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Forex Trading Nigeria: The Ultimate Guide

 

forex trading in nigeria

We spent 120 hours* researching the Nigeria forex trading market

This is an in-depth look at everything you need to know before trading forex in Nigeria.

In this in-depth article you’ll learn:

– Who are the best forex brokers in Nigeria?
– What is the legality of trading in Nigeria
– Which brokers do the most successful traders use?
– Who is the governing body for all regulations?
– Some jargon that all beginner forex traders must understand

And Lots more…

So if you’re ready to go “all in” with the forex trading in Nigeria.

Let’s dive right in…

👌13+ Point Summary on Nigeria’s Trading Regulations

🇳🇬 Amount of traders in Nigeria170 000+ ( Updated March 2022 )
🗺️ Government Regulatory Body in NigeriaCentral Bank of Nigeria (CBN)
📍 CBN Physical Address and DetailsAddress: Central Bank of Nigeria
Plot 33,
Abubakar Tafawa Balewa Way
Central Business District,
Cadastral Zone,
Abuja,
Federal Capital Territory,
Nigeria
Phone: +234 700 225 5226
Website: https://www.cbn.gov.ng/
Email: [email protected]
📢 CBN Official Twitter PageCBN on Twitter
📚 Official Wikipedia Page of CBNCentral Bank of Nigeria Wikipedia Page
📉Most Traded Currency*USD / EUR and USD / NAIRA
⚖️ Is Trading Legal in Nigeria?Yes, if it is with a regulated forex broker.
💰 Do you get taxed on forex trading profits?Yes
🌎Who is the number #1 Forex Broker offering Nigerian denominated accounts?Exness
🕒 Best time to trade in Nigeria?09:00 – 12:00 and 15:00 – 16:00 GMT+12
🏆Top CBN Regulated Forex BrokersForextime,Tifia,7B Forex, Superforex, Alpari and Trade Nation
💳 How much money do you need to successfully get started trading forex in Nigeria?40 000 Nigerian Naira’s
📈 Fastest Growing Broker in Nigeria*Exness

Our 11 key point Overview on Forex Trading in Nigeria:

  1. ✅An overview of foreign exchange in Nigeria
  2. ✅An Introduction To Forex Trading Basics
  3. ✅Forex Terminology
  4. Understanding Currency Pairs
  5. How can Nigerian Traders Start Trading?
  6. Forex Trading Strategies
  7. Forex Charting
  8. Forex Trading Risk Management
  9. Forex Trading Platforms
  10. Pros and Cons of Forex Trading
  11. Frequently Asked Questions

An overview of foreign exchange in Nigeria

👉 The forex market is a global platform where currencies can be exchanged, even the Nigerian Naira, regardless of whether it is for business, travel, or leisure. Every exchange rate is determined by various factors such as the overall economic situation in Nigeria, news releases, and so on.

👉 While there is no single, centralized forex market or exchange located in Lagos, Nigeria, forex trading can be carried out over a network of computers, with the Central Bank of Nigeria (CBN) overseeing forex trading activities, ensuring that traders are protected.

👉 Forex trading can therefore be considered as a combination of foreign currencies and exchange rates. The act of converting one currency into another (e.g. Nigerian Naira to US dollars) is known as foreign exchange and can be done for several purposes, the most common of which being business, trade, or tourism.

👉 Every day, $6.6 trillion worth of currency is traded on the foreign exchange market, according to a Bank for International Settlements (BIS) research released in 2019. A currency exchange market is a valuable tool because it allows us to buy and sell goods and services both inside our own country and across international boundaries.

👉 Nigerians must exchange currencies to allow for international commerce, business, and travel. To trade currencies, traders must be connected to one of the main financial hubs in Frankfurt (Hong Kong), Hong Kong (London), New York (Paris), Singapore (Sydney), Tokyo (Zürich) or Frankfurt (Frankfurt).

👉 Nigerian traders have the benefit that they can connect to any of these sessions according to their unique trading strategy and trading horizon.

