Retail investing has taken on new-found global prominence in recent days. The surge in interest is attributable to a Reddit community that rallied to drive specific stock prices up, causing a short squeeze for hedge funds who had been betting against businesses including brick and mortar video games seller Gamestop and cinema chain AMC Entertainment.
The Redditors on r/WallStreetBets, and others they inspired, managed to drive Gamestop (GME) stock up 400% as they snapped up every share they could find, although trading volumes have since slowed down. The frenzy saw some brokers restrict trading on stocks favoured in the online forums, such as Gamestop and AMC.
The moment has fueled a debate on the democratization of trading. It has also led many to explore retail investing for the first time.
Just as individual and institutional investors in China, India and Korea were some of the most active traders buying foreign stocks such as Gamestop, many Kenyans remain interested in participating in global markets.
As of February 1, trending US stocks by popularity included Gamestop, AMC Entertainment, Blackberry, Nokia ADR and Sundial Growers. So how exactly can you purchase stocks listed on US indices such as the NASDAQ or the New York Stock Exchange (NYSE)? Well, it’s easier than most people think.
Importantly, anyone interested in plunging into the world of retail investing is advised to take time to understand markets and how they work. Numerous educational resources are available online for aspiring investors to explore before parting with their hard-earned cash.
To buy and sell US stocks in Kenya, many retail investors prefer to use brokers licensed by the Capital Markets Authority (CMA). Regulated brokers in Kenya have in recent years introduced and aggressively marketed web and mobile trading platforms.
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Some of the most popular trading platforms in the country include FXPesa, Scope Markets, PepperStone and SBG Securities.
Before settling on a trading platform, investors are advised to thoroughly research on what the services have to offer, such as fees charged per trade, access to analytical tools, risk management tools and variety of trading instruments and asset classes.
Your choice of broker should be informed by your specific needs. The priorities of a day trader, for instance, can be vastly different to those of a long-term investor.
Signing up for these apps takes a few minutes, with an image of your national Identification Card (ID) or passport usually one of the requirements. To make trades, you will need to top up your wallet with an initial deposit.
Many brokers require a minimum deposit of at least $100 (Ksh11,000).
On these platforms, one can easily buy and sell stocks such as Alphabet, Apple, Amazon, Coca Cola, Tesla, Nike, Zoom and more.
Aside from the trading functionality, some of the platforms also incorporate live market feeds, market research tools and newswire services to help traders make informed decisions.
All major trading platforms allow users to create demo accounts, providing virtual currency for users to practice with before graduating to the live servers.
Practicing with demo accounts is highly recommended for retail investors, particularly beginners, as it offers you a simulation of real trading conditions and first-hand insights on how to trade.
Kenyan retail investors do it for different reasons. For some, it is a side-hustle while for others, it is their main income-generating venture.
While forex trading has been the most popular segment for Kenyan traders, stocks and commodities also continue to attract investors. Silver, for instance, was the next target of Reddit retail investors after the Gamestop saga, driving up interest globally including in Kenya.
Silver prices rose by as much as 12 per cent to hit the highest prices since 2013 on Monday, February 1 as retail investors targeted it after the attack on hedge funds betting against Gamestop and AMC.