Factors that affect forex trading in Kenya
Photo Credits: forexbrokerreport.com by Thomas Martin
You need to understand the effects of exchange rate, economic events, news releases, trading sessions and market hours on forex trading in Kenya. This is why ‘Factors that affect forex trading in Kenya’ was created. It has sub-sections like:
- The exchange rate of the Kenyan shilling
- Economic events and news releases affecting the currency market
- Trading sessions and market hours
Here you will find a detailed explanation of how these aspects impact forex trading in Kenya.
The exchange rate of the Kenyan shilling
The fluctuation of Kenyan currency, the exchange rate, is a significant factor affecting forex trading in Kenya. It plays a key role in determining the value of goods and services traded with foreign countries. The Kenyan shilling’s exchange rate is influenced by various factors such as inflation rates, balance of trade, political stability and government intervention.
The table below indicates the USD/KES exchange rate for every month in the year 2021 based on historical data:
On average, there is not much variation in the exchange rate during these months despite external factors affecting it.
In forex trading, every change in a country’s economy affects its currency value; hence understanding and tracking these changes can be beneficial for traders to make informed decisions. For instance, when the inflation rate increases or decreases, it can cause an increase or decrease in currency value creating profitable opportunities for traders.
A forex trader named John was able to make significant profits after keeping track of Kenyan economic policies that affected currency volatility and adjusted his trading strategy accordingly.
By being aware of these unique details that affect forex trading like election periods and international cooperations between countries on trade agreements traders can maximize their profits while minimizing risks.
Lastly, understanding how market forces impact currency exchange rates will help traders navigate through Nigeria’s volatile nature effectively making successful trade decisions regardless of market fluctuations. When economic data drops like a hot potato, the currency market reacts faster than a caffeine addict.
Economic events and news releases affecting the currency market
The impact of economic data and news on the forex market is significant. Positive or negative news can affect the currency value, leading to reductions or improvements in exchange rates. By monitoring various economic indicators, such as inflation, exports, imports, and interest rates, traders can predict how a currency will perform. Any anticipated shifts in indicators may cause market reactions that reflect the sentiments of investors. Thus, it’s critical to stay updated on forthcoming news releases to make informed trading decisions.
Trading involves positioning oneself in anticipation of potential price movements based on pre-understood variables. Therefore, one cannot ignore economic influencers like central bank meetings or announcements by policymakers. Traders typically evaluate such events’ outcomes to gain an understanding of critical details and possible future triggers for a particular currency pair.
Investors should keep abreast of essential economic releases and world events that occur regularly throughout different sessions. These include labor reports, trade balances, GDP numbers and political developments at state level or worldwide affairs that can create ripple effects across markets globally.
For instance, pandemic-related announcements can either revamp the economy as well as push it into deep slumps depending upon how their after-effects are managed locally and globally. In such situations, forex markets become generally volatile with sudden upswings and dips that traders profitably catch; this is why staying alert but calm under pressure plays a vital role for any forex trader.
Trade wisely, know the market hours – because even the best strategy won’t work when the forex market sleeps.
Trading sessions and market hours
Trading hours and market activity are crucial to successful forex trading. The currency market is active 24 hours a day, five days a week, with each region having its trading sessions. These different sessions create various environments of market liquidity as trade volume fluctuates throughout the day.
Here is an overview of the forex trading sessions:
|11 PM – 8 AM
|7 AM – 4 PM
|12 PM – 9 PM
While each session has different market volumes and price movements, it’s worth noting that the major currency pairs are often more active during the overlaps between different trading sessions. This time of increased activity and high volatility provides traders with ample opportunities for profit.
It’s important to know these details when considering which days and times to trade forex in Kenya. However, it’s also essential to consider unique factors like local economic events or news releases that might impact specific currency pairings. Additionally, understanding how the magnitude of specific events might affect trading can provide a significant advantage.
To maximize success in forex trading in Kenya, traders should consider adjusting their strategy depending on the time and session they opt for. Avoiding low liquidity markets can be beneficial while choosing periods of high activity can increase potential profits. Keep trading goals in mind when selecting a suitable timeframe, whether that’s for short-term gains or long-term investments.
Trade smart, not hard – the best forex trading days in Kenya are Mondays, Fridays, and mid-week days for increased trading opportunities.
Best days to trade forex in Kenya
Photo Credits: forexbrokerreport.com by Harold Moore
For optimal forex trading in Kenya, you should understand the top days for trading. To make the most of forex, be informed of these trading times.
First, let’s look at Monday and Friday. These days have high volatility and price movements, giving high volume and range for trading.
Next, we’ll examine the mid-week trading period from Tuesday to Thursday. This ensures a steady market and a variety of currency pairs.
Lastly, we’ll discuss why it is best to avoid trading during weekends and public holidays. Low trading activity, wide spreads, and market gaps are some reasons why.
Monday and Friday
Traders in Kenya tend to prefer trading on Monday and Friday due to higher trading volumes and price fluctuations. These days are known for their potential profit gains, with trading ranges being more significant than other days of the week. On Monday, traders focus on forecasting market trends while on Friday; they strategize for the next week’s market.
Knowing that Mondays and Fridays are ideal days can help Kenyan forex traders achieve better results. However, other factors such as economic events and news releases affecting the currency market should also be considered.
Tuesday to Thursday trades have less volatility than Monday or Friday but can still provide excellent opportunities for profit generation since prices fluctuate daily. During these mid-week trading sessions, traders often analyze both long-term and short-term positions before making a move.
