Last Updated on March 31, 2021 by Henry Ibeleme
Forex trading in Nigeria is a profitable investment. It could be the only real and legitimate goldmine that promises returns in minutes or hours.
For individuals who are fascinated with quick money, this investment might be what you’ve been looking for.
Forex has become so popular that the estimated daily trading volume is over #500 million. If you know the rudiments of forex trading, making a lot of money from your smartphone is possible.
But come to think of it, can a small individual investor succeed as a forex trader?
How much capital do you need to invest?
If you’re also wondering if you could do this part-time, or perhaps you’re trying to evaluate the risk associated with forex trading, you’re on the right page.
In this article, you will learn everything you need to know about trading forex in Nigeria. Additionally, you will learn some success tips and the best brokers to trade with.
When you play your ball well, you will be impressed by the outcome.
Table of Contents
- What Is Forex Trading, And How Does It Work?
- Getting Started With Forex Trading In Nigeria
- How To Invest In Forex Trading In Nigeria
- 4. Set Aside Expectations
- Pros And Cons Of Forex Trading In Nigeria
- Frequently Asked Questions On Forex Trading In Nigeria.
- Over To You
What Is Forex Trading, And How Does It Work?
Forex trading is merely the buying and selling of currencies to make a profit. In other words, intending traders can trade in the forex market, often referred to as Over The Counter (OTC) market, where investors can trade currencies.
If you’re to dig more, you will discover that the foreign exchange market is the biggest trading market with a daily trading volume of over $5 trillion.
If you’ve ever traveled outside of the country before, or transact using a foreign currency, you’re trading forex.
When you exchange your naira to the dollar, you’re making forex transactions without even knowing.
Look at this from another angle, the tradable commodity here is MONEY.
You can exchange one currency for another while speculating whether a currency will change relative to the other or not.
If the speculation is correct, you make money. If you’re wrong, you lose money.
Here are six of the most popular currencies being exchanged in Nigeria
- The US Dollar – USD
- The Euro – EUR
- The British Pound
- The Canadian Dollar
- The Ghanaian Cedi – GHS
- The South African Rand – ZAR
Getting Started With Forex Trading In Nigeria
Before you dabble into forex, you must understand that the market is pretty volatile. That means, nothing is stable, and anything can happen.
The market is open virtually every hour of the day, except on weekends. You can trade from anywhere, either from a plane or in your bedroom.
Before one can become a forex trader, there are some fundamental steps to follow. It is to ensure that you’re following the right route.
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How To Invest In Forex Trading In Nigeria
1. Learn The Basics
Before you can start forex trading in Nigeria, the first step you must take is education. I am not saying you need to enroll in the university; you just have to learn how the investment works.
It entails learning some terminologies that will help you understand the investment. Here are a few of the terms you must know:
- Pip: This term refers to the smallest distance that a currency can move either up or down. It is often equated with USD $0.0001, also known as the basis point.
- Orders: The order is the description of how you exit and enter the market when investing.
- Lot Size: This refers to the amount of currency that you can trade all at once. If, however, you choose a standard lot size, you will trade in 100,000 units.
- Calls: This term is an option that gives a trader the ability to buy a certain amount of currency at a specific price and on a certain date.
There are some other terms you should know. Aside from the terms, there is a need to practice how to trade using a demo account.
Virtually every forex broker has a demo account which you can use to trade with virtual money.
As a beginner, I would advise playing around with this demo for at least a month.
While you’re at it, buy books, watch YouTube videos and listen to podcasts on forex trading. There are lots of materials out there; you simply have to focus and learn.
2. Choose The Right Forex Broker
Due to the popularity of forex trading in Nigeria, it has given rise to numerous brokers. Thus, finding the right forex broker can seem impossible.
There are different kinds of brokers, depending on your trading style, needs, or perhaps some factors. However, there are attributes to look for before settling for a broker.
- The forex broker must be licensed.
- Trading and non-trading fee
- The trading platforms offered
- The quality of customer service
- Deposit and withdrawals, including payment methods, fees and processing times
Get as many brokers as possible, then narrow your choices down to the best. Even if you’re not yet ready to trade, find a broker and start practicing with a demo account.
By trading on a risk-free environment, you’re able to master some strategies and gain more in-depth insight into how the investment works.
When you’re confident about your trading skill, only then should you trade with real money. When you register with the right broker, they might be able to guide you.
3. Analyzing Trading Platforms
Through trading platforms provided by third parties, your broker can facilitate forex trading. When looking for the best trading platform, here are some tips that will help you choose the best.
1. Lots Of Users: A good indicator that a trading platform is worth trying out is the number of traders that use it.
Aside from this factor, ensure that the platform is best in your opinion, as that is the only thing that matters.
2. User Friendly: The trading platform needs to have a user-friendly interface with clear navigation buttons. Go for any trading platform that looks simple, easy, and friendly to use.
You do not need a trading platform that confuses you, as that will be bad for business.
3. Relevant Features: Another factor to consider when evaluating a trading platform is the features. Does the platform have all the basic function that improves trading skills and strategies?
4. Customer Support: You also need to find out the quality of customer support and their response time. You don’t need to trade with a platform that pays no attention to users’ issues.
5. Stability: You honestly do not need a trading platform that crashes in the middle of a trade. Ensure your ideal platform is not prone to such occurrence before making a decision.
4. Set Aside Expectations
One of the problems new traders often make is, to begin with, an unrealistic expectation. There is no doubt that you can make money from forex trading.