👉 A high level of volatility and continuous price movement characterize the currency market. Forex markets are dominated by commercial and investment banks, but there are also speculative possibilities for professional and individual investors to trade one currency against another.

👉 The currency asset class has two main characteristics:

➡️️ It is possible to profit from the difference in the interest rates between two currencies.

➡️️ Changes in the value of the dollar may be used to your advantage.

👉 Investors can benefit from the difference in interest rates between two distinct economies by purchasing and selling currencies with differing rates of return. Forex trading is a potential source of money for Nigerian investors.

👉 It is all about speculating on the movement of a currency’s value in a disciplined and strategic manner, using a solid trading plan and proven trading strategies.

👉 With an estimated daily transaction volume of 300-450 million, forex trading has grown very popular in Nigeria. Nigerian traders are often drawn to forex trading since it provides the opportunity to generate substantial gains in a shorter period (minutes and hours instead of months).

👉 In this article, you will learn about the following:

✅ The basics of Forex trading in Nigeria

✅ The factors that drive forex prices

✅ Forex terms and definitions

✅ All that you need to know about currency pairs

✅ How you can start trading forex in Nigeria ASAP

✅ The forex trading strategies that you can consider

✅ A crash course on Forex Charting

✅ What you need to do to protect yourself in the forex market

✅ What trading platforms are and how they work

✅ The pros and the cons of forex trading to decide if it is suited to you

Top 10 Brokers in Nigeria

Broker

Rating

Regulators

Min Deposit

Sign Up Bonus

Spreads

Website

1

9/10

FSCA, FSA, CySEC, FCA, CBCS, FSC (BVI), FSC

$10

1:Unlimited

10%

0.1 pips

2

8/10

ASIC, FSA

$100

1:400

40 USD

0.91 pips

3

8/10

FSA, FCA, CySEC, FSCA

$100

1:20

30 USD

0.07 pips

4

8.7/10

CySEC, FSC, CFTC

$5

1:500

30 USD

1 pips

5

8.5/10

FSA, FSCA

$100

1:200

20 USD

0.9 pips

6

8.4/10

FSA, CySec

$1

1:3000

30 USD

0.3 pips

7

8.3/10

IFSC, CySEC

$100

1:3000

100 USD

0 pips

8

8.2/10

FSC, IFSC, MFSC

$10

1:400

50%

0.4 pips

9

8.1/10

IIROC, ASIC, CFTC, NFA, FCA, FFAJ, MAS, MFSA

$0

1:200

1000 USD

0.2 pips

10

8/10

CySec, FSC, FSA, BaFin, NFA

$100

1:200

30%

1.5 pips

Top 10 Brokers

Broker

Deposit

Leverage

Website

1

$10

1:Unlimited

2

$100

1:400

3

$100

1:30

4

$5

1:500

5

$100

1:200

6

$100

1:3000

7

$100

1:3000

8

$10

1:400

9

$0

1:200

10

$100

1:200

An Introduction To Forex Trading Basics

👉 The foreign exchange market is the platform that facilitates the exchange of currencies globally. A currency is considered one of the most vital tools because it allows Nigerian traders to buy and sell goods and services both inside their own country and across international boundaries.

👉 For example, when someone buys cheese from France, they are required to pay using euros. The individual can exchange their currency either through a broker or they can exchange it at a currency exchange kiosk.

👉 Traveling works in the same manner, for example, euros are not an accepted currency in Egypt, which means that a French visitor cannot pay for a visit to the pyramids with euro. In this scenario, the traveler must convert their euros to the Egyptian pound to pay for their tour.

👉 Foreign exchange (forex) trading is similar in many ways to stock trading, with Nigerian traders trying to acquire currencies that they believe will rise in value or sell currencies that they believe will fall in value.

👉 Traders can choose from the following three ways to trade forex:

➡️️ Spot Market. Exchange rates are set in real-time here on the principal forex market based on supply and demand.

➡️️ Forwards Market. To secure an exchange rate for a certain amount of money at a future date, Nigerian forex traders might engage in a legally binding (private) contract with another trader instead of immediately completing a deal.

