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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 in Kenya?
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 trading 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.
Have a look at the best time to trade forex in Kenya.
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. Here’s a detailed guide on the best forex brokers in Kenya.
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.
Learning to Day Trade Around Your Day Job
One of the questions that we get asked pretty often when learning to trade is ‘How can I fit trading into my life? I work normal daytime hours, and can’t be in front of the screen. What do I do?’
This is one of the most common issues for newer traders, and people that are still struggling to find the time to trade. Most people think that you need to spend hours in front of the screen as a day trader to make money trading Forex. This is a huge misconception that couldn’t be further from the truth when learning to trade.
At Learn to Trade Online, we know that its possible and practical to make money trading Forex from as little as 20 minutes a day. You just need to follow the next 5 steps when learning to trade to reduce your time in front of the screen and fit trading into your lifestyle around your day job.
1. Keep your Day Job.
Too many people get into trading and instantly try to work out how quickly they can quit their job. This is usually all within the first 2 or 3 months, when they are still learning to trade. You need to be fully aware that you are not going to quit your job and retire on a beach inside of your first 6 months. The best thing you can do when learning to trade is to keep your day job which brings in the regular income, while you grow your trading account, and if possible add funds to it along the way.
Trading the Forex markets while you have a regular income coming in will mean that you don’t have the need to try to force the market, to over-trade, to force trades and to try to make money. You can focus on the essential part of trading, which is trading.
2. Learn to Trade the higher timeframes.
If you’re going to fit trading into your lifestyle you have 2 options. Firstly trade really small timeframes such as 30 second and 1 minute charts, which funnily enough is what most amateurs start doing. They feel they have to make money in those 30 minutes in front of the screen in a state of heightened tension. This is certainly one way to do it, however it seems a stressful, difficult, not to mention scary way of trading! Trading small timeframes like the 1 minute chart is incredibly difficult, as you may have a 3 pip stop loss with a 1 pip spread. This means that 33% of your trade is just the transaction cost. This means making money is rather difficult. Not to mention the spread could be 2 or 3, and you land yourself in a whole world of pain.
Why not take the sensible and practical approach when learning to trade and trade higher timeframes like daily charts. This way you only need to be at the charts once a day when the New York market closes, which you can quite easily fit into your lifestyle. Trading for 20-30 minutes at the end of the trading day allows you to trade multiple currency pairs, and benefit from their movement over the course of the trading day.
3. Restrict your trading time.
Don’t give yourself 3 hours in the evenings to trade. Believe me, you’ll find a way to spend 3 hours in front of the charts. Trading can become addictive, and if you don’t consciously restrict yourself to a certain time period, you’ll find yourself there for hours or even days!
Human beings only have the ability to concentrate fully for 20-30 minutes, so why on earth would you want to be controlling your money 6 hours later? Your brain will be like a vegetable and not capable of making logical decisions. When learning to trade restrict your trading time to under 30 minutes a day, and trade the way you want to trade for the rest of your life.
4. Don’t become obsessed with trading.
Trading can be incredibly addictive, if you let it. Remember that learning to trade is just one aspect of your life, don’t let it be the dominant part of it. Don’t trade for trading sake. You’re trading only if your edge is present in the marketplace, and the market presents a high probability opportunity. Again you’re learning to trade to make money over time, and sometimes there will be nothing there, so walk away.
5. Trading less, to make more.
Lots of new traders when learning to trade, believe that the more you trade, the more profit you stand to make. Stands to reason, right? With almost everything else, the more time and effort you put in, the more you get out.
Trading is slightly different. While you’re learning, the more time and effort you put in, the quicker it is likely that you’ll see improvements in your learning, understanding and results. However when it comes to trading itself, it is knowing when not to trade that is as equally important as when to trade. The market will produce a certain number of high probability opportunities every month, and no matter how hard you try, you can’t force any more. Instead focus on trading those high probability price action patterns when they present themselves and stand by to reap the rewards.
Less really is more. Focusing on high probability price action signals will likely lead to profitability, while forcing low probability trades will undoubtedly cost you money.
Finally…
Imagine that you had to risk 10% of your account on each trade, and watch how selective you suddenly become. Keep that standard and apply it to all of your trades at lower levels of risk such as 1%. Beyond that, when learning to trade try restricting yourself to no more than 5 trades per week and you’ll be forced to pick the best opportunities. As your discipline improves, look to take additional trades, if the market presents you with the opportunity.
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