- 1 Is Binary Options Legal in Kenya?
- 2 How to Open a Binary Options Position
- 3 What Are Binary Options?
- 4 The Future of Binary options in Kenya
Is Binary Options Legal in Kenya?
The short answer is, yes, binary options is completely legal in Kenya. There is no law that forbids one from trading binary options in Kenya. Its regulation should fall under the Capital Markets Authority, but so far, there is no statute to regulate this. This should however not worry you. Such was the case with online forex trading, which had been popular for over a decade before CMA stepped in to regulate it.
Although binary options trading in Kenya is not as popular as forex trading, it is quickly gaining a strong foothold. This is more so because binary options is much easier than forex trading (more on this later).
Binary options brokers are also realizing of the potential in the Kenyan market. Some brokers like Olymp Trade already accept Mpesa as a way to deposit and withdraw money from your trading account. Our predictions is that in the next few years, binary options trading will overtake forex trading in popularity, and then CMA will swing full force into regulations for the same.
Why Do Some Countries Ban Binary Options?
Most countries in Europe have banned binary options trading because of the prevalence of scams propagated using binary options trading. Other countries such as the United Kingdom banned binary options trading for retail investors, terming it more of gambling than investing or trading.
You must be worried right now, right? If other more developed countries in Europe are banning binary options trading, is it really safe to trade these financial instruments in Kenya?
The one thing you need to know is that binary options in European countries are mostly banned for retail traders and open to professional traders. Interested individuals in Europe have continued investing in binary options by registering on trading platforms as professionals. They are basically saying that they are experienced enough to trade high risk/high profit financial instruments.
The ban in these countries is to stop uninformed and inexperienced traders from getting their hands burned. You on the other hand, I trust, will do all due diligence and invest in learning how to trade binary options safely and profitably.
Armed with the proper education and risk management, it is completely safe to trade binary options in Kenya.
The most common reason why people lose money when trading binary options is lack of due diligence when choosing a broker.
Let’s tackle the next frequently asked questions next:
How to Avoid Binary Option Scams
A lot of people are wary of trading binary options because they have heard about multiple fraudulent operations in the business and they are concerned about falling into a scam themselves.
Ponzi scheme scams
The biggest scam online traders are afraid of is what could be defined as a Ponzi scheme, where you place your money with an online broker, but that broker does not provide the services that are promised and uses the deposits of new clients to simulate profits on your trading account. Luckily, this kind of scams only happens very rarely.
You can easily avoid this type of fraud by only opening a trading account with a regulated broker (FCA agreement) that possesses a long track record of client satisfaction.
Be extremely cautious the withdrawal details
The second most common problem faced with scam broker is the difficulty to withdraw your profits. In most cases, client only realized they have become the victim of a scam when they try to make their first cash withdrawal. This is typically the time when brokers stop replying to your inquiries or when the problems start to materialize.
Monitor the alerts from the financial regulators
The most respected financial regulators are constantly releasing binary option broker’s blacklists that highlight the brokers you should avoid. These lists gather the brokers that are not authorized to provide financial services or that have been the subjects of multiple retail traders’ complaints. For instance, the French financial regulator AMF (Autorité des Marchés Financiers) is releasing a binary option brokers black list every quarter. In December 2014, this list was constituted of 155 fraudulent brokers that were not authorized to provide their services in France.
Do not focus on the amount of the welcome bonus
You should always remain cautious about brokers that offer big welcome bonuses. Always keep in mind that the best binary option brokers out there don’t need welcome bonuses to attract new clients. They rely on competitive rates, advanced trading platforms and strong security processes which are all much better competitive advantages than a simple bonus that can lure you to open an account with a scam broker.
Look for multiple online reviews and client complains
There are many websites and public forums out there that gather reviews of the different online binary option brokers, and there exists many topics where clients can share their good or bad experiences. This is an easy way to get a diversified and unbiased opinion about a broker and about the quality of its services.
Another problem: changing terms and conditions
Fraudulent brokers can also modify their commissions or rates without notifying the clients. This kind of fraud is more difficult to spot, as it requires daily observations on a wide range of different underlying assets and binary option types. The best way to avoid this fraud is to compare the different major brokers for a few days before you place your money anywhere. You can also try the demo accounts of all the brokers that are able to provide one. This is a great tool to gain insight into a broker details and to forge your own opinion
Stick to our recommended broker list
Eventually, the best way to avoid any problem is to only register with a binary option broker that you find listed on the website. All our recommended brokers are fully regulated and authorized to provide trading services in the UK by the FCA. They all provide advanced trading platforms and competitive rates on multiple underlying assets and option types. Moreover, we are in close relationship with these brokers’ account managers and we will be able to help you should you face any problem with them.
Can You Really Make Money With Binary Options?