➡️️ Futures market. Traders may also select for a conventional contract to buy or sell a preset quantity of a currency at a predetermined exchange rate at a future date.

Factors that drive the Forex Market

👉 Because of the wide variety of currencies traded on the forex market, it is impossible to make accurate forecasts about the direction of exchange rates. When it comes to forex, supply and demand are the primary factors that determine the price movement, and it is necessary to grasp these variables to be successful.

➡️️ Central banks
Central banks have the power to announce supply-control policies that have a substantial impact on the value of their currency. Injecting more money into an economy, such as via quantitative easing, may lower the value of its currency. The Central Bank of Nigeria (CBN) manages the supply of Nigerian Naira in the country, much like other central banks are in their respective regions.

➡️️ News Reports
As a general rule, commercial banks and other investors prefer to invest in economies with a positive outlook. A favourable piece of news about a particular location may promote investment and enhance demand for that region’s currency if it reaches the markets. If more positive news about Nigeria and its economy emerges, there will be increased investment from foreign investors.

👉 There must be an equal or greater increase in the supply of money for the price to rise. In the same way, bad news may induce a decline in investment and a fall in the value of a currency. Currency values are influenced by the stated economic health of the area they represent.

➡️️ Market Sentiment
The overall market sentiment associated with forex is often influenced by recent events. This is a factor that could have a significant impact on currency pricing. Trades will be made according to what Nigerian traders feel the currency is going to do, which may either increase or decrease demand for the Nigerian Naira.

➡️️ Economic Data
Both the Nigerian economy’s performance and the Central Bank of Nigeria’s future policy decisions are inextricably linked to currency price fluctuations, and therefore economic data is so important.

➡️️ Credit Ratings
Nigerian traders’ primary goal is to maximize their profit while minimizing their exposure to market risk. These Nigerian traders can use credit ratings in addition to interest rates and economic data when making investment decisions.

Forex Terminology

👉 The language of each market is distinct. Before getting into forex trading, Nigerian traders need to know these terms:

➡️️​ Currency Pairall forex trades are carried out using currency pairs ranging from major pairs, minor pairs, and exotic pairs, with the Nigerian Naira falling into the category of an exotic currency.
➡️️​ PipPips are the currency pair’s measurement of movement. Subsequently, a percentage in point refers to the one-digit change in the fourth decimal place of a currency pair.
➡️️​ AskAsk refers to the lowest price at which traders are willing to buy a currency pair.
➡️️​ BidThe bid refers to the price at which the trader is willing to sell a financial instrument.
➡️️​ Spreadrefers to the difference that exists between the purchase and sell prices for a currency pair. When Nigerian traders start a forex position, they will see two prices, like many other financial markets. The purchase price is above the market price if traders wish to initiate a long position. The sell price, which is a little below the market price, is the price at which they buy to initiate a short position.
➡️️​ Bear marketsRefers to times when prices decline in the forex market, showing Nigerian traders that there is a market downtrend because of depressing economic fundamentals, events, and other factors.
➡️️​ Bull marketsRefers to times when the prices increase in the forex market, indicating that there is an upward trend because of optimistic news.
➡️️​ Contract for Difference (CFD)A derivative and complex instrument that allows Nigerian traders to speculate on price movements for financial instruments without owning the underlying asset.
➡️️​ LotCurrencies are traded in lots and it refers to the batches of currencies that are used to standardize forex trades. Forex price movements are small, and this means that lots can be very large, with a standard lot 100,000 units of Nigerian Naira, or any other base currency.
➡️️​ LeverageWhen using leverage, Nigerian traders can trade with much larger sums of money without having to pay the whole value of their trade at the beginning of the transaction. Subsequently, traders pay a small amount of money, known as the margin requirement, to the online broker as collateral for the trade.
➡️️​ MarginLeveraged trading would be impossible without margin money. The initial deposit that traders make to create and maintain a leveraged position is referred to as a margin deposit.

Understanding Currency Pairs

Currency Trading

👉 Every currency in the world is assigned a three-letter code, with the Nigerian Naira expressed as NGN in the forex market. The US dollar (USD) is engaged in the great bulk of foreign exchange trading even though there are more than 170 other currencies in existence.

