Is Forex Market Legal?

Is Forex Market Legal?

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What is Forex Market?

Forex Market also referred to as Foreign Exchange Market is an internationally recognized marketplace where investors buy and sell currency pairs. Is Forex Trading a scam? It is not a scam! Forex is a legal business traded by Central banks, commercial banks, and big financial institutions besides small retail traders like me. That is why governments have formed regulatory bodies to regulate Forex Trading activities. You can read about the agencies tasked with regulating forex trading in each country on this page.People who don’t know how online forex trading works think the business is a scam because they do not take the time to learn and master the concepts of forex market charts. Before you start to trade the forex markets, there are many things you need to learn to ensure you are not doing guesswork. Complete beginners who want to make money online by trading forex MUST start from the basics of forex trading.

What moves the forex market

The movement of price in currency pairs is caused by different factors as highlighted below:

  • Inflation

We say there is inflation when the price of commodities in a country shoots up. Inflation causes the value of a country’s currency to weaken compared to the value of other currencies. This leads to a decrease in the number of foreign customers since people from other countries do not want to hold a currency whose value is depreciating.So how does inflation affect the forex market? A currency of a country with a high inflation rate attracts more sellers, while that of a country with a low inflation rate attracts more buyers. This is why Forex Traders can make money whether the price moves up or down.

  • Political news

The local currency is affected if there is a national election in a country. This is because financial experts analyze and release data on whether the value of that particular currency will strengthen or weaken due to election activities. Fundamental traders use this data to decide whether to place buy or sell positions.

  • Uncertainties

Uncertainties such as terrorism and earthquakes ‘shake’ the Forex Market. A national crisis negatively affects the value of a local currency, thereby repelling foreign investors.

  • International Trade

Always, there is less demand for a country’s goods if it imports more than it exports. This means that no foreign traders want that particular country’s currency. Therefore, the value of such a currency depreciates.

  • Central Bank Rate Decisions

The governments, through central banks, manipulate interest rates to balance the economy. Central banks analyze past economic data to project the future of a currency. When such economic news is released, news/fundamental traders decide whether to buy or sell that particular currency.

What are the forex market advantages?

Here are two advantages of the Forex Market:
  • It provides a platform for countries to facilitate foreign exchange.
  • Because of Forex Market, firms and individual foreign traders can convert their money into currencies they want.
For instance, if Safaricom PLC (the biggest networking company in Kenya) wants to purchase networking equipment from the USA, they have Kenya Shillings (Ksh) at hand. But, they need US Dollars ($) to complete the transaction. Forex Market allows the company to convert Ksh to USD.

7 Main Advantages of Forex Trading

Forex Trading is defined as the buying and selling of currency pairs. It provides many advantages to governments, large firms, and retail traders. Allow me to list some of theadvantagesof Forex Trading:1. Forex Trading is a source of employment because of the following reasons;
  • It allows traders to earn money by buying and selling currency pairs.
  • Forex market chart creates an opportunity for programmers to earn a living by designing Forex Trading bots and chart Indicators.
  • Article writers can also earn a living by practicing their writing skills. N/B: Please note that Forex Trading is a technical field that you cannot just wake up and start writing about. First of all, learn how to trade and then spend time trading before you can start writing about the Forex Market.
2. It reduces a country’s unemployment rate as forex investors become self-employed3. Forex Market is open 24 hours, five days a week. This implies that forex traders can make money any time they want within the open market hours.4. In Forex Trading, currencies are traded in either direction. A trader can choose to buy and sell the same currency pair simultaneously. This strategy is called hedging.5. Forex Market can be accessed online. Forex traders can trade anywhere using portable devices such as smartphones and laptops.6. There is room for everybody. Since about $6 trillion is exchanged in the forex market daily, it is big enough to accommodate everyone.7. Forex Market is very liquid. Liquidity refers to the likelihood of an asset being sold or bought while maintaining its value. For example, a trader can decide to buy a currency pair and sell it within seconds(that is called scalping) because he does not need to look for a buyer.

What are the 4 Main Forex Trading Strategies

The main types of Forex TradingStrategiesare:

  • Scalping

Forex Scalpers do not hold their open trades for long. They can open and close a trade within seconds.

  • Day Trading

Day Traders do not allow open trades to roll over to the next day. They ensure all open trades are closed before a new market day begins.

  • Swing Trading

Swing Traders may decide to hold trades for a few days or weeks.

  • Position Trading

Position traders are long-term traders. They can hold trades for months and years.

