How To Start Forex Trading in Nigeria
Forex trading in Nigeria is gaining momentum and awareness is at an all-time high. This article is aimed at educating you on forex trading, information on reliable forex trading brokers, how lucrative is forex trading, advising on the available forex trading strategies and short details about successful forex traders in Nigeria. As regards successful traders in Nigeria, let us warn you that this article does not in any way endorsing anyone, we strongly advise against investing your money with any trader, and our facts on how successful these individual are is not verifiable, so act with caution.
Forex trading can be regarded as the trading done in foreign currencies. Other names forex trading is known with include Forex Exchange or FX. Another simple definition for forex trading is the trading of one currency for another for profit and loss. For example, exchanging of Pounds or Dollars (Foreign currencies) for Naira (Nigeria Local Currency) and vice versa. This definition is just a basic way of interpreting forex trading as no broker presently offer naira pairs. The popular currency pair is EURUSD, USDJPY, GBPJPY, AND USDCHD.
What does this mean?
Let us assume I bought USDJPY at a certain value, to make a profit, I would have to wait for the price to rise (bullish) and sell the pair again for profit. A drop in price means I am losing money.
Terminology in Forex Trading
You may probably not know anything about Forex trading in Nigeria as a newbie, but have heard about how people have made opportunities for themselves using the platform for business.
Forex trading can be an alternative source of income in Nigeria since it is similar to what banks and bureau de change do. Forex trading business practically involves the prediction of the outcome of a particular trade market.
If you are not too familiar with Forex trading yet, lets quickly go through some common terms used in the trade.
This is the type of currency you spend or get rid of.
The basic idea of Forex trading is selling one currency to purchase another. The quote currency is the currency you are purchasing. The amount you spend on quote currency to purchase base currency is based on the exchange rate.
When you want to buy quote currency and sell base currency is called a short position. For instance, you would want to sell British pounds to buy U.S. dollars.
A long position is the opposite of the short position. It is when you buy base currency and sell quote currency. In other words, you would want to purchase British pounds by selling U.S. dollars.
This is the price which your broker is willing to buy base currency in exchange for quote currency. The bid is regarded as the best price you are willing to sell your quote currency on the Forex market.
This is the price your broker is willing to sell base currency in exchange for quote currency. The ask price is regarded as the best price available you are willing to buy from the Forex market.
A spread is referred to as the difference between the ask price and the bid price.
Types of Forex Markets
There are three types of Forex market in operation right now, they are:
- Forward Market: In a forward market, there is no trading of actual currency, rather specific prices are set. There are contracts representing certain currencies and settlements are made in the future. It is mostly used by the government and big corporations.
- Future Market: Future market used to be the most popular foreign exchange market for traders. This is because it is available to individual investors for a longer time compared to the other types of markets. Nowadays, most companies trade in this market mainly to protect themselves from a possible surge in the future foreign exchange rate.
- Spot Market: Most traders refer to spot market as the Forex market because it is the basis of the other two types of Forex trading markets. In this market, currencies are traded based on the current price of the market. The Forex prices are automatically determined by the forces of supply and demand among other factors.
How lucrative is Forex trading in Nigeria?
Nigeria has over the years depended on crude oil as the only means of generating revenue for the country. There have been calls recently for Nigerians to look into other sectors like agriculture, tourism, and solid mineral to help our already battered economy.
Forex trading is a very lucrative business that Nigerians need to pick an interest in. It has its own risks but when you put the necessary things in place, then you can rest assured to make profits.
One major reason why Forex trading in Nigeria is very lucrative is the fact that only a few Nigerians are aware of the trade and the economy of the country puts Nigerian traders in a better position. As it is today, the value of the US dollar is bigger than our Naira.
You can actually start Forex trading in Nigeria with as little as $100, but you have to take time to study how the global economy works before you start trading with a bigger amount. The Foreign exchange market is dynamic, so it is possible to invest just $100 and make huge profits and the possibility of losing is not ruled out. Forex trading can be very lucrative when you use the right strategy so as to know the right time to invest.
Remember that the foreign exchange market cannot be accurately predicted but you can make guesses based on how you see the trend of the market.
How to make predictive profitable decisions
The secret of making profits in Forex trading in Nigeria is to look at the market situation and make a predictive decision about the economy. You can invest in the trade if you believe that the U.S economy will continue to weaken for a continuous period, then you would probably want to sell dollars in exchange for a currency from a country with a strong economy.
Let’s use Nigeria for instance; the country has high demands for goods which are likely imported from foreign countries. The countries that export all the goods to Nigeria have an advantage of boosting their economy and adding more value to their currencies. In this case, it is wise to sell Nigeria’s currency in exchange for the currencies of the other countries because they have stronger economies.