👉 The euro (code: EUR), which is used in 19 EU nations, is another popular currency in the foreign exchange market.

👉 Additional well-known currencies include:

➡️️ Japanese yen (JPY)

➡️️ British pound (GBP)

➡️️ Australian Dollar (AUD)

➡️️ Canadian Dollar (CAD)

➡️️ Swiss franc (CHF)

➡️️ New Zealand dollar (NZD)

👉 All forex trades involve two currencies that form a currency pair. Forex trading relies heavily on the following seven currency pairings, which are also referred to as the forex majors:

➡️️ EUR/USD

➡️️ USD/JPY

➡️️ GBP/USD

➡️️ AUD/USD

➡️️ USD/CAD

➡️️ USD/CHF

➡️️ NZD/USD

👉 For each currency pair, the current rate of exchange between the two currencies is represented by the two currencies in the pair. For example, because it is the most popular pair, the EUR/USD can be used as an example to explain how a forex pair works.

➡️️ On the left traders will see the base currency, which is the euro.

➡️️ The quotation currency is represented by the US dollar on the right.

➡️️ The exchange rate refers to how of the quote or counter currency Nigerian traders need to purchase a single unit of the base currency. Subsequently, the base currency will always be expressed as a single unit, with the quote currency varying according to the current market and the amount needed to buy a base currency unit.

➡️️ For example, if the exchange rate between EUR/USD is 1.2, it means that it will cost traders 1 EUR to purchase 1.20 USD, or it would cost them 1.20 USD to purchase 1 EUR.

➡️️ When the exchange rate increases it means that the base currency has appreciated and if the exchange rate falls, it means that the base currency has depreciated.

👉 Nigerian traders must note that the base currency is normally listed first, followed by the quotation currency.

👉 However, historical practice dictates that certain currency combinations be represented differently. Conversion rates between the United States Dollar and the Euro are displayed as EUR/USD rather than USD/EUR.

How can Nigerian Traders Start Trading?

What is Forex Trading

👉 Investing in the stock market is a lot like FX trading. To begin a forex trading career, Nigerian traders can follow these simple steps.

✅ Learn about Forex

➡️️ If Nigerians are new to trading, they need to take the time to learn as much as they can about forex. Nigerian traders must acknowledge that forex trading typically offers higher leverage ratios than any other financial market. In addition, the factors that drive the forex market are also different to those that drive equity market prices.

👉 Any political and economical news in Lagos, Nigeria can spart volatile movements in the forex market, either in an upwards or a downwards trend.

👉 Traders who are just starting out have a plethora of training material, books, courses, classes, and other educational materials, tools, and resources at their disposal to ensure that they are thoroughly educated in forex trading.

✅ Choose a broker and set up an account

➡️️ To get started in forex trading, Nigerian traders need to open an account with a brokerage firm. Some forex brokers make up their fees by charging a flat commission on trades.

👉 However, other Forex brokers do not impose any fees for trading. It is instead via the spread in forex trading (indicated in pips) that exist between the purchasing and selling prices that they earn their money.

👉 Micro accounts are ideal for beginner Nigerian traders because they have lower capital requirements, lower degree of risk, and smaller positions size of 1,000 units of base currency, in this case, Nigerian Naira depending on whether they are buying or selling currency.

👉 To put things in perspective, one normal account lot is equivalent to one hundred thousand dollars. With a micro forex account, Nigerian traders can learn the basics of forex trading and find out what kind of trading strategy works best for the trader.

👉 While the CBN approves forex trading and provides a regulatory framework, it is the responsibility of Nigerian traders to ensure that they only use the services of regulated brokers.

✅ Develop a trading strategy

➡️️ Having a trading strategy can help Nigerian traders define broad rules and a road map for trading, even if they cannot always foresee and time market action.

👉 The truth of the trader’s financial circumstance, any financial restrictions, and trading goals should be the foundation of any sound trading plan.