If you want to become a successful binary options trader, you’ll need to dedicate yourself to a study of the markets. You need to be able to discern how different economic events, like jobs reports, will impact different assets for longer-term trades. If you understand basic economics and watch for trends in how assets move under certain circumstances, you’ll have a better chance of being an effective long-term trader.
Also important to a binary trader is price fluctuation analysis. Binary options trades, especially ones with very short expiry times, tend to work more on tiny fluctuations than on macroeconomic trends. This is why traders who plan to focus on short expiry times should learn to analyze charts of recent price movements.
For example, most assets will have points above or below which their value has not broken recently. These points, known as support points, are good indications of where the value of an asset will find its minimum and maximum in the near future. Say, for example, an asset has fallen in value until it is near a support point it typically does not fall below. Traders relying on trend analysis would likely open a “Call” position, assuming the fall would reverse as the price neared that support point.
As a general rule, the more analytical methods you can master, the better off you will be as a binary trader. Combining multiple methods of predicting an asset’s value can help you come up with a more accurate prediction. The more accurate you are, the more trades you will be able to win on.
The exact return you’ll make on a successful trade will vary based on the asset itself, the brokerage you’re using and whether or not you employ any risk management tools. However, for binary options, returns of 60-70 percent are far from uncommon. This is a large part of what makes binary options trading so popular, as it offers some of the highest returns you’ll find in any investment market.
Understand, however, that even the most experienced traders don’t win on every position. Just because individual trades may yield 70 percent doesn’t mean that you’ll be able to make that kind of return each day, or even each week. If you trade wisely, research your positions and don’t take on too much risk at any one time, however, you should be able to leverage the high returns individual trades offer into an appreciable stream of income over time.
Binary Options have many simple traits, but do not let that deceive you. If you are a beginner trader, or even an advanced trader trying out Binary options for the first time, remember that this is not a trade with a 50/50 chance.
Like all other types of financial market trading (Forex, Stocks, etc.) you will need to use strategies and different types of analysis in order to place your trades.
Is Binary Option Trading Like Gambling?
This is not gambling, nor will it work like flipping a coin. No matter how many trades you place, it will not raise the chance that next trade you place will be correct.
Many novice traders have come to believe that Binary Option trading is a sort of gambling. This is NOT true. If you look at Binary Options in the correct manner you will see that it is just another sort of trading on the markets, and with all the different types of trading (Forex, Stocks, etc.), it comes with its own risks. With Binary Options, as others, you have different strategies with which you can base or build your trades. So why does Binary Options come off as a type of gambling?
For many who have just entered into the Binary Option world, you may accidentally be profitable in a number of trades by picking an option randomly. Yet, eventually you will see that without a hard based reasoning you will begin to lose. Therefore, you must be able to choose an educated assessment as to which trade to follow through with. Most traders will decide to use either fundamental or technical analysis to receive their final choice.
Using Fundamental Analysis and Technical Analysis
In the financial markets and worlds of trading, there are two basic types of analysis that traders use to predict market movement. Using these types of analysis one is able to decide which asset should be traded at which time, in which direction, and how much money they should invest on each trade.
In trading Binary Options the most relied upon analysis type is Fundamental Analysis.
Here is a quick step by step guide to beginning to work with fundamental analysis in binary options:
- Follow the news. Watch for any information in connection to the asset/s that you are interested in trading in. Keep track of any economic events in the areas that can take effect on your asset, as well as social and political events.
- Once you have read up/watched the new, think about how they will most likely change the movement of your asset in the market. Was the news positive or negative?
- Watch the market to see the reaction of the event. Sometimes the markets will make a small move in the opposite direction first before taking on its real movement.
- Once you have done this once or twice you will be ready to take on the assessments alone. You will be able to develop your own strategy in how to trade the binary option markets.
For those of you who want to make trading in Binary Options your full time job, news (fundamental analysis) may not be your number one choice. Using fundamental analysis may help seeing as you base your trade on a major event that is transpiring somewhere in the world that has an effect on the asset you would like to trade with. Yet, with Binary Options there are great trades going on every minute that you don’t want to lose out on because there wasn’t an announcement in the news.
In addition, if you are a beginner trader you may not have become familiar enough with many of the assets and the effects that the news and events occurring will have in the market. For this reason it is safe to say that taking the time to learn and trade with technical analysis will most likely be more profitable for you.
Technical analysis may be one step more complicated than understanding fundamental analysis, but its outcome is much more satisfying. Technical analysis is compiled by charts and indicators that make the procedure for choosing a trade more simple and raise the accuracy for picking the correct time and rate to open your option.
Through technical analysis one of the simplest trading strategies to pick up on is using support and resistance to follow your assets movements. Once you will be able to see the trend you asset follows and learn about breaking points, you will be able to minimize your risk and be able to trade more assertively. In addition to fundamental and technical analysis you may find it helpful to use other strategies throughout the day, read more here.
