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There are three main styles that you can choose from when trading forex in Kenya.
However, before you pick a style that suits you, you need to place several considerations into mind. The major consideration is your lifestyle.
Are you available to monitor the money markets throughout the day or are you only available during certain times? If you have a fulltime job, it may not augur well with your boss if he happens on you stealing time off to monitor the forex markets at work.
You also need to take into consideration the amount of money that you are willing to risk in forex trading. As a rule of thumb, never use money that you cannot afford to risk on speculative trading. For clarity’s sake, money you cannot afford to lose is money that will cause a noticeable disruption in your lifestyle if you lost it.
In this article, I discuss a forex trading concept known as Day Trading or short-term trading.
Why Day Trading?
Day Trading is for persons who have a lot of time on their hands. It is the easiest strategy of trading that does not involve too much technical analysis. However, you will be required to be in front of your monitor most of the time in order to place and close trades.
A lot of day traders use instincts to trade forex.
How to Start Trading Forex Market as a Day Trader in Kenya
If you are going to trade the forex markets using the short-term strategy (day trading) or what I personally refer to as guerilla trading, and what other forex traders refer as scalping or jobbing the market, you are going to need a few trading strategies.
Short-term forex traders enter into a trade and close it almost instantly. The longest that day traders hold a trade is a few minutes, typically less than 5 minutes. The main aim of scalpers is to benefit from only a few pips. In order to ensure that you are not losing your money as a short-term forex trader, you need to take into consideration a few factors:
- Make sure you capture at least 3-10 pips to offset the spread
Many forex brokers place a spread of 2 to 5 pips on retail traders. In order for you to break even, you will have to put into consideration the spread at which you entered the market. You should also factor in the pip when considering the amount of loss you are willing to take.
Do not hold on a losing position hoping that the tides will soon turn to your favor. The most disciplined day traders have a position working for them or close it sooner than they can blink an eye.
- Develop proper the short-term trader’s discipline
As a short-term trader, you need to have very high levels of financial discipline. Do not let your emotions cloud your judgment and obscure your objectives. If your main aim is to profit from only a few pips, then it follows that you cannot afford to lose more than a few pips.
- Only trade in currencies with the highest liquidity
Liquidity is the greatest for a day trader. Currencies that are highly liquid are the most ideal for short-term forex traders. The liquid currencies include USD/EUR, USD/JPY, EUR/GBP, EUR/GBP, EUR/JPY and EUR/CHF.
These currencies have tight spreads and less impromptu price jumps. You can therefore make a prediction of which the side the market will be moving in the next few minutes.
- Only trade during the peak hours of the forex trade market
Like liquidity, a volatile market is fodder for the day trader. The forex market usually peaks at European trading zone, which is around 9 a.m. to 7 p.m. Kenyan time.
At this time, the Asian and the American markets overlap with the European zone. Other time zones are not ideal for a day trader.
- Focus your attention on only one currency pair only
For you to adeptly follow minute-by-minute price changes on the market, you need to narrow on only one of the most liquid currency pairs (see no. 3). Focusing on a single currency pair also improves your ‘feel’ and intuitiveness on the currency pair.
- Preset your forex trading volume to save time
Time is of utmost importance to a day trader. To minimize the amount of time you spend setting up your trading options, consider presetting the trading volume that you will use throughout your day trades.
- Choose your forex brokers carefully
To be successful as a day trader, you need to work with forex brokers who offer click-and-deal trading platforms. This saves you from delays that might be occasioned by execution orders.
- Do not trade around the time data is being released
While data releases are a major ally to long-term traders, they do not augur well with short-term traders. Trading 30 minutes prior to a major data release is equivalent to tying a noose around your neck. The forex markets usually go into a flurry minutes before the release of such data.
That is it for the forex day traders in Kenya. Next, we shall be looking at the medium term forex traders in Kenya, and what you need to do to break even in the market.