👉 Traders must consider how much money they are willing to invest and the degree of risk they are prepared to face to avoid losing their initial deposit. It is important to remember that forex trading is a high-leverage business. Those who are prepared to take the risk, however, will reap greater benefits.

✅ Traders must remain on top of their numbers

➡️️ The fourth rule of trading is to verify the positions every day after the trading day has ended.

➡️️ There is already a daily accounting of transactions provided by most trading software. If Nigerian traders have any open positions that need to be closed, they must make sure that they have enough money in their trading account to cover any future transactions.

✅ Ensure emotional Equilibrium

➡️️ Beginner forex trading may be a roller coaster of emotions, with many unresolved issues. There are many uncertainties in forex trading and unanswered questions.

➡️️ Subsequently, it is critical to maintain a level of emotional stability regardless of the trading positions’ successes or failures. When it is time to close a position, traders must be strict about it.

Forex Trading Strategies

Forex World Map

👉 Nigerian forex traders use forex trading strategies, despite whether they are active traders who have a forex career, or they trade when they are home.

👉 Trading differs from gambling and guesswork in that it relies on a plan to guide a trader’s choices. Many traders build their trading systems from the ground up by taking components from other traders’ work and modifying them to suit their own requirements.

👉 Forex signals and technical indicators are typically part of a currency trading strategy. Using a forex trading signal, traders may get a sense of the market’s entry and exit locations.

👉 Automated or manual approaches may be used to identify these signals. Trading chances are found by examining chart patterns and averages using manual approaches. Trading signals are generated, and transactions are executed automatically by algorithms based on a variety of predetermined circumstances.

👉 Nigerian traders can utilize a wide variety of trading methods to help them make smarter selections when it comes to trading. Technical analysis, as well as fundamental analysis, may be used together in forex trading methods, just as in other trading systems.

👉 Traders can subsequently construct a more well-rounded trading strategy by combining elements of both technical and fundamental analysis.

👉 Any forex trading strategy selection criteria must first be established. Nigerian forex traders must consider the following to help them narrow down the search on an ideal strategy:

➡️️ The time that the trader can dedicate to trading forex

➡️️ The forex pair that the trader wants to focus on

➡️️ The position size

➡️️ Whether the trader wants to enter a long or short position

👉 Traders use the following forex trading methods to organize their trading activities. These tactics may be used in any financial market, not only the currency market.

👉 To be an effective trader, Nigerian traders must first identify their own style of trading. In addition, traders can open a virtual trading account to practice and test forex trading tactics.

Forex Scalping

👉 Scalping is best suited to forex traders that like short-term transactions lasting only a few
minutes, or those who want to take advantage of many market changes.

👉 With forex scalping, the goal is to make modest but frequent profits while also trying to keep losses to a minimum while trading NGN. As a result of the huge leverage used in these short-term deals, a trader might still suffer large losses.

👉 This forex strategy is best suited for Nigerian traders who can devote the necessary time and attention to the larger trading volumes and the resulting quick transactions. The following are times of high trade volume:

➡️️ Between 8 am and 12 pm (GMT) when the New York and London stock exchanges operate.

➡️️ Between 7 pm and 2 am (GMT) when the Tokyo and Sydney exchanges operate.

➡️️ Between 3 am and 4 am (GMT) when the Tokyo and London exchanges are operational.

👉 The best forex pairs to trade using scalping strategies are as follows:

➡️️ EUR/USD

➡️️ USD/JPY

➡️️ AUD/USD

✅ Day trading in the Forex market

👉 Day trading is an alternative to scalping if Nigerian traders wish to trade for short periods but are not comfortable with the fast-paced nature of the method.

👉 Each day, on average, just one deal takes place, and it is not held overnight. Intraday price movements in the relevant currency pair determine profit or loss.

👉 Because of the time and effort required for this form of trading, Nigerian traders need to partner with a broker that can grasp economic performance and factors that might have an impact on their trade.

👉 Subsequently, the trading position may be adversely affected if any important economic developments occurred on that day.

