Forex is a 100% legal business in Kenya, South Africa, Nigeria, and other African countries. Trading currency pairs on online financial brokerage platforms in Kenya is a proven way to generate passive income. The forex market rarely goes to sleep as it operates on a 24-hours-a-day, 5-days-a-week schedule. Beginners venturing into the forex market should try to understand the basics of a currency trading system, which is the set of rules and techniques used to execute buying and selling decisions in the foreign exchange ecosystem. Forex currency trading systems use either manual or automated methods to analyze and determine the right time to buy or sell currency pairs. They also define the entry and exit points, alongside the risk management strategy. Beginner traders in Kenya, South Africa, and other parts of the world should understand that currency trading systems follow a strict rule-based approach to trading. Advanced currency trading systems integrate technical analysis, fundamental analysis, and price patterns to determine entry and exit points. Based on how a forex trading system is developed, the strategy may allow traders to stop losses or take profits when the need arises. 

Two Major Types of Forex Currency Trading Systems

The two main types of forex trading systems are manual and automatic. While a manual system requires human effort to analyze the market and execute trading decisions according to the strategy, an automated approach uses computer algorithms or through Expert Advisors (EA) to automatically implement trades depending on the specific rules. This eliminates the need for consistent manual monitoring.

What Are the Key Components of a Forex Trading System?

The underlying elements of a robust currency trading system include the following:

Specific Rules For Trading

A standard currency trading system utilizes a combination of rules that follow “if” or “then” formats to determine when to enter or exit a transaction. 

Technical or fundamental analysis

Foreign exchange traders also rely on indicators, price trends, and economic news to create their rules. Moving Averages and Bollinger Bands are popular examples of tools applied to identify market trends.

Risk management

Every good forex currency trading system comes with an effective risk management strategy. This is vital for managing possible losses and locking in gains. Stop-loss orders form a fundamental component of modern currency trading systems.

1. Automation

As highlighted in the intro, the majority of forex trading systems are automated. Automation helps traders implement transactions without the need for 24-hour human intervention.

Ultimate Guide to Choose the Best Forex Trading Platform

Forex trading platforms are financial brokerage providers that provide software like MT4 to buy and sell currency pairs. A lot goes into choosing the best brokerage platforms for beginners as the market is rife with alternatives. You can find a great online brokerage platform to trade forex, commodities, and volatility assets by prioritizing industry regulation, fund security, affordable trading cost, platform speed, customer support, and brand reputation. Here is a detailed look at these crucial factors to consider when choosing a forex broker.

Industry Regulation and security

Trusted forex brokers like Weltrade are licensed and regulated by the right financial authorities, like the Capital Markets Authority (CMA) of Kenya, FCA of the United Kingdom, ASIC of Australia, and NFA of the United States. Regulatory compliance ensures legality and financial accountability. Choosing a secure forex trading platform is crucially important for enhancing your security and enjoying your peace of mind. Reliable brokerage platforms keep trader funds separate from their own accounts.

Compare Trading Costs and Fees

You can save a lot of funds investing in forex by avoiding brokerages with hidden expensive fees. Forex brokers make money by charging commissions while others accumulate their profit into wider spreads. Selecting a trading structure that suits your style is important, especially for day traders. Prioritizing transparent pricing without any hidden costs is just as vital as paying close attention to swap fees and withdrawal charges.

Check the Platform Features and Trading Execution

You should consider using a brokerage that is feature-rich and user-friendly for beginners. MetaTrader 4 is an essential tool for streamlining your forex trading experience. Choosing a brokerage that offers easy access to this popular software download lays a solid foundation to trade a variety of instruments beyond currency pairs. More experienced traders should prioritize fast execution, especially during volatile sessions. Finally, you may want to partner with brokers that guarantee fund protection. Beginners are advised to choose forex brokers that permit flexible lot sizes and smaller deposits. With Weltrade, for instance, you can trade currency pairs starting from as low as $1. The feature-rich brokerage platform also provides demo accounts for beginners and professionals to test their trading strategies with virtual funds before going live.

Evaluate Platform Reputation and Support

One strategy to find out more about the reputation of a forex broker is to read unbiased reviews on Trustpilot and other sources. This can provide you with great insights into a brokerage firm’s reliability and customer service. Prioritizing brokers with 24/5 customer support is important for finding prompt assistance with any potential issues that may develop along the line. Educational resources are also worth considering. So, don’t forget to collaborate with brokers that provide essential resources like webinars, tutorials, and market analysis to enhance your trading skills on the go.

Watch out for High Leverage

Experts suggest you should avoid brokers with excessively high leverage, as they substantially increase your trading risk. Partnering with a broker that allows you to set your own leverage can help tailor your trading approach. The leverage you set should come with a reasonable amount that aligns with your risk tolerance.

It’s estimated that the global forex market records a whopping daily trading volume of over $7.5 trillion. Just to put this in perspective, alternative financial instruments, like the S&P 500, only manage an average daily trading volume of $550 billion, representing a small 2.7% of the forex market size. 

To sum up, foreign exchange is an exceptionally high liquidity financial market that constantly reacts to several conditions. It’s a great investment for those looking for short-term wins. Unlike stocks which are managed by centralized exchanges such as the New York Stock Exchange, foreign exchange trades are run by a decentralized global network of banks. You can create a brokerage account with Weltrade today to start using an award-winning currency trading system to generate profit and minimize losses