The Basics of Forex Trading Explained Here – Stay Tuned!

forex trading market

A lot of new traders in Kenya are planning to invest in forex trading, and there is not much availability of information. So, a basic guide to the knick-knacks of forex trading is given in this post which might be quite helpful for the beginners. There are many specific informative sites on the internet which provide specific information about the trade exchange market in Kenya.

First, have a look at the features:

1.      Funding resources:

The legit brokers allow exchange through various payment methods like credit/debit cards, PayPal services, and other modes of payments. The most important part is to invest with some real money otherwise the benefit won’t be real money as well.

2.      Liquidity of the trade:

Currencies are traded worldwide, so the market has high liquidity and is quite dynamic. The more fluidity, the more easily buyers or sellers will get attracted to this trade and the more it will be beneficial. In a lesser liquid market, getting a good profit becomes quite complicated.

3.      The leverage and the risks:

Another big advantage of investing in a forex trade is that a lot of leverage can be obtained, but then it is like a very risky business where one can lose everything if he/she isn’t careful.

forex trading market

4.      It is entirely commission-free:

It is most specific for market-makers who are broker-dealer firms that decide the pre-determined prices of given assets. When there is a difference between purchasing and selling price of a particular currency pair, then firms earn a specific profit or the spread. So, a market dealer doesn’t take any commission for the forex trade.

5.      Currency pairs:

It consists of a base and a counter which are two currencies between which this trade exchange occurs usually. The base currency comes first, and the counter comes next. Then there’s a fixed rate for each currency. That is how a buyer purchases these currencies and an exchange occurs in the forex trade market.

How does the trade work?

The trade has some basic policies and rules. Here’s a simple example to explain it:

Let’s consider that Ray bought 5000 US Dollars in September 2016 when the rate might have been 90.55 Kenyan Shillings for one dollar. So, she paid a total of 452,750 Kenyan Shillings (KES). She held on to the US Dollars (USD) for a year after which she decided to sell them in September 2017. So, if at the time the rate would have increased to 100 KES per USD, then she would have gotten exactly half a million KES which would give her a profit of 47,250.

So, that is how a forex trade business happens, and people earn money. Hence, remain careful and keep trading for lots of profit!