Is Forex Trading Profitable In Nigeria

Contents

Forex trading is the buying & selling of currencies with an aim to make a profit. Traders tin place their trades in the forex market, which is an over-the-counter market that allows investors to trade currencies. This is a platform for investors, institutions, banks, and retail traders.

Foreign Commutation Market place is the largest trading markets and has an boilerplate turnover of US$half-dozen.v trillion on a daily basis effectually the world. This is larger than all the stock markets in the world combined together. Trading activities are conducted through the "Interbank Market" which allows you to execute trades 24 hours in a day, for five days a calendar week from Monday through Friday.

Existent Life case of Forex Trading

Have you traveled overseas? If y'all have then the chances are that yous have already traded currencies before. This is because y'all need to acquire the currency of the land y'all are visiting past exchange the currency of your domicile state.

Permit's say that you change ₦410,000 to The states Dollars for travelling, and you get thou USD from the exchanger. In this example you are physically buying USD by exchanging your Nairas. When you alter your Naira into a unlike currency to spend money on your trip, you are actually making a forex transaction.

The rate that you get from your exchanger is decided on the basis of the real fourth dimension exchange rates plus the profit margin of the money changer. If the current market charge per unit is NGN410 per USD, then you would probably get around ₦420 rate from your changer. The deviation of ₦10 (420 – 410) for each USD is your changer's profit margin.

In theory, this is what online forex trading on the net is all about, but still a fleck more than than exchanging currencies through a Money Changer.

All transactions in the forex market are based on the purchase of one currency for the auction of another currency. Then yous are trading or exchanging the ii currencies simultaneously for one another, hence known as 'currency pairs'.

For instance: EUR/USD (Euro & the United states of america Dollar), NGN/USD (Nigerian Nairas & the The states Dollar) etc.

In that location are 100s of currency pairs, including the so called Majors, minors & exotic. It is really important to understand what currency pairs, and how they work before you can start trading Forex.

In this chapter, y'all volition learn everything you need to know about Currency pairs. Let's commencement!

Types of Currency Pairs

Currency pairs are mainly classified into 3 types:

i) Major Currency pairs: These are the currency pairs that include US Dollar as ane of currency in the pair. Near 85% of the global trading book is traded in the majors.

Majors include 7 currency pairs: EUR/USD (Euro/U.s.a. Dollar), GBP/USD (Pound/Us Dollar), USD/JPY (US DOllar/Japanese Yen), AUD/USD (Australian Dollar/US Dollar), USD/CHF (United states of america Dollar/Swiss Franc), NZD/USD (New Zealand Dollar/ U.s.a. Dollar) and USD/CAD (US Dollar/Canadian Dollar).

Since most of the trading is washed in majors, and then they are highly liquid & it is easier to make it & out of trades. The opportunities to make profits are college.

2) Modest Currency Pairs: Minors, also called the cross curreny pairs, contain all the currencies in the major pairs except for US dollar. These include EUR (Euro), GBP (Pound), JPY (Japanese Yen) etc.

Examples: EUR/GBP, EUR/JPY, GBP/JPY etc. Equally you may take noticed that these are the crosses of all the major currencies excluding Us Dollar.

The liquidity & volume are lower than majors, so trading opportunities may be lower than with majors.

3) Exotic Currency Pairs: Exotic Currency Pairs are made from ane of the currency from major pairs and other one from the emerging economies like: Brazil, South Africa, Mexico, Russia etc. Examples of such pairs include: USD/BRL (United states Dollar/Brazilian Real), USD/HKD (United States Dollar/Hong Kong Dollar), USD/ZAR (The states Dollar/South African Rand), USD/RUB (The states Dollar/Russian Ruble) etc.

Exotic Pairs usually don't have high liquidity & trading book simply they have high volatility plus they have loftier spreads equally compared to Major & Small-scale Pairs.

As a beginner Forex Trader, you need to stick to major pairs simply as it offers high liquidity and predictable market place movements.

Currency Pairs Lingo

While trading forex, yous would come across these common terms. We will exist explaining all the important terms hither.

