The youth obsession for online forex trading

There has been a notable surge over the years in the participation of the Rwandan youth in leveraged online foreign exchange trading business commonly known as online forex trading.

Leveraged online forex trading involves using borrowed money to increase the potential returns or losses in the foreign exchange (forex) market. Forex market is a global marketplace where currencies are traded against each other.

Traders try to profit from movements of constantly fluctuating currencies. Unlike forex bureaus which deal in converting currencies into others as real financial assets, online forex trading involves borrowing money from a forex broker to increase their trading positions.

ALSO READ: Rwanda moves to regulate online forex trading

Protogene Iradukunda, a 24-year-old based in Busegera District in the Eastern Province, started trading in 2019 after returning from Zambia where he was inspired by traders who lived a flexible, independent and luxury lifestyle.

“I connected with a guy whom I admired his lifestyle back when I was still in Zambia. He introduced me to the world of forex trading. I started off with an investment of $10, and I would make a profit of $150 in 5 days,” he recalled.

The unusual profit, Iradukunda said, lured him into investing in the business.

“I was greatly attracted by the profit and the flexibility of working from anywhere. I took it upon myself to invest in acquiring the knowledge that would allow me to trade professionally,” he noted.

Iradukunda currently trains over 500 young people in trading, providing them with basic knowledge as well as techniques and information of trading.

ALSO READ: Online forex trading regulations in Rwanda: 10 things to know

Like Iradukunda, Desire Ishimwe Vuguziga, a 23-year-old university student, was drawn to the world of online trading because of the possibility to make huge returns when you trade wisely.

“The accessibility and potential for significant returns in forex trading have drawn many young people including myself into this market. It is remarkable how easy it is today to acquire skills for trading,” he said.

Vuguziga, however, believes that the market equips one with financial knowledge and experience that otherwise would have taken years to acquire.

“The possibility of making large financial gains in a short time is what attracts many, but forex trading offers a chance to master important skills like risk management and analysis,” he noted.

Luxury lifestyle

Despite forex trading being a professional industry, many young people end up in the field drawn by stories of online traders who display luxury lifestyles such as expensive cars, mansions, and vacations.

“I would argue that many young people go into forex trading, not because it is a professionally appealing industry but because of stories they see online of traders who flaunt luxury lifestyle,” Germain Iradukunda, another 25-year-old trader based in Kigali, said.

ALSO READ: Why central bank won’t use forex reserves to curb depreciation

For Iradukunda, the flexibility to work from anywhere and anytime is what is more important, it is also something that he said young people want today, as opposed to sitting in offices for eight hours.

“The youth that are engaged in this market normally love the fact it’s not a 9-5 kind of job, they can work from anywhere, no one tells them what to do or when to do it, which makes it more flexible,” he noted.

Iradukunda warned that despite increased interest from young people to venture into forex trading, the rise in forex trading has attracted scammers who pretend to know how to trade when they actually have zero experience in trading.

“This market has a lot of scammers that can easily and quickly take your money and make you lose your money. A person who wants to enter the industry should be aware of this and choose carefully who to deal with,” he advised, adding that the sure way is to deliberately acquire knowledge by taking courses in online forex trading.

Earlier this year, the Capital Market Authority of Rwanda passed regulations governing online forex trading as a way to facilitate the development of the market as well as protect investors.

The regulation, among other things, set tougher conditions and introduced a threshold of capital base that companies which facilitate forex trading or want to invest in forex trading in Rwanda should have.

To acquire licence, for instance, a company must have in banks licensed to operate in Rwanda, a minimum paid-up capital which may not be impaired, of Rwf500 million in case of a dealing leveraged foreign exchange broker; Rwf300 million in case of a non-dealing leveraged foreign exchange broker; or Rwf100 million in case of a money manager.