This archive report was first published on 9 July 2021.
Published on July 9, 2021, online trading has become increasingly popular in Kenya, offering investors access to various financial instruments. To start trading, one must open an online trading account, which involves several steps.
Choosing a Broker ¶
When selecting a broker, consider factors such as commission rates, leverage, and the availability of various financial instruments. Some brokers offer low commission rates, while others provide high leverage and other features. It is essential to compare the initial deposit charges, yearly maintenance costs, trading fees, commissions, and whether they provide interest on liquid cash available in the account.
Registration and KYC ¶
Before choosing a broker, register and fill in the required details to create a dematerialized and trading account. The list of documents required includes full name and age proof, address proof, identity proof, photograph, email address, and contact details, as well as nominee details.
Opening a CDS Account ¶
Once the account is opened by the broker, one needs to open a Central Depository System (CDS) Account. This can be done by the broker on behalf of the trader, if the broker is a Registered Central Depository Agent.
Paper or Demo Trading ¶
Before trading live with huge capital, demo or paper trading should be used. This involves trading with virtual currency to test a particular strategy and prove to be highly cost-saving.
Start Trading ¶
Finally, after completing all the steps, one can start trading using the Web/Mobile platform. It is essential to visit all the key sections to take advantage of the entire brokerage platform.
Trading Risks ¶
There is no such thing as high returns without risk. Market risks, liquidity risks, and operational risks are some of the types of risks that traders need to acknowledge while trading. It is not possible to win every trade, but with proper risk management controls in place, losses can be minimized.