1) Quote past the banker: When you open up a trading account with a Forex Broker, they tell you the Bid/Inquire toll to purchase & sell the currency. It will be quoted similar this instance: EUR/USD one.2812/xv. This price is the quote by the broker.

2) Pip: Pip is the smallest unit in the currency quote (given past the Broker). It is the final decimal in the price. For Case: In the quote ane.2811 moves to 1.2812, the movement in the last decimal is 1 pip.

3) Bid Cost: Bid price is the cost at which the banker is willing to buy a currency pair from you lot. At this cost, y'all can sell base currency in the pair. This toll is shown on the left side in the quote ticker past the Broker.

For Case: If you lot meet the quote as EUR/USD 1.2812/15, then ane.2812 is the quote toll, and it means that y'all can sell 1 Euro for 1.2812 US Dollars.

4) Inquire Cost: Ask cost is the price, at which the broker is willing to sell a currency pair to yous. At this cost, you can buy the base currency mentioned in the pair. Information technology is shown on the correct side of the quote ticker by the Banker.

For Case: When you see the same quote as higher up it had 2 values in it: EUR/USD 1.2812/15, the second value tells you most the Inquire price, information technology means you lot tin buy 1 EUR for 1.2815 Dollars.

5) Spread: Spread is the difference betwixt the Bid & Ask Price quoted to y'all by the broker. And then in above example: in which quote is EUR/USD i.2812/15, the difference between 1.2815 minus 1.2812 i.e. 0.0003 or 3 pips, is the spread. Spread is the fees charged by forex brokers, so information technology is essential to choose a forex broker that has lower spread (you should likewise cheque the overall fees).

Forex trading can now be done past anyone in Nigeria, someday, from home or anywhere through the internet. All you need to trade forex online is a laptop, good internet connection, good trading strategy tested on demo & starting capital which we recommend to be atleast ₦l,000.

You need to signup with a Forex banker. There are many 'good' & 'scam' brokers. We will tell y'all exactly who to choose.

Finally, once yous have a trading business relationship we will testify you the Forex Orders that you can place, and the profit/loss calculation.

Let's start!

1) Open up Account with a Forex Banker

In social club to trade forex, you need to observe a CFD broker. In that location are numerous forex brokers available for Nigerian traders such as Hotforex, Exness, XM Forex, FXTM, Forex.com, FxPro, Oanda etc.

We have compiled the list of best forex brokers for Nigerian traders. All of the brokers that we recommend on our website have proven track record of honest dealing with traders, low spread, and are authorized/regulated by top-tier global Regulatory bodies (FCA, FSCA, CySEC & ASIC) for the safety of your funds.

ForexTime is the best banker for Forex trading in Nigeria.

• Competitive Spread on majors (and zero fees on deposits & withdrawals). For ex. typical spread of 0 pips + $iv.88 commission for major similar EUR/USD. This commission gets lower with college trading volume.
• Gratuitous demo Trading business relationship
• Piece of cake to use (mobile-friendly) MT4 & MT5 platforms
• 63 Currency Pairs, 100s of CFDs on Metals, Commodities, Indices etc.
• Fast Withdrawals in Nigeria & Good support
• Multiple Business relationship Base Currency options including USD, EUR & NGN
• Your funds are safe – regulated with UK'southward FCA (Financial Deport Authority), CySEC (Cyprus Securities Exchange Commission) and FSCA (Financial Sector Conduct Authority in South Africa)

Starting time Trading at FXTM Important: Forex Trading is risky, so accept a working strategy earlier trading with real money.

Start with Demo Accounts: Never beginning trading directly on a alive account if you lot are a beginner becaue your real money will be at risk. We advise you to commencement create a demo account with the broker of your choice and then learn to merchandise by building & testing out a trading strategy, and effigy out what works for you lot in different market conditions. Only once you are confident near your trading style & strategy, only then you should decide to trade with real money on a Alive account.

Once you have institute the Forex Broker of your choice, you can then open up an account with that broker to start trading (or demo account to larn). This account will enable yous to identify your trades in the interbank market at the live currency prices.

