How forex trading works
Currencies are quoted in pairs. When you buy EUR/USD you are buying euros and selling dollars at the same time; you make money if the euro strengthens against the dollar and lose if it weakens. Every trade has two sides and someone is on the other one.
The market runs 24 hours a day from Monday morning in Asia to Friday evening in New York. Different sessions have different characters — the London and New York overlap is the busiest and usually the most volatile.
The vocabulary you need
- Pip — the smallest standard price move in a pair, usually the fourth decimal place.
- Lot — trade size. A standard lot is 100,000 units; micro lots let you trade far smaller.
- Spread — the difference between the buy and sell price, which is the broker's cut.
- Leverage — borrowing to control a larger position. It multiplies gains and losses equally.
- Margin — the deposit the broker holds against your leveraged position.
- Stop loss — an order that closes your trade at a set loss, so a bad trade cannot become a catastrophic one.
Leverage is what actually hurts people
Leverage is presented as the attraction of forex and it is the single biggest reason new accounts get wiped out. At 1:500, a half-percent move against you can erase your entire position.
The arithmetic is unforgiving in a way that is easy to miss: losing 50% of an account requires a 100% gain to get back to even. This is why professional traders obsess over limiting losses rather than maximising wins.
What to expect realistically
Most retail forex traders lose money. Regulators in several jurisdictions require brokers to publish the figure and it usually lands somewhere between 65% and 80% of accounts. Kenya is not different from anywhere else in this respect.
That does not mean it cannot be done. It means the people who do it treat it as a skill acquired over years, size their positions conservatively, and accept a lot of small losses in exchange for fewer larger wins.
Be extremely sceptical of anyone showing screenshots of profits, offering signals for a fee, or promising a monthly return. The reliable business in forex is selling to traders, not trading.
The mistakes that cost the first deposit
- Trading without a stop loss, and letting one bad position run.
- Increasing position size to recover a loss — the fastest known route to a zero balance.
- Trading a live account before a demo account has been consistently profitable.
- Risking a large share of the account on a single 'certain' trade.
- Following signals from social media without understanding the reasoning.
Common questions
Can I learn forex trading on my own?
Yes, and most people do. Broker education sections, a demo account and a written trading journal will take you further than most paid courses. Be wary of expensive mentorship offers — the person selling it is making their money from you, not from trading.
What is the best time to trade forex from Kenya?
The London session opens at 11am EAT and the New York session at 4.30pm EAT. The overlap between them tends to be the most active period, which means more movement and tighter spreads.
Do I need a lot of money to start?
No, but a very small account makes proper risk management awkward. More important than the amount is that it is money you can lose entirely without it affecting your life.
Trading carries risk and you can lose money. Nothing on this page is financial advice. Past performance does not indicate future results.