Forex trading is a safe method of earning profit wherever you are, including in Kenya. However, make sure that you take all essential precautions when entering the trading world.Forex is the biggest financial market in the world. With high volumes of currencies traded every day on the Forex market, it boasts a huge market capital. Moreover, this massive market offers significant profit potential, which attracts hundreds of thousands of traders globally. Individual traders, investors, global companies, governments, and banks participate in Forex trading.
Retail trading pertains to investors finding the margin between the exchange rates of a currency pair and then buying or selling them to make a profit. Here’s what Forex trading, in simple words, looks like.
What is Forex Trading?
On the Forex market, there are many different currencies available to you from all around the world. The common norm of Forex trading involves dealing in currency pairs. One currency in the pair is the base currency, while the other is the quote currency. Plus, the different types of currency pairs in the market include major, minor, and exotic currencies. It is worth mentioning that pairs including USD are major currency pairs. Other currencies on the Forex market include GBP, JPY, CAD, etc.
In simpler words, when you opt for a currency pair, you keep the exchange rate of both currencies in your mind. When the exchange rate appears to be profitable, you sell one currency in exchange for another.
What’s the Role of the Capital Markets Authority?
In Kenya, there are rising concerns over the safety of Forex traders. More importantly, as the scale of Forex trading keeps increasing worldwide, there are higher risks of scams. However, the CMA (Capital Markets Authority) is the supervising body of Forex trading in Kenya. They are the body governing the rules and regulations that follow Forex trading. Therefore, it is imperative to consider that you only choose to trade Forex with those Kenyan-based brokers who carry a CMA-certified license.
The authority in Kenya, i.e., CMA, offers three types of licenses to all the brokers providing online Forex trading services.
- Non-Dealing Foreign Exchange Broker License
- Dealing Foreign Exchange Broker License
- Money Manager License
While CMA doesn’t impose any strict regulations over individual online traders, they are quite consistent in their requirements from brokerages. They make it mandatory for the brokers to acquire a relevant license if they aim to facilitate the online traders with financial instruments, including Forex.
What are the Forex Trading Scams and Risks in Kenya?
The safety for Forex traders goes beyond ensuring that they deal with a regulated, licensed, and a certified broker. There are many risks and threats the traders face in the digital world, whether in Kenya or not. Nonetheless, widespread awareness of such matters makes it possible to educate every trader to adopt preventive measures for their safety. Meanwhile, Forex traders in Kenya require swift management to tackle scams and risks effectively.
There are numerous scamming brokers in the Forex trading environment of Kenya. These scammers target the unsuspecting and unaware Forex traders. Such traders are prone to these scams because the cybercriminals devise their strategies smartly, leaving little to no proof. This, combined with the inability of the Kenyan to detect scam signs, results in heavy losses.The most popular Forex trading scams in Kenya are:
- Signal Seller Scams
This scam involves fake organizations or illegal entities claiming that they have inside information on market trends. They suggest that selling on their suggested times will guarantee profits and ensure asset diversification. However, this is totally illicit. Still, newcomers fall prey quite easily due to a lack of experience and not taking preventive measures.
- Robot Scamming
In this scam, scammers recommend using their fraudulent programs that they refer to as trade bots, trade robots, etc. They claim that these software and “AI” bots can make trades 24/7 by judging profit potential. That’s not all; they claim these bots will always make the right trades for you even when you are busy or asleep.
There are many other scams in the Kenyan Forex trading environment. But this doesn’t mean that Kenya-based brokers aren’t safe to deal with. You can find many legit Forex brokers in Kenya. They offer smooth and protected services to all traders from within Kenya or around the world. It is your job to search for the right online broker before actually trusting them with your money and making a trade.Read more about Forex brokers at dailyforex.com.