to entry. Retail investors buy a currency pair and expect it to rise in the future so they can earn a profit. Those who have traded in shares would find it very much similar.
Nevertheless, forex trading is quite risky in comparison to stock trading.
Report on State of Kenya’s Online Forex Trading Industry in 2021
Forex Trading online does not come without its risks, and scams. Retail Forex is offered as a leveraged CFD instrument by retail brokers, it is common practice in Africa for brokers to offer leverage upto or Almost every broker will suggest using leverage to earn more profit. Some can offer as high as a leverage ratio. The unwise use of leverage is often the typical reason behind investors losing money in forex trading.
Every broker advertises how easy their trading platform is, high leverage, and excellent customer support, but nobody tells you how risky the forex trading is. Many experts believe that forex trading is highly speculative. Earning a profit from forex requires knowledge, skill, patience, vigilance, and wise use of leverage.
And that makes it a notoriously unpredictable market. Gaining profits on a regular basis is difficult. The forex market is the biggest financial market in the world.
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But it is also the most volatile market. Volatility means you can lose a significant amount of money very quickly in a matter of few seconds. Except for few major currencies, many African currencies were devalued to sustain their economies. Many traders unaware of the situation lost their forex investments in quick succession.
Report on State of Kenya’s Online Forex Trading Industry in 2021
Not long ago when the Switzerland government abolished the Swiss Franc-Euro peg in The announcement caused the currency market to respond with force; Euro went into free fall against the Swiss franc. Improved telecommunication across the continent and increased access to the Internet all over Africa brought in massive numbers of new forex traders who signed up to trade on the established electronic trading platforms.
Other reasons include the high liquidity that the forex market offers in addition to lowered transactional costs , making it possible for anyone to trade forex, especially through mobile trading. Newly released statistics.
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The following regulated brokers supplied us with their percentage growth for 1. Don't miss a thing! Discover what's moving the markets. Sign up for a daily update delivered to your inbox.
Report on State of Kenya's Online Forex Trading Industry in | Finance Magnates
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