Forex trading is gaining traction in Kenya as more Kenyans are getting interested in making money through it. We talked to Richard Mutinda, author of forex trading course books on a few tips that everyone getting into it should have. By JACQUELINE MAHUGU.
1. Educate yourself
You should take forex trading as a course, just like any other financial course. This gives you the skills that you need to navigate the choppy waters of forex trading. Even people who have been trading for years often take the course in order to acquire specific skills that they have not picked up in their years of trading, and they find that it makes a huge difference when they resume. In addition, when training there is a software provided by an international brokerage firm known as FxPro that provides a platform known as MP4 where you are able to wire your money through local banks and the money reflects in US dollars, pounds and other major currencies.
2. Start small
You need a minimum of Sh1,000 to trade, but a comfortable minimum to trade with while learning the ropes is Sh10,000. That will allow you to possibly make profit depending on how the market fluctuates. You can make even Sh3,000 per day with that. Forex trading has a learning curve, and with a low amount, the mistakes that you make will not be too costly, allowing you to learn from them instead of getting knocked down by them. Give yourself time to get a grasp of how the market works.
3. Be in the right frame of mind
This is trading psychology. You have to be careful, so that anxiety and greed does not make you lose money. Trade with the minimum given so that you do not lose money. Many factors affect how much money you will gain, so you have to manage to expect anything. Greed may make you ignore or overlook those factors. Outline what position you are at. If you are anxious, hoping to get a lot of money and then you end up not getting it, you may trigger yourself into making further losses through more mistakes, and you might not bear those losses. Check your emotional undertones. If you are not in the mood to trade, keep off the platform until you are sober.
4. Know when to trade
Some days are good for trading, while some may not be appropriate at all. The markets are usually dormant on weekends, for example, and over holidays. You need to be able to predict such changing tides.
5. Do not make it your main source of income
You can earn a living from forex trading alone, but it takes a while to get there. The best way to get into it is slowly, while doing other things on the side, like being a student or working, in another industry. While starting, take a short course that takes approximately three months. You can work, trade and learn all at the same time.
6. Be able to read trends
Read and understand global news so that you can manage to read and understand the market. Strategies on trading keep changing depending on how the market is, so you must have current affairs at your fingertips. Trade when the market is right. Do not do it hapharzardly, knowing when to enter and exit the market is crucial
7. Increase your investment with time
In order to make really good money in forex, you also have to invest in it. It works just like any other market, where the more you invest, the higher the risk but also, the higher the returns. Do not use very higher volumes in order to try to make more money faster. For example, do not try to make Sh20,000 from Sh10,000 in a day. It is better to gain Sh 2,000 per day than lose it all to greed.
8. Commit to it
The biggest mistake people make is that they borrow money to trade and they are supposed to pay it back, say by the end of the month. Some of these people wait until the last week to trade, only to realise that they do not have enough time to make money, and even make losses. If you do not follow the due process, that is exactly what will happen, and your creditors will be on your case.
9. Have patience and persistence
The market runs for 24 hours on weekdays, but sometimes when you follow the news you will realise that the market will be good at 3 am. Can you wake up at 3 am, get into the market and execute the trade? Are you the kind of person who will be told that only Monday will be good for trading, or that you have to wait over the holidays and trade in January when the biggest market movers like banks are active again and be comfortable with waiting? That is the kind of person who is likely to succeed in forex trading.