Indices trading in Kenya: A step-by-step guide

Kenya is home to one of the ten biggest stock exchanges in Africa by market capitalization and the biggest in East Africa. The country’s 50+ million people have a growing appetite for stock trading, including indices trading on global markets.

If you’re interested in indices trading in Kenya, read on.

What are indices and why trade them?

Indices measure the performance of a group of shares available on an exchange. Through indices trading, individuals can speculate on the success of a particular industry or a nation’s biggest companies.

Understanding global indices

Indices trading in Kenya can refer to specific Kenyan stock indices, including the NSE All Share Index, which measures the market capitalization of all stocks on the NSE and trades from 09:31 to 15:00 EAT. With Exness, however,  Kenyans have access to global indices, and it’s these that many traders follow:

• NASDAQ—US: The National Association of Securities Dealers Automated Quotations is a New York stock exchange that lists national and global companies, including Microsoft and Meta.
• S&P 500—US: Standard and Poor's 500 includes 500 companies on US exchanges, including Apple, Nvidia, Amazon, and Alphabet.
• Dow Jones Industrial Average—US: Known as the “Dow”, this index includes 30 of the biggest companies on US exchanges, including Walmart, JPMorgan Chase, and Visa.
• FTSE 100—UK: The Financial Times Stock Exchange, pronounced “footsie”, is an index of 100 of the biggest UK blue chip stocks, including Entain and GSK.
• NIKKEI 225—Japan: Also known as the Nikkei Stock Average, this index measures 225 Japanese companies, including Aeon, Casio, and Kikkoman.

Key reasons to trade indices

Indices trading offers trend consistency and diversification, and provides traders with greater variety than simply trading stocks:

• Trend consistency: Indices move with the market and react more consistently to geopolitical events and economic news.
• Lower risks than stocks: A company can go bankrupt, face reputational damage, or be hit with fines and lawsuits, driving down the share price in the process. However, as indices span many companies, the comparative losses of such an event will be minimal. They can still be volatile, and there is always capital risk, but indices trading is generally less volatile than individual stocks.
• Diversification: Indices trading spreads your trade across many companies, thus diversifying with a single trade.

Is indices trading available in Kenya?

Indices trading in Kenya is possible with Exness and other regulated brokers that offer CFD (Contract for Difference) based trading. Traders should always seek reliable, trusted, and legitimate platforms. CFD trading for indices allows you to speculate on the price movements of major stock market indexes without owning any underlying shares. With Exness, you can go long (buy) or short (sell), trade on margin, and react to global market trends with tight spreads and flexible leverage.

Regulation and availability

The capital markets industry in Kenya is regulated by the Capital Markets Authority of Kenya, or “CMA”, so traders should ensure that their chosen platform is registered and regulated by this authority. Exness, for instance, is registered in the country and regulated as a non-dealing online foreign exchange broker, with an office in Nairobi.

Local brokers vs global platforms

Kenyans are free to use global and local platforms. However, those global platforms must be licensed in the country. Just because the site allows visitors from Kenya and includes an address option on the registration form doesn’t mean it is regulated or safe.

Always check the website’s footer, “about”, or “licensing” sections for CMA regulation.

How to start indices trading in Kenya

Ready to start  CFD indices trading in Kenya? Follow these simple steps: 

Step 1 – Open an account with a reliable platform

The capital markets are heavily regulated, and brokers must abide by various rules and regulations to provide a safe and secure platform for their members. As a trader, you’re guaranteed a secure and fair trading experience on these platforms and have recourse for action if you feel unjustly treated.

Step 2 – Choose the indices you want to trade

Now it’s time to choose your preferred indices. 

If you’re using the Exness Terminal, click the instruments tab in the top left, represented by three horizontal lines. Type your preferred index into the search bar or simply select “indices” to see your options.

Once you select one of the indices, it will appear on the main screen to the right, along with various charts tracking price movements in real time. It will also be added to your favorites tab at the top, so if you open multiple indices, you can easily navigate through them.

Under the “signal” column, you’ll see green and red arrows, indicating that the price is either up or down. The price will also flash green if it’s increasing and red if it’s decreasing. Use this information and the charts at your disposal to find a suitable index to trade.

Step 3 – Use demo trading to understand market dynamics

You don’t have to jump straight into the deep end with real money trading. Sign up for a demo trading account to get a feel for the platform and general index trading without depositing or risking real money. When you’re familiar with how the platform works and have gained confidence in your trading ability, you’re ready for the next step.

You have nothing to lose with a demo account. Your funds will be displayed as real money to give you an idea of how real trading works, but as long as you stick with the demo account, you won’t lose any cash.

If you lose most or all of your virtual funds and need to start again, click on your balance and then choose “top up”. 

Here are some tips for using a demo account for indices trading:

• Test everything: Open various indices, try different charts, set stop loss and take profit orders, and test everything that the platform allows. You will probably make mistakes, especially if you’re new to trading, but it’s best to get them out of the way on a demo account.
• Trade and watch: Place your trades and watch as the price moves up and down. You don’t need to rush in and settle profitable or losing trades just yet. It’s all about figuring out how the market moves.
• Play around for a few days: The more time you spend in your demo account, the better prepared you will be when moving into real money trading.
• Start treating your funds like real money: After you have spent some time buying, selling, and exploring, it’s time to treat your funds as if they were real money. Analyze each trade, think smarter, check trends and market conditions, and set stop loss and take profit orders. If you can trade without losing money or making mistakes, you’re ready.

Step 4 – Fund your account 

After opening a trading account and verifying your email address and phone number, you must make a deposit before you can start indices trading using real money. Whether you’re trading on Exness or elsewhere, you should have several options at your disposal:

• M-PESA: Backed by Vodafone and Safaricom, M-PESA is one of the biggest mobile payment services in Africa. You can deposit money quickly and securely into your account and then withdraw funds back into the account. Although M-PESA charges fees for some transactions, you won’t be charged when making a deposit.
• Cards: You can use debit cards (Visa and Mastercard) on most platforms. Deposits are fee-free, secure, and fast, and you can also use them for withdrawals. You can use credit cards in some instances, but you may be charged additional fees by your provider, and you can’t use them for withdrawals.
• Money transfers: This method can take a little longer and may incur additional fees, so always check the information on the broker page. If you use this method to cash out, your bank may also charge fees.

Take a look at our page on deposits and withdrawals for more information.

Step 5 – Begin trading

You’re now ready to start trading indices.

Remember, your capital is always at risk, and there are no guarantees. Indices might provide more stability than some other trading options, but they still carry risk and require proper risk management protocols, including careful trade sizing, stop loss orders, and take profit orders.