✅ Swing trading in the foreign exchange market

👉 Traders who want a mid-term trading strategy that allows them to hold positions for many days might use swing trading, which tries to benefit from movements in price. Even while it requires less attention to the market than does day trading, this method exposes Nigerian traders to overnight or gapping disruptions.

✅ Position Trading

👉 Traders with the greatest patience may choose forex position trading, which does not pay as much attention to short-term swings in the market and instead concentrates on the long run.

👉 Investors who have a long-term view of currency markets may maintain holdings for months or even years at a time. Long-term gains are expected from this method. Position trading in Forex is best suited for Nigerians who cannot devote hours of their day to trading but have a deep grasp of market basics.

✅ Carry Trade

👉 Borrowing money at a lower interest rate from one currency pair and investing it in another with a higher interest rate is known as a “carry trade.” Based on the currency combination, this method might be either beneficial or negative to Nigerian traders. It is all about taking advantage of the “interest rate disparity” between the two currencies.

10 Best Forex Brokers in Nigeria for 2022

Rank

Broker

Review

Regulators

Min Deposit

Official Site

#1

AvaTrade Islamic

4.8/5

User Score

#2

4.7/5

User Score

#3

4.5/5

User Score

#4

FXChoice

4.4/5

User Score

#5

4.7/5

User Score

#6

4.6/5

User Score

#7

4.7/5

User Score

#8

4.8/5

User Score

#9

4.7/5

User Score

#10

4.7/5

User Score

Forex Charting

👉 In forex trading, there are three sorts of charts. They are as follows:

➡️️ Line Charts

➡️️ Bar Charts

➡️️ Candlestick Charts

✅ Line Charts

👉 A currency’s larger movements may be seen using line charts. A candlestick chart is the simplest and most often utilized chart style in the forex industry today that Nigerian traders can use. For the given periods, they show the currency’s closing trading price on an hourly, daily, or weekly basis.

👉 Trading techniques can easily be developed using the trend lines that can be seen on a line chart. Price breakouts or trend shifts may be detected using the information contained provided in a trend line, for example.

✅ Bar Charts

👉 In the same way that they are used in other contexts, bar charts are employed by advanced Nigerian traders to illustrate trading periods. Bar charts are known to be more informative than line charts, albeit being a little more complex.

👉 Each bar on the chart represents a single trading day and includes the starting price, the highest price, the lowest price, and the closing price of a deal.

👉 The trading day’s opening and closing prices are shown by dashed lines on the left and right, respectively. When prices rise, the colour green or white can be used to represent that, while when prices fall, the colour red or black is typically used.

👉 Currency traders may use bar charts to determine if the market is a buyer’s or a seller’s market.

✅ Candlestick Charts

👉 Japanese rice dealers employed candlestick charts for the first time in the 18th century. They have a more pleasing appearance and are simpler to understand than the previous chart kinds. To show the opening and highest price point of a currency, Nigerian traders utilize the top section of a candle, while the bottom portion of a candle is used to show the closing price and lowest price point.

👉 A down candle is coloured red or black, while an up candle is coloured green or white and signifies a time of rising prices. Candlestick charts may be used to determine the direction and movement of the market based on the formations and shapes they display.

👉 Candlestick charts often use the hanging man, and the shooting star patterns.

Forex Trading Risk Management

👉 Young Nigerians have become dedicated fans of forex trading, making it one of the most popular ways to make money in the country. Mobile devices and desktop computers can both use it, and it is accessible all the time, making them a great deal less expensive than other options. The only requirements are a cell phone and some capital.

👉 Mobile trading platforms have become extremely popular in Lagos as it allows Nigerian traders to remain updated on their trading while they travel.

👉 Regardless of the broker, 60-90% of traders who engage in Forex trading lose money. It is common for traders to lose money because they do not have a risk management plan in place to limit their losses.

👉 There are a few basic techniques to reduce risk when developing a good risk management plan:

➡️️ Use a well-regulated broker

➡️️ Keep leverage usage to a minimum

➡️️ Trade Major Currency Pairs

➡️️ Use a reputable copy-trading platform

➡️️ Use stop-loss orders

➡️️ Make use of a broker who is properly regulated

👉 Even though it seems clear, a large proportion of new traders fall victim to Forex trading scams or deal with unlicensed brokers despite this fact. Anyone claiming to be a “Forex expert” on social media should be avoided if there is no proof backing this claim.