If you are creating a Live account: All reputed brokers have some sort of KYC (ID & Accost proof verification) & you cannot start trading in the market without verifying your account with any of the regulated banker. Once the verification is complete, y'all volition need to make a deposit to fund your alive account. These funds volition be used to identify live trades at the real market place prices.

ii) Identify your First Merchandise

After y'all take opened your Live account & funded it real money with your Forex broker, you lot can then open your kickoff merchandise. The two positions that yous can take in the Forex market are either the "long position" or the "short position".

Yous need to study and analyse the trading charts or the market place news & so make up one's mind whether you want to identify a buy order or a sell society.

The long position implies that you are buying a currency pair and are betting on information technology to ascent in value in the future. For ex. If you currenny market price of EUR/USD is ane.1000 & you lot believe that it would reach 1.25 in the virtually time to come then y'all can place a buy club, hence you would be buying Euros & selling US Dollars.

Come across the example below for a profitable Long/Buy Gild in Forex.

Buy order in forex is similar to buying an equity stock. You purchase the currency at a low price, and once it reaches a higher value, y'all can then sell off the currency, thus making your profit.

The curt position can be taken when you believe the price of the currency volition autumn in the upcoming period. If the present cost of EUR/USD is ane.10 & yous call back that it would fall to 1.0 in the well-nigh future then you lot can place a sell order in the marker.

Below is an illustration of how you lot tin can make turn a profit with a Sell Lodge in Forex.

You can identify a sell social club when the currency is at a higher price and and then when the value falls significantly, you can buy information technology back at lower price, thus realizing your profit.

iii. Close the trade

To realize your proft (or loss), yous need to close the trade that you opened.

Turn a profit or Loss? Depending on the motility of the currency pair that you were trading, y'all volition either be profitable or make a loss once you close the trade.

Example: If you lot have placed a purchase/long lodge on EUR/USD, and the price of the pair goes upwardly past 100 pips, and you decide to close the trade. You would have made a profit of around $100 (minus spread) if you are trading 1 Mini Lot.

Just if the EUR/USD goes downwards 100 pips, and yous decide to close the trade. Y'all will make a loss in this instance.

As well Read: Our detailed guide on How to Merchandise Forex in Nigeria

There are many different strategies that are followed by successful forex traders. But most of them fall into ii categories which are 'Technical Analysis' and 'Fundamental Analysis'.

Technical Analysis involves the study of chart patterns, currency trends, using indicators etc. and then placing the order based on the analysis of these technical factors & nautical chart patterns. While the fundamental analysis is mainly related to trading based on Economic outlook for a currency which could be impacted by news events like Gdp, Unemployment data etc.

In this affiliate nosotros will but analyse popular technical analysis strategies.

Technical Analysis

Nearly technical forex trading strategies involve some level of written report and analyse of the chart or trend patterns of the currencies before making an actual trade. Good thing is that about all brokers effectually the globe now offer MT4 or MT5, which are excellent platforms for sound technical analysis.

Advise: Building an understanding of the current market scenario & having a working strategy before placing a live trade is highly recommended. Merely based on your strategy, y'all tin make really get the all-time returns in the futurity.

Now let's look into some of the most popular forex trading strategies.

1) Trend Trading or Back up & Resistance trading

In theory, trend trading involves identifying a trend, waiting for the pullback in price & so following the continuation wave. This is one of the most profitable trading strategy in a trending market & was as well the chief strategy for highly successful traders similar Jesse Livermore.

Let's say the loftier for EUR/USD for the last three months is one.31 (making it a cost level of importance). We telephone call the high the resistance.

One time the toll crosses the previous high to achieve a higher loftier, there is a huge chance that the old high volition become the new low in a trending market. The depression is now called the support.

Stick to the Majors: In the current scenario, there are seven major currency pairs which plant nearly 80% of the transactions. These major pairs include USD/EUR, USD/GBP, USD/JPY, USD/CHF, USD/AUD, USD/CAD, and USD/NZD.

If you are a new investor, it is a practiced strategy to brainstorm trend trading with one of these pairs. This is because these pairs are very liquid and accept stable volatility. Since these currencies are stable, they will help you in managing your chance initially. It is always a good strategy, to begin with, a USD pair considering of stability. There are various other pairings available which practise non include the USD.