However, never be so obsessed to the point where you battle with anxiety. When such happens, you’re most likely to make a mistake, which can lead to losses.
Before you start trading, the first rule is to set aside every expectation or unrealistic goals. You should trade only after making your calculation, and try not to be overconfident.
The reason you need to do away with your expectation is apparent – to avoid stirring up great emotional pressure, which is often the factor that leads to error.
Instead of building colossal expectations, it’d be better to focus on learning a trading strategy and researching all the trading tools at your disposal.
When you have the right knowledge and trading tools, becoming a successful forex trader is possible.
5. Develop A Trading Strategy
If you want to succeed in forex trading in Nigeria, you need to begin with a strategy to avoid losing all your money.
I tend to envision forex trading as a gamble since you can never be sure of the outcome. Nevertheless, developing a trading strategy will help you make decisions at crucial times.
By trying to harmonize your online trading strategy with your risk profile, you become better at what you do.
There are lots of techniques out there which you can study, analyze, and adopt. When you come across a logical technique, try to see how it can be applied in your strategy.
Usually, the strategies that worked for a currency pair in a given market might give a different outcome in another market or market conditions.
As you develop your trading strategy, you will discover what works for a particular market or currency pair. The more you trade, the better you become.
If you want to create a better strategy, it is crucial to study the market and understand how it works. When you’re clear about the basics, creating a formidable trading strategy will be easy peasy.
A common mistake new Nigerian forex traders make is to jump from one strategy to another. If you want to succeed by trading forex in Nigeria, you need to spend time identifying a trading strategy.
When done, spend time trying to understand this strategy and how it works. Eventually, you can adapt it by using technical indicators and other tools that suit your need.
6. Place Your First Trade
After playing around with a demo account for a month and developing your trading strategy, it is time to play the real deal.
To place your first trade, you need to study and analyze trading charts or market news.
Your knowledge of the market will determine if you should place a buy order or a sell order.
The Long Position: It implies that you’re buying a currency pair, and you’re speculating it will rise in value in the future.
For instance, if the current market price of EUR/USA is 1.1000 and you think it will reach 1.25 in the distant future, you can place a buy order.
In other words, you will be buying Euros while selling US Dollars. Buying an order in forex is almost like buying stock.
READ ALSO: How To Invest In Nigerian Stock Exchange
The two investments operate in a similar model, except for a few differences and terms. You can buy a currency at a low price, and when the value rises, you can sell and make a profit.
The Short Position: You can only take this action if you believe that a currency’s price will fall in the nearest future. In that case, you can place a sell order and sell off your currencies.
Close Trade: To realize either profit or loss, you must close the trade. You go at a loss when your speculation fails.
To make money with forex trading in Nigeria, you must understand that losing isn’t bad. It is something you should get used to.
By all means, try not to involve emotion and avoid overtrading.
Pros And Cons Of Forex Trading In Nigeria
To ensure this investment opportunity is best for you, it is imperative you know the pros and cons. That way, you can determine your chances and decide.
Every business idea or investment comes with a certain degree of risk. As a forex trader, your job should be to identify these risks and profound ways out of them.
Low Capital: You can start trading forex trading with as low as #1000 since brokers today now have small minimum deposit and very high leverage.
Huge Trading Volume: In case you have no idea, the forex market is the biggest in the world, with over $5 trillion daily trading volume.
Open 24 Hours: Unlike some investments, forex trading is open 24 hours for five days a week. When compared with Stock Exchanges, you will discover that the trading hours are much longer.
Currency Choice: In forex trading, you can trade on any currency of your choice. It might include significant traditional currencies like the US Dollar, Euros, or perhaps CZK and MXN.
Buy/Sell: When trading, you have two options: you can either buy it and go long if you believe a currency will go up. When you think otherwise, you can sell and go short.
High Risk: In forex trading, you can lose all your money in a minute. That is why studying the market and developing a trading strategy is essential.
Bad Brokers: To succeed, ensure that you choose the right broker. Many forex brokers in the market lack transparency, nor are they regulated.
Emotional Stress: Here is the ugly truth; trading forex can be extremely upsetting emotionally, especially when your trade results in a massive loss.
Frequently Asked Questions On Forex Trading In Nigeria.
The best time to trade is when there are most volume and liquidity in the market. As a Nigerian, the best time to trade is between 2 pm and 10 pm, which is very convenient.
Forex trading can make you rich, especially if you’re a hedge fund with a deep pocket. However, your success is mostly dependent on your skill in the market. You can make tons of money; you can also run at a loss.
You don’t need to enroll in any former education. With an article like this and a demo account, you can learn on your own.
Yes, forex trading is very much legal in Nigeria.
As a Nigerian, you can start with as little as #1000. But if you’re serious, begin with #50,000 and ensure you follow the right strategy.
Over To You
You can delve into forex trading in Nigeria and make a lot of money. However, it isn’t as easy as it sounds.
In your first month, I would advise you to trade only with a demo account. During this month, watch as many forex trading tutorials as possible.
If you don’t have bundle data for YouTube videos, please subscribe to midnight browsing.
Also, there are lots of strategies and tips to learn. By reading valuable materials like this one you’re reading, you widen your chances of success.
My next article will center on top forex trading platforms in Nigeria. To ensure you don’t miss it, ensure you subscribe to this blog.
In that light, I am wishing you success!