👉 The licenses of all properly licensed brokers are listed at the bottom of their websites, and a quick check with the appropriate authorities reveals whether they are. When Nigerian traders use well-regulated brokers, they are given access to negative balance protection. This is a vital risk management tool that ensures that the trading account does not go into a negative.

👉 Nigerian traders can try their trading strategies using a demo account, with the most popular brokers offering this option. The practice account works in the same way as a live account but uses virtual money until traders are ready to trade real money.

➡️️ Keep leverage usage to a minimum

👉 Nigerian traders must be aware of the leverage that they are employing once you begin trading on a live account. While increasing trading capital to more than 1,000 could seem like a good idea, the impact that leverage can have will apply to any losses that the trader incurs.

👉 Some brokers provide leverage of 1:1000 or even 1:2000. Until traders are confident about the impact of leverage on their trading, they should stick to a leverage ratio of no more than 1:100.

➡️️ Trade Major Currency Pairs

👉 All currency pairs that include the US dollar are considered major forex pairs, with these also the most stable currencies.

👉 Forex brokers offer major currency pairs, but it is not common for brokers, even prominent names, to offer smaller, less liquid, and popular currency pairs such as the EUR/TRY (Euro/Turkish Lira), NGN/USD (Nigerian Naira/US Dollar), or the AUD /MXN (Australian Dollar/Mexican Peso).

👉 When trading exotics, Nigerian traders should be aware that they are riskier and more expensive than trading major and minor currency pairs.

➡️️ Make use of a reputable copy-trading platform

👉 Keeping an eye on the markets all day is not feasible for many new investors. Fortunately, copy trading is available from brokers and individual signal providers. Beginner Nigerian traders can use copy trading services to imitate the trades of more experienced traders, and the brokers take a tiny percentage of the profit.

👉 To help new traders choose a signal provider that meets their needs, most copy-trading firms tend to indicate each experienced trader or signal provider’s success rate, risk profile, and a maximum single loss.

➡️️ Always employ stop-loss orders

👉 Nigerian traders must always use a stop-loss on every transaction they open to avoid significant losses in Forex trading. When the price reaches a certain level, a stop-loss order will automatically terminate the transaction.

👉 It is only natural for traders to want to stay on to a losing transaction in the hope that one day, it will turn around and be lucrative. However, this is not the way it always turns out, with most traders experiencing significant losses at this point.

👉 A stop-loss order is one of the most potent weapons in a well-seasoned Nigerian trader’s armoury since it may either avoid a loss or lock in a little profit.

Forex Trading Platforms

👉 Many novice Nigerian forex traders struggle with the sheer volume of information on trading platforms and their inability to use them effectively while learning how to trade.

👉 For clients of forex brokers, trading platforms are software applications that allow them to participate in the foreign exchange market. Trading platforms can be used across a series of devices, and they can either be web-based terminals, a mobile app, or software application.

👉 Traders can use trading platforms to place buy and sell orders in the foreign exchange market. For the benefit of their customers, forex brokers make these tools readily accessible. Many brokers today offer a proprietary trading platform or trading app that can be used for order processing and research.

👉 Online trading platforms for individual and institutional customers are available from a broad range of brokers. Banking and brokerage firms may also construct their own custom trading systems to fulfil their own internal demands, which are then implemented through institutional trading channels.

👉 Several platforms provide forex charting programs that Nigerian traders can use in combination with other technologies, such as predictive forecasting software and online trading, to get an advantage in the forex markets.

Pros and Cons of Forex Trading

👉 The benefits of Forex Trading While forex trading and the foreign currency market have significant hazards, they also include numerous benefits that may make them a profitable and appealing activity.

👉 Forex markets are the world’s biggest in terms of daily trading volume, which means they have the greatest liquidity available. A fraction of a second in normal market situations is all that is needed to open and close a trade in any of the major currencies.

