- There are four online exchange brokers licensed and regulated by the Capital Markets Authority (CMA) in Kenya.
- Over time, the brokers have steadily been expanding their product offering, offering investors the opportunity to diversify their portfolios by investing in global stocks whilst giving them exposure to the markets.
There are four online exchange brokers licensed and regulated by the Capital Markets Authority (CMA) in Kenya.
Over time, the brokers have steadily been expanding their product offering, offering investors the opportunity to diversify their portfolios by investing in global stocks whilst giving them exposure to the markets.
But where does a Kenyan who wants to invest in global stocks begin? The first step is to open a free account with a licensed and regulated broker. There are many brokers in the market, but some are not licenced and regulated by the CMA, so exposing potential traders to risk.
Upon successful registration, the investor needs to make sure that the broker they have chosen has all the assets needed to trade on their trading platform. The online forex broker is then expected to undertake an extensive know your customer (KYC) process to ensure that the client is not investing illegal funds or engaging in money laundering activities.
Once the required documents are verified, investors are free to start investing in various assets classes including global stocks which trade on global financial markets.
These global markets include currencies markets, global stock markets, stock market indices, commodities markets, futures contracts, Exchange Traded Funds (ETFs), and Contracts For Difference (CFD) stocks.
The wide variety of assets and asset classes means that traders have a wide choice of opportunities to trade and make profits while also managing volatility and exchange rate risks.
Due to their linkages with global forex brokers, some of the local licensed brokers such as Scope Markets offer traders secure multi-asset Metatrader 4 and Metatrader 5 platform to take positions in the markets.
Some brokers offer additional mobile platforms that have a simpler graphic user interface to make trading seamless for their clients.
To manage risks, some brokers have developed risk management tools to help traders risk a very specific portion of their capital. This helps traders manage their capital effectively without taking too much risk.
The Metatrader platform allows traders to access global financial markets on a desktop computer, laptop, tablet, and/or mobile phone as long as they have an internet connection. The trading platform gives traders access to multiple order types such as market orders, pending orders, stop loss orders, take profit orders, and trailing stop orders.
Licensed traders have third party website applications for social trading, trading performance analysis, market analysis, live market updates, technical charts analysis, and risk management that aid an investor in achieving financial trading success as well as consistency.
These include the tradercast platform, trading view platform, myfxbook platform, babypips risk calculators, forex factory economic calendar platform, and the Bloomberg terminal for market news.
The global online financial markets offer potential rewards to traders which largely outweigh the risks involved. The technology deployed in the trading platforms give traders an upper hand in mitigating risk while the global online trading community gives a trader a wide range of perspectives to make an informed trading decision.
The results achieved by existing traders are proof that trading in global online financial markets is achievable even for participants in smaller African economies such as Kenya, Uganda, and Tanzania.
Retail traders can deposit as little as Sh10,000 and begin building a portfolio with discipline and skill to achieve some financial goals.
The licensed online forex brokers also organise trading lessons to help traders understand the dynamics of global financial markets before getting in. Ultimately the choice to invest is left to individual investors guided by their risk appetite and investment goals.
Kamau is a research & markets analyst at Scope Markets Kenya Email: [email protected]