2) Day Trading

Day trading is non strategy per se, it is more of a trading routine. In this strategy, you identify your trades, and close them within the same 24-hour interval or inside a 24-hour window to book your profits (or loss).

You can realise profits quicker in this strategy although the take a chance is also college, as most of the traders try to gain high returns with small capital. This is a very mutual strategy followed by a wide multifariousness of traders, but y'all must sympathize its risk equally well. Another strategy is known every bit scalping. This strategy is based on opening a position for a curt time and closing information technology to make a small-scale turn a profit. These strategies can be a great mode to volume profits apace.

Information technology is very important to note that 24-hour interval trading is very risky & only suited for Professional person traders. You could lose when y'all are trading CFDs & forex using leverage.

If you lot are ready to start Forex trading then you may have doubts on which banker or app should yous choose to trade online.

In the table below, nosotros have compiled list of brokers & their trading platforms that nosotros have institute to be best in terms of security, withdrawal time & more than in meeting the expectations of profitable traders in 2022.

We have only selected brokers that are regulated & offer both Mobile app & web trading platforms.

Here's our listing…

2022's Best Forex Trading Platforms for Nigerians

Forex Banker	Regulation	Leverage	Account minimum	Forex Trading Platform(s)	Visit Banker
FXTM	FCA (UK), FSCA (South Africa), CySEC	1:1000	₦2000	MetaTrader 4, MetaTrader 5, Webtrader, iOS, Android apps	Visit FXTM
Alpari	CySEC	1:thousand	₦0	MT4, MT5 for web & mobile. Plus Alpari Invest app.	Visit Alpari
OctaFX	CySEC	1:500 (variable based on business relationship type & nugget)	₦36,000 ($100)	MT4, MT5 on desktop & mobile. And cTrader for web & mobile.	Visit OctaFX
Hotforex	FCA (United kingdom), FSCA (S Arica), CySEC	1:1000	₦1800	MetaTrader 4, MetaTrader 5 for spider web & mobile	Visit Hotforex
XM Forex	FCA(UK), CySEC, ASIC (Commonwealth of australia), IFSC(Belize)	1:888	₦1800	MetaTrader 4, MetaTrader 5 for spider web & mobile	Visit XM
Exness	FCA(UK), CySEC	one:2000	₦350	MetaTrader 4, MetaTrader five for web & mobile	Visit Exness
Avatrade	FSCA (South Africa), ASIC (Commonwealth of australia)	1:1000	$100	MT4 for Web, Desktop & Mobile App	Visit Avatrade

Forex Trading, like whatever other marketplace investment has many benefits simply also carries pregnant risks.

On the positive side, forex trading has the potential to bring practiced income if yous trade with a audio working strategy while properly managing your risks. Y'all don't need very loftier capital to start.

On the downside, one bad trade without proper money management can be disastrous, or if you are trading with real money without practising on demo & don't understand the risks then also you can lose everything on a unmarried merchandise. It is really important to empathize all the risks.

Permit's analyse the benefits & risks of trading Forex!

Pros of Forex Trading

1. Offset with Low Capital: You can starting time trading in the forex market with every bit depression as NGN k, equally brokers these days have very low minimum deposit & very high leverage. But it is highly recommended that yous only start trading with a upper-case letter of atleast ₦fifty,000 & never risk more than five% of your majuscule on a single trade. It is of import to merchandise with not too low uppercase because with low capital you lot would probable exist using very high leverage to make coin. This could crusade huge loss to you & you lot might lose all your capital on a single trade.
2. Huge Trading Book: Forex market is the largest market place in the world with close to 6.half dozen Trillion USD daily trading volume. This makes information technology very liquid & you can hands place very large orders also & close them without having to worry about price volatility because of your merchandise (unless there is some major result). In most cases, you would be able to open & close your positions at the price that yous want.
3. Buy/Sell: In forex, you tin can open up accept both brusque or long position to make a turn a profit. If yous feel that the particular currency is on the style upward, you can buy it and go long. On the other hand, if you feel that a currency is not performing well, you tin sell it and become short.
4. Open 24 hours: Another key benefit of forex trading is the ability to trade 24 hours, for five days in a week. These trading hours are much longer compared to traditional stock exchanges which allow you to identify an order or close information technology during limited trading hours. In forex, y'all can identify a merchandise & close information technology anytime during the week instead of waiting for the markets to open during the solar day. You might want to check out our guide on best time to trade forex in Nigeria as the opportunities to make profits are higher during certain market hours.
5. Currency choices: Another major benefit is that forex trading allows y'all to trade in a wide range of currencies from around the world. This includes the traditional major currencies such as EUR and USD also as exotic ones such as TRY and MXN. Too, almost forex brokers offering CFD trading on range of asset classes similar Commodities, Metals, Indices etc.

