How to Select an Online Trading App in Kenya that is Right for You

online trading

Retail Online trading has been a growth industry around the world & in Kenya too for the past few years. The COVID-19 pandemic & the rise in market volatility caused by the events have caused huge spike in number of retail traders lured by thoughts of making quick money. Many brokers have reported record trading volumes & new customer signups during the first half of 2020.Some of the popular regulated brokers in Kenya have gained the trust of a significant number of traders. In the last few years, the number of brokers in Kenya has marginally increased on the web as well as on mobile for stock and forex trading.

The popular trading apps in Kenya include FXPesa, Faida Investment Bank, SBG Securities, PepperStone, Scope Markets etc.

The rise of Online trading platforms has allowed individuals easy access to the financial markets while working from home. However, this has also given rise to number of scam brokers too. So, choosing a right platform is really important for safe investing.

Besides safety, traders must also have access to tools for market research, charting capabilities, live market feed, and news services. Good trading platforms often offer these services free to cost to their clients.

If your broker doesn’t offer a specific tool, you would probably need to find independent services on the Internet like TradingView, Reuters, Bloomberg, MarketWatch. But its best to find a platform that offers all the tools that you would need to make efficient trading decisions.

You must ensure that the trading app you are choosing provides all the necessary tools and is also secure & trustworthy by keeping these below factors into consideration. 

  1. Know Your Needs and Objectives

Every trader has a different perspective of trading online and seeks different outcomes through different strategies. If the trader is aware of the goals and objectives, choosing a suitable broker becomes an easy task.

The choice of a broker can vary according to financial literacy, trading instrument, trading strategy, etc. But as a general rule, the broker that you choose should offer suitable tools and services that you need for your analysis, and easy access to your desired financial instruments.  

A day trader will be more interested in a broker that offers custom leverage, lower fees per trade if you trade higher volumes, charting tools for technical analysis, risk management tools like stop loss, negative balance protection, etc. 

Similarly, a long-term trader would seek a broker that offers multiple trading instruments, asset classes to diversify the portfolio and charges lesser non-trading fees. 

The selection of a broker must be done according to your personal trading requirements.

  • Variety of Instrument, Trading assets, and Accounts Available

A broker that offers excellent service for stocks, futures, and options might not offer the same quality of service for forex and CFD and vice versa.

Each broker has a specialization for different types of instruments and is popular among traders for specific services. Traders must choose a broker in accordance with the trading instrument you are looking to trade. 

If you want to diversify your portfolio then you might want a platform that has access to multiple markets. Research all the regulated brokers in Kenya, and check the instruments on their platform & markets, asset classes that they offer.

Another point to note is that some brokers offer multiple types of accounts to suit the demands of different types of traders and investors. Some account types can have lower spread but the overall maintenance fees can make it costly for the traders who do not trade frequently.

An insightful trader must select the broker that offers a convenient account type & the trading instrument that you want to trade at reasonable prices.

Before selecting any platform, analyze all the pros & cons, and all the available features of the different account types, and compare it with other regulated platforms in the market. 

  • Broker’s Reputation and Regulation

It is very important to check the reputation and verified reviews of a broker by the experts and past clients before you deposit any funds with them.

Most of the brokers in Kenya are new in the industry while some have been operating for more than a decade. Traders must check the background and history of the broker to ensure the safety of their invested money.

Also check how the brokerage firm has performed and served the clients during bearish as well as bullish market trends in the past. Are there any bad reviews? If there are, then for what reasons?   

Regulation or License is a very important factor that must be considered by every trader before choosing a broker.

Regulatory authorities keep an eye on the activities of a broker and safeguard the traders while offering them protection. Traders must ensure that the selected broker is regulated by regulatory authorities in Kenya & preferably across multiple jurisdictions.

For example: Kenyan traders looking to trade in forex market must choose CMA regulated forex brokers, while for stock trading you should trade with a NSE licensed broker.

There are currently only 3 brokers licensed by CMA for forex trading in Kenya which are FxPesa, Scope Markets & PepperStone Kenya, whereas there are 15 licensed NSE stock brokers.  

The insurance cover, segregated funds & support by a banking firm can be an added advantage for the safety of your funds.

  • Platform Options and Ease of Use

For a smooth and efficient trading experience, a trader must ensure that the broker provides convenient and user-friendly trading platforms on all 3 devices i.e.: desktop (both PC & Mac), web & mobile (iPhone & Android).

The availability of fast & feature-rich trading platform on the web and mobile can enhance the trading experience and allow trading anytime and anywhere.

The management of your account, funds withdrawal, access to support should be easily available from inside their platform. The trading platform should also be secure & it is best if it includes 2 Factor authentication & multi user support.

The layout and design of the trading platform should allow traders to quickly place new orders & close them without delays. The chosen trading platform should also provide regular updates through SMS, email etc. to notify the activities of the trading account. 

  • Trading Tools Availability

Some brokers offer more advanced charting and analytical tools than others.

Features including margin, leverage, stop loss, and details of trades executed in the past should be easily accessible. The availability of algorithmic trading tools like expert advisors (EAs) can also be useful.

Traders must also check whether the broker provides real-time data of the capital markets along with the regular news and updates.

  • Trading & Non-Trading Fees

Each broker in Kenya charges different fees for different trading instruments.

You must check & compare all the fees and commissions involved in the trades of each instrument. The fees and commission can greatly affect your profit and loss from a trade. But look at the overall fees, including spread, commission, maintenance charges, inactivity fees, withdrawal & deposit fees etc.

Some brokers can charge very high non-trading fees like inactivity fees, maintenance fees, or any other fees that have to be paid without making trades. Brokers with high non-trading fees should be avoided.

But remember that, lower fees should not be the only basis for the selection of a broker. Some of the new, unregulated, or unprofitable brokers might offer cheap services to gain clients and promote business. 

  • Demo Account

Most of the new traders lose due to a lack of experience and knowledge of the risks.

Demo account can be useful for beginners who seek to learn the basics, and can help you build your strategies for different market conditions before making actual trades.

If the trading instrument involves high risk, it is always advisable to gain decent experience via virtual trades on a demo account.

Most brokers offer demo account like FXPesa & Pepperstone. Beginner traders must choose a regulated broker that offers a demo account, which allows you to practice without the risk of losing any real money.

  • Ease of Withdrawal and Deposit

Unregulated brokers operating in Kenya would not be transparent with the traders about the methods of withdrawals and deposits and the charges associated with it. Deposits with such brokers would be easier than withdrawals.

You must make the required effort to inquire about every information regarding withdrawals and deposits. And also check reviews whether other traders faced issues during withdrawals. If they did then for what reasons?

Also, check the fees & limits for deposits & withdrawals. Some brokers might offer free of cost withdrawals and deposits while some charge variable fees for different withdrawal and deposit methods.

The minimum limit for withdrawals and deposits should also be checked before selecting any broker. 

Be wise in choosing a Trading platform

Due to a consistent rise in trading demand in Kenya, the number of brokers has also increased significantly in the last few years.

The brokerage industry is getting highly competitive in Kenya & the costs are getting lower – this can be advantageous to the traders, but only if you are insightful and informed about the available options. 

You should check and compare features, fees, instruments available, and technical tools – and then choose the most convenient broker for your requirements. As a rule, only choose brokers that are reputed & licensed in Kenya for offering the instrument that you want to trade or invest in.

Also, new traders must only trade with virtual money in a demo account before making actual trades, until you have a working strategy & experience.  Assess your goals, objectives, and risk factors before investing in any trading instrument. If you are a beginner then it is better to seek advice of a licensed investment adviser before choosing any platform.