Trading is becoming increasingly popular in Kenya, and for good reason. With recent developments in the Nairobi Securities Exchange (NSE) indicating the return of foreign investors, a net foreign equity inflow worth KSh130 million ($874,000) was registered for the first time since February 2022. Furthermore, the director of Capital Markets Authority (CMA) reiterated the attractiveness of the Nairobi bourse for foreign and local investors due to the undervalued stocks present at the exchange.
These positive developments mean endless potential for all those willing to make an income by joining the Kenyan economic landscape. That said, trading is a highly competitive and fast-paced activity. As such, traders must continue to adapt to changes and hone their respective strategies even more. The following article will discuss ways you can stay at the top of your trading game:
Maximise your trading tools
Maximising the trading tools in your arsenal is critical to ensure you’re making the right trades or buying and selling at the right time. Useful tools like a pip value calculator assist by helping you determine how much you will earn or lose depending on trade price movements. You can further use these tools by tracking open positions on various instrument types with increased speed and efficiency. The calculator instantly computes pip value fluctuations caused by rapidly changing exchange rates, increasing your chances of a more successful trade.
With regards to foreign exchange (forex) risk management tools, ensure you have the best fundamental analysis features. This will allow you to stay on top of your investments since risk management tools use long-term price movements to determine a stock’s fair price. With this, you can choose the best approach for your trade activities. For instance, the NSE continues on its promising trend, recording a record-high trading day of KSh165 billion ($1.1 billion) in September 2023 and signalling that now is the optimal time to work on your trading.
Refine your strategies
Learning never stops as a trader, and it doesn’t hurt to try things outside the box, so why not find new ways to refine your strategies — even if it’s something you haven’t considered before? You can call a fellow trader who can give you advice and whom you can bounce ideas off of. They don’t have to provide you with the solutions, but hearing different perspectives could be enough for you to avoid costly mistakes.
It’s also important to stay abreast of the latest trading knowledge. For example, increased efforts are going into blockchain education, and it is being revolutionised globally and in Kenya through online courses. Although blockchain differs from trading, it can give you a good idea of how technologies are changing with blockchain. You can also try looking for similar learning opportunities more aligned with your needs; there are countless online webinars and masterclasses for stock trading in Nairobi, so consider finding one about a topic you’re not as familiar with. This can potentially help you reframe your strategies.
Be on alert for all outcomes
At this point, you’re probably too familiar with the sudden shifts that result in market fluctuations. For example, despite the return of foreign investors to the NSE, it’s still ranked as the worst performing exchange in Africa. This is due to a combination of factors and the shilling currency’s continuous decline since the start of the year. According to the Central Bank of Kenya, it has depreciated against the US dollar by 16.9%. In light of this, keep your plans and strategies ready even for the least desirable outcomes.
Make sure you have backup plans for each scenario that may come your way. Focus on upcoming events in an economic calendar and compare market movements against other analytical tools, then include fundamental and technical notes in your trading journal to identify possible patterns. Furthermore, ensure that your mind is clear and present with every transaction, and make records of every trade you make. This will allow you to learn from any mistakes or spot successful practices you can replicate.
With these tips and strategies, you’ll be able to fully realise your potential as a player in the Kenyan economy. Your ability to adapt and stay afloat despite market shifts and uncertainty will be a testament to your advanced skill and mindset.