👉 There is a great deal of flexibility for Nigerian traders because of this and the fact that the market runs around the clock. Even those who are employed full-time might participate in Forex trading on the weekends or at night to relieve stress.

👉 Unfortunately, this is not something that many Nigerian traders can do in either the stock or bond markets in Nigeria. Because of this, part-time traders prefer Forex trading because it allows them a flexible trading schedule that does not conflict with their full-time occupations.

👉 The forex market offers a broad range of trading opportunities for investors. Hundreds of currency pairings are available for trading by any type of individual Nigerian trader regardless of their trading style or strategy.

👉 Spot transaction or a future agreement are two more options available to them. To fulfill the demands of Forex traders, futures contracts are available in a variety of sizes and with a variety of maturities. As a result, the Forex market has a trading strategy for any investor’s budget and risk tolerance.

👉 In comparison to other markets, the forex market has minimal trading costs. Comparatively, the transaction costs of Forex trading are exceptionally cheap when compared to dealing in other markets, with Nigerian traders able to start with small initial Nigerian Naira deposits.

👉 This is because the Forex market is run by dealers who issue two-way quotes to cover their own risks. In terms of financial asset markets, forex markets have the biggest leverage.

👉 Investors can use leverage in forex trading to boost their initial investment up to 20-30 times because of the setup of this trading tool. Both earnings and gains are increased because of this. Even though Forex market moves are often minor, retail traders wind up making or losing a large amount of money due to leverage.

👉 Nigerian traders do not have to maintain as detailed records of their trading operations as dealers in other markets do to disclose their profits and losses on a tax return, thus simplifying the tax computation process.

👉 Automated trading techniques are also well suited to Forex trading. To automate trades, forex traders must first learn how to program entry, stop-loss, and limit prices in advance.

👉 Participants in the foreign exchange market have the option of trading on specific price movements or other market circumstances.

👉 Cons of Trading in Foreign Exchange
Several aspects and situations might make effective trading in the forex market more difficult than it seems. The following are some of the drawbacks of forex trading to keep in mind.

👉 Every market, including the currency market, can experience periods of high or low volatility. For short-term earnings, forex traders may be subjected to unanticipated severe volatility, which might render their currency trading tactics unprofitable.

👉 On the global forex market, significant participants such as a network of banks, hedge funds, and other huge financial institutions still make up most of the trading.

👉 They have a natural edge in establishing pricing and influencing price changes in the market because of their volume of trade and their superior access to information and technology.

👉 There is no centralized exchange for forex trading in Lagos, Nigeria, and regulatory control may be lax at times since it is an “over-the-counter” market, with the Central Bank of Nigeria unable to oversee all transactions due to their sheer volume.

👉 Therefore, before opening an account, Nigerian traders should do “due-diligence” research on the reputation of their forex broker and trading methods, especially before they decide to invest funds.

👉 Investing in stocks and bonds can increase the long-term net worth of traders more than foreign exchange because of the interest and dividends that are paid out regularly. It is common practice in the forex market to seek financial gains from the appreciation of one of two currency pairs.

Frequently Asked Questions

How do I become a forex trader in Nigeria?

  1. First, make sure that you have an online connection. 2. Choose a forex broker.  3. Open a trading account. 4. Fund the account. 5. Install the trading platform. 6. Start your forex trading journey.

How much do forex traders in Nigeria earn per day?

How much you will earn per day with forex trading depends on how much capital you invest, your particular strategies and risk levels. When you are averaging a monthly profit of 3%-7% you can consider yourself a successful trader.

How much capital do I need to start forex trading in Nigeria?

You can start forex trading with as little as NGN 1000.  Many forex traders consider it safe to never risk more than 5% if their capital on a single trade.

Do I have to be licensed to trade forex in Nigeria?

It is legal to trade forex in Nigeria with your own capital;  however, if you intend to trade with investor’s capital you will need a license.

Which African country has the most forex traders?

When you take into account the market size, Nigeria is the country with the most forex traders in Africa.

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