Risks of Forex Trading

At that place are sure risks attached with forex trading, which you lot demand to be aware of.

1. High Risk with Leverage: Virtually all Forex brokers offer very high leverage, which is unremarkably as high equally 1:chiliad in many cases. This ways that you can place $1000 worth of merchandise (1 Micro Lot) in the market with just $one trading capital. Only, using a very loftier leverage puts your trading capital at huge risk of depleting very fast with fifty-fifty a single bad merchandise. Ex: Permit'south say that y'all eolith $100 in your trading business relationship, and you employ ane:one thousand leverage to place a 1 standard lot purchase merchandise on EUR/USD. In this example, you can lose your full capital letter if the price goes just 10 pips against y'all. If the spread at the forex banker is 1 pips for the instrument that you are trading, so it means that the position is already in 10% drawdown. It is advised to always apply proper risk management & never risk more that 5% of your trading account's balance on a single trade. Y'all should never utilize more than 1:xxx leverage on Forex. Major regulators like FCA, ASIC have limited the leverage on Forex & CFDs, but forex brokers that operate in Nigeria are able to offer very loftier leverage of as loftier as 1:2000 at Exness. And so, it is really important to self regulated your leverage, and non merchandise with over 1:30 leverage with Forex.
2. Avoid Bad Brokers: There are and then many forex brokers out there that lack transparency, & are not fifty-fifty regulated past whatsoever Acme Tier regulation & may bear witness some Offshore regulation to tell customers that they are regulated. Yous should definitely avoid brokers that promote forex equally a become rich quick schemes. Be wise plenty to choose a broker that is regulated past major regulators similar FCA, CySEC etc, has years of feel, must take good reviews & is transparent in their dealing of any problems. A good Forex Broker will be regulated with multiple Top-tier regulated, have depression fees, and offer quick withdrawal methods to traders in Nigeria.
3. Risk of Volatility: There are a wide range of factors which tin influence the value of currencies (causing farthermost volatile, particularly for the non-conventional currency pairs), not express to political or macro & micro economic factors. And unfortunately, you lot cannot control these factors. So it is really important to watch out for whatsoever news before placing or closing a trade & have strict cease loss limits in place to control whatsoever losses in instance of bad event. There have been events during which the price of a currency pair can motion a few 100 pips with minutes, and in such a example you lot could lose almost of your capital or fifty-fifty go into negative. And so, it is actually important to empathise this risk.
4. Emotional Stress: Let's face it, forex trading tin can exist extremely challenging emotionally. I bad trade can issue in big losses if you lot are not post-obit good risk management & dealing with losses tin can prove to be very difficult. This tin can be emotionally stressful for you lot especially if y'all are because forex trading for a living.

How you can manage these risks? Be cautious, have a fully tested trading strategy (on demo) and use skillful risk management to exist successful at forex trading.

How does ForexTrading.NG help you?

At Forextrading.NG our ultimate aim is to help you choose the best banker for your trading needs. We have tested all the Top Brokers in Nigeria to requite yous unbiased reviews & comparisons. Don't choose whatever banker without going through our Peak list.

We have also created tools, guides to help you learn & successfully trade forex.

Is Forex Trading Profitable In Nigeria,

Source: https://www.forextrading.ng/

Posted by: smitheark1985.blogspot.com

Share this post