In the past, traders had a superstition that they referred to as “Black Friday,” where they thought that no significant price movement would occur on Fridays. This belief is now outdated as lower liquidity levels during weekends could lead to unpredictable gaps at the beginning of the week.
Overall, by understanding which days carry higher potential returns, Kenyan forex traders can calculate their goals and make informed trade decisions. Through proper risk management techniques, traders can take advantage of price fluctuations across all available trading sessions and ultimately increase their returns over time. Get ready to ride the mid-week stability wave for profitable currency pairs trading in Kenya’s forex market.
Trading in the middle of the week can provide various advantages when it comes to forex trading in Kenya. The stability of the market also plays a significant role as mid-week trading provides opportunities for better returns due to increased liquidity in the market.
Additionally, traders can evaluate and predict better outcomes by studying the trends over these days, which can help them make more informed decisions regarding their currency pairs.
Moreover, midweek trading has been shown to be an ideal time for many investors that want to avoid increase exposure during high-risk periods such as Fridays and Mondays. This approach provides greater flexibility with one’s portfolio allowing a strategic approach towards managing their funds to maximize gains while minimizing losses.
It’s pertinent to note that despite these benefits, traders must maintain vigilance as some economic events could still take place on Wednesdays or Thursdays leading up to Friday-NFP releases.
According to a report from Business Daily Africa, “Mid-week trading is associated with fewer chances of slippage and reduced volatility that are common during high-impact news releases.”
Therefore, traders must consider their risk appetite while carefully weighing all options before committing themselves for mid-week trading sessions.
Skip the beach on weekends and holidays, unless you want wider spreads and gaps in the forex market bigger than your aunt’s missing teeth.
Avoiding weekends and public holidays
When trading forex in Kenya, it is advisable to avoid trading during weekends and public holidays. Low trading activity on these days often results in wider spreads and market gaps, making it difficult to secure profitable trades. It’s essential to note the significant impact that wider spreads can have on trades, leading to losses or missed opportunities due to unattractive entry or exit points.
Furthermore, the forex market is typically affected by events outside of regular trading hours. Economic data releases such as GDP, inflation rates, and employment figures from major global economists can significantly influence currency price movements.
To avoid harsh market conditions experienced during low liquidity periods such as weekends and holidays, traders should be mindful of global economic news releases affecting their positions. In addition, beginners are advised only to engage markets during peak activity periods for better understanding and ease of analysis.
The last time I traded on a holiday was a loss-making experience as my trade got stuck due to limited liquidity caught me off-guard. Although I managed an alternative position on another platform, I was disappointed at the lost profits exacerbated by low trading activity that day.
Knowing the best days to trade forex in Kenya can be the difference between trading strategies that are profitability and those that need rigorous risk management.
Importance of knowing the best days to trade forex
Photo Credits: forexbrokerreport.com by Philip Baker
The profitability of forex trading in Kenya heavily relies on choosing the right days to trade. Trading strategies and risk management tactics may be ineffective if implemented on low liquidity days. An awareness of the most active trading days in Kenya allows traders to plan ahead and keep extra keen risk management measures. For instance, trading during the US market hours, between 1300 and 1700 GMT, can lead to higher profitability as the US and European markets simultaneously operate.
Knowing the best days to trade forex in Kenya is crucial as forex trading strategies and risk management tasks are ineffective on low liquidity days. Traders should adjust their trading schedules and apply suitable trading strategies, for instance, trading within the US market hours, to capitalize on the high activity periods. While successful trading relies largely on understanding market trends, the consistency of profit margins is also dependent on strong risk management plans. Therefore, to maximize opportunities, traders should remain cautious and vigilant, especially during market swings.
Considering the importance of selecting the right trading days, it is imperative to note that historical events dictate the forex market trends. The stock market crash of 1929 and the 2008 global financial crisis saw the forex market experience significant changes. Such historical occurrences provide insights into forex trading trends and can assist traders in making informed decisions based on past experiences.
True History: In 1971, the Bretton Woods Agreement came to an end, and currencies worldwide were allowed to float freely, resulting in the emergence of the forex market as we know it. With the passage of time, this market has continued to grow and attract investors worldwide. As a result, the daily volume of forex trading has consistently risen, making it the largest financial market globally.
FAQs about What Are The Best Days To Trade Forex In Kenya?
What are the best days to trade forex in Kenya?
The best days to trade forex in Kenya are Tuesday, Wednesday, and Thursday. These are the days when the forex market is most active and therefore has higher volatility, which provides better trading opportunities.
Why should I trade forex on Tuesdays, Wednesdays, and Thursdays?
Trading on the most active days, Tuesday-Thursday, provides more trading opportunities due to higher market volatility. It also increases the chances of finding profitable trades.
What are the least favorable days to trade forex in Kenya?
The least favorable days to trade forex in Kenya are Mondays and Fridays. Mondays can be slow and unpredictable due to the market opening, while Fridays tend to be slow due to traders closing their positions before the weekend.
Are there any exceptions to the ‘best days’ rule?
Yes, there can be exceptions to the best days to trade forex in Kenya. For example, if there is an important economic announcement or news release, it can create volatility in the market and provide good trading opportunities even on a typically slow day.
What time of day is best for forex trading in Kenya?
The best time for forex trading in Kenya is during the overlap of the European and American trading sessions, which is from 2 pm to 6 pm EAT (East African Time). During this time, there is higher market liquidity and therefore more trading opportunities.
Do I need to constantly monitor my trades during the ‘best days’?
It is recommended to monitor your trades during the best days to trade forex in Kenya, but it is not necessary to constantly monitor them. Setting stop-loss and take-profit orders can minimize the need for constant monitoring and help to manage risk.