How to Start Learning Forex Trading

It is very easy to start learning how to trade forex. If you are wondering where to learn how to trade Forex in, there are a lot of forex trading schools you can attend physically within your neighborhood. Additionally, you can use online resources to get basic trading knowledge. Here is a list of where you can learn how to trade Forex:You also need to know that you are on your own if you learn at Babypips because there is no comment section below each topic where you can ask questions. But the good news is that they have a Forex Trading Forum you can join and ask anything about Forex Trading.

  • OpWell Forex

Our aim isn’t to market our brand using misleading information to attract readers. But OpWell Forex strives to provide accurate Forex Trading tutorials to our readers so they can build a rewarding Forex Trading career. What differentiates us from Babypips is that we have a comment section where learners can ask any question concerning the topics they have read and get a reply as soon as possible.

  • Forex Exploits Academy

Wanjiru Gichagi, the founder of Forex Exploits Academy, is one of the best Forex Trainers in Kenya in 2022. She runs a YouTube channel and an active Facebook page. Unlike Babypips and OpWell Forex, she charges a training fee. But if you don’t want to dig deep into your pocket, you can get one of her Forex Trading ebooks at an incredibly low price.

  • No Nonsense Forex

No Nonsense Forex is a trading academy run by a trader from the USA who identifies himself as Patrick. But most people know him as VP. He focuses on technical indicators, so if you want to trade using indicators, you can visit his blog or YouTube channel and learn how to trade for free.The best knowledge you can get from No Nonsense is Risk Management. VP does a good job teaching his followers how to manage risk in Forex Trading.

  • Financial Hub Forex Academy

Financial Hub is a Nairobi-based Forex Trading Academy founded by three passionate Forex Traders. Kenneth Munene, Tarrus Lawi, and Caleb Sam designed e-learning courses to suit learners who cannot attend their physical Forex Trading classes.I am an avid consumer of their Forex Trading resources, especially on YouTube. Financial Hub has a premium plan for anyone who wants to access all their learning resources.

  • Karen Foo

Screenshot of Karen Foo YouTube Channel You cannot talk about the best Forex Trainers without mentioning Karen Foo. Besides being an established Fundamental Forex Trader, Karen Foo is a YouTuber from Singapore.

  • Esther Mofrey

Esther Mofrey is a Kenyan Forex Trader and Trainer. She runs a YouTube channel that boasts over 30,000 subscribers. You can find her on YouTube if you want to become her student.

  • XM Global Education Rooms

Over the past few years, XM broker has become popular amongst Forex Traders in Kenya since they integrated the Mpesa payment method into their platform. They have a live Basic Trading Room where various Forex experts teach beginner traders the basics of Forex Trading. They also have an Advanced Trading Room where their experts talk about different Forex Trading Strategies.What I do not like about XM Trading Room is that sometimes you will have to stay late at night so you can catch one of their important discussion. Their time is GMT, and Kenya’s time is GMT3.Now that you know how to start learning Forex Trading, we will be glad to answer your questions in our completeForex Trading Tutorialthat you can read at your own pace.

FAQs about Forex Market

What is the definition of Forex, and how does it work?

Forex means Foreign Exchange, and Forex Trading is done by exchanging one currency for another currency.

Is Forex a good market?

Forex Market is a good market because you can trade simultaneously in both price directions, unlike stocks.

Who controls the forex market?

Forex Market is a decentralized market. This means that it is not controlled by one single body, as in the case of stocks. For instance, Nairobi Securities Exchange(NSE) controls the Kenyan Stocks Market. But Forex Market is controlled by different Market Players such as Central Banks, Commercial Banks, and large Financial Institutions.The only work of a government forex trading regulatory agency is to protect investors from lousy Forex market players.

How is the forex market regulated?

Several global and local financial authorities are tasked with setting standards that all Forex brokers must comply with. Examples of such financial regulatory bodies include Kenya’s Capital Markets Authority(CMA), UK’s Financial Conduct Authority(FCA), and America’s National Futures Association(NFC).These financial regulatory agencies ensure that all Forex brokers operating in a jurisdiction are licensed and are subject to occasional audits.

What is the amount of money traded on the forex market daily?

Forex Market is larger than all the markets in the world. According to Investopedia, over $6.6 trillion is transacted in the Forex market daily.

Can You Get Rich by Trading Forex?

If you have the best Forex Trading knowledge but don’t have enough trading capital, you can never be wealthy by trading Forex. But if you have both knowledge and good trading capital, it’s possible to make a good amount of money through Forex Trading.Research shows that about 95% of Forex traders quit the business within the first three months. These people start trading with real money immediately after being introduced to the Forex Market. Most of them are greedy people who do not have enough capital and trading skills but want to make 1000% returns on their investment within a month.
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