If you are going to trade heedlessly be ready to lose your money. Any and every event that takes place around the world has an effect on the financial markets, so if you do not pay attention you can place a position and have the markets turn against you.
Many binary option brokers have educational programs that can help you learn more about the markets, take advantage of them. Talk to your broker about different strategies and analysis, learn.
How to Open a Binary Options Position
Though the concepts may sound a little complicated, opening binary options positions is actually very easy. To start with, you’ll need to sign up for an account with a binary options broker and deposit funds with which to trade into that account. Once that is done, you’re ready to open your first binary position.
The first step in binary options trading is to decide on the asset you’re going to trade on the value of. Most traders end up specializing in a single asset class, such as commodities, so that they can learn the exact ins and outs of how that asset class works and therefore make better predictions. However, in your first few trades, it’s okay to experiment and see what assets seem to work best for you. Just be sure that you’re putting adequate research into every trade, rather than just banking on the 50-50 chance of a binary options trade to come out in your favor, as this is a very poor strategy in the long run.
Once you’ve selected an asset to trade, the next thing you’ll need to do is decide whether the value of that asset will move up or down over a certain period of time. You’ll build this decision into the position by selecting “Call” or “Put” from the brokerage interface, with a “Call” option corresponding to a prediction of increasing price and a “Put” option used if you think the price of the asset will decrease. You’ll also need to set your expiry hour, as your prediction needs to be based on what you think that asset will do in a given time frame.
Finally, you’ll choose how much money you want to put into this binary position. Different binary options brokers have different minimum requirements, but £10 is fairly standard. If you don’t have a large amount of capital in your account, don’t put too much into any one position, as this drastically increases your risk relative to the amount of trading capital you have available.
What Are Binary Options?
Binary Options are a simple online trade in the financial markets. Binary Options simplicity and large profits are what have made this type of trade so popular among traders of all kinds.
In binary option trading you make a prediction of the assets movement in the market, and invest your money accordingly. If your prediction is incorrect you may lose the entirety of your investment, however there are binary option brokers who offer you a certain percentage return.
Nevertheless, the payouts for in-the-money trades are high enough that the minimum risk for an out of the money trade will be worth your while. We do however recommend that you know the basics of predicting movements in the market when starting to trade, and many brokers will help you with this as well, offering one on one personal training, and training seminars.
Popularity of Binary Options in Kenya
Ever since being added to the financial markets in 2008 Binary Options have quickly gained popularity among traders worldwide. Unlike stocks, trading with binary options gives you the ability to profit off of a downward movement in the markets and with the worldwide recessions that have taken place this is a definite pro.
In addition, binary options give traders the advantage of being able to make large profits over short amounts of time which separates itself from Forex trading. A trader is able to make up to 90% profits in just 60 seconds. For many, these short time periods can offer a new thrill through trading that was not available to them before, yet for many it gives the ability to quickly make that extra few hundred dollars needed to pay the bills this month.
Although the risk in trading through Binary Options is higher than that of trading through the stock market, binary options has shown to be more profitable and looks like its popularity will be much larger than the stock markets in the near future.
How to Make Money with Binary Options in Kenya
If you are interested in beginning to trade in the binary options markets, the first step you will need to take is to choose your binary option broker. We have posted some more articles that dive into this area more in detail, but here are just a few quick tips to help you get started.
- Check for fraud
Obviously the first thing you want to make sure of is that the binary option broker you sign up for is reliable. There are some binary options brokers out there that if you invest your money in them you will not see it again.
Read the terms and conditions of each broker that you are interested in, making sure that you are allowed to withdraw your money, and what their bonus terms and conditions entail. Transaction options: Make sure that the broker you want to work with is compatible with the form of transactions, for depositing and withdrawing money, of your choice.
Check to see that the binary option broker you want to work with offers the assets of your choice to trade with. Many binary option brokers offer the main currencies, and stocks, yet many traders wish to trade with more exotic pairs or commodities and indices.
- Customer care
Make sure that the customer service center at your binary option broker offers high and dependent care. Ask to speak with a customer service representative, or even if you will have a personal broker who will take care of your needs.
The Future of Binary options in Kenya
As we mentioned before, Binary Options offers large and fast profits. Since its entrance into the financial world in 2008 it has become one of the first picks for traders to trade through.
Binary options has also become very popular among Kenyans who are just beginning in the financial market, offering the ability to trade and profit even with little knowledge of the financial world. Ensuring this fact many binary option brokers have begun offering educational tools for their traders.
So whether you are an advanced trader coming from a background of trading in the financial markets, stocks, Forex, or otherwise; Or even a beginner who has no knowledge of what the difference between currencies, indices, or futures are, trading through binary options will prove to be legal, profitable, safe, and easy to use.