Let’s also consider politics. When a country is having an election, then the country’s currency will appreciate if the winner of the election has an agenda that is fiscally responsible. For example, when president Buhari won 2015 election, the value of Naira depreciated against the U.S. dollar. This is because economic factors such as unemployment and inflation always have an effect on the value of a country’s currency.
To succeed in Forex trading in Nigeria, you will need to be a very quick thinker and also very calculative because both your profit or loss depends on the trend of the market when you are investing.
Learn how to calculate your profits
A pip is used to measure the difference between the values of two currencies. Usually, 1 pip is measured as equal to 0.00001 of a change in value. For example, if you dollar trade moves to 1,547 from 1,456, it means you currency value has increased by 10 pips. Multiply the number of pips that has changed your account by the exchange rate. This calculation will let you know how much your account has decreased or increased in value.
To understand this properly, you will need to open a free account with a Forex broker so that you can learn and practice the trade better. There are many Forex trading platforms you can make use of as a Nigerian and we will talk much more about them later.
Before you venture into any business, it is important to know what the business is all about and the best approach to take that will enable you to make the best of such business. For forex trading in Nigeria, there is a need for you to know how the market operates before investing in it.
Don’t just jump into the trade but analyze the market. There are different methods you can use to analyze the market. Below are three types of analysis you should consider.
- Technical Analysis: This type of analysis involves reviewing historical data and reviewing charts to predict how the currency will move based on past events. These charts can be obtained from your brokers or by using popular platforms such as Metatrader4.
- Fundamental analysis: Fundamental analysis involves analysis taken by looking into a country’s economic situation and using the information gathered to influence your trading decisions.
- Sentiment analysis: This type of analysis is subjective. In this analysis, you try to analysis the mood of the market to know if it’s “bullish” or “Bearish”. It is not every time that you will need to put your finger on market sentiment but you can sometimes make a good guess that can influence your trade.
Why Nigerians fail in Forex trading
Many Nigerians have not been successful in Forex trading because they have not taken the relevant time to study what Forex trading is all about. Some people just jump into the business simply because they have heard about the profits involved in the business without having the required knowledge of how to run the trade.
It is a common practice for Nigerians to call any business “Scam” when they do not understand how the business works. Many Nigerians have considered Forex trading in Nigeria as a scam, the same way they even do to banks because they deduct money from their bank balances for what they do not understand.
The following are major reasons why Nigerians experience failure in Forex trading.
- Lack of knowledge
Many Nigerians fail in Forex trading business because they don’t bother to equip themselves with the right knowledge about the mode operation of the business. They also do not make proper research so that they can know what the business entails.
Another problem with Nigerians is their over assumption. After reading one or two pdf files on Forex trading, they consider themselves gurus and don’t bother making the necessary consultation before starting the trade.
Over 70% of Nigerians that have lost their money in Forex trading business did so because of their greed. An average Nigerian wants to buy cars and build houses without actually working for it or by just putting a little effort.
It is important that Nigerians know that the business requires patience, and it is not a “get rich today” scheme. Be careful of offers that look too good to be true.
- Lack of good Mentors
There are some people that parade themselves both online and offline as mentors, telling you that they can teach you how to make thousands of dollars monthly when they have not made a dime yet in the business.
Beware of such people because when a person makes a thousand dollars monthly, he will not bother going around advertising himself in exchange for peanuts.
If you must get a mentor, get someone that is credible and has been proven by others to be reliable. Don’t fall victim to those self-acclaimed Forex trading gurus.
- The wrong mindset
Many Nigerians still have the mentality of the 17th century. We so much believe that someone needs to work for 7am to 5pm before he can make a decent amount of money. Online few Nigerians have realized that you can actually work at home at your own convenient time and still earn money.
Although there are fraudulent businesses online, you can still deny the fact that they are legitimate businesses online that have made many people millionaires today.
There is no business without a risk but the most important thing is to know when to take the risk. Have a positive mindset and know that you can still earn a significant amount of money doing business in the comfort of your house.
How to start Forex trade in Nigeria
Before you start Forex trading in Nigeria, you should know that not all forex brokers are genuine. We have also compiled a list of recommended brokers you can make use of in Nigeria.
Open an account:
Before you open an account, go through all the recommended brokers and see the one that their style and pattern suit you. When you have chosen the broker of your choice, proceed to open an account with them. The process is simple and free.
Fund your Account:
You must fund your account before you can start a live trade. There are different methods of funding of account depending on the forex trade platform you are using. You can use direct deposit or by using your credit/debit card to fund your account. Some platforms use third-party payment platforms such as interswitch or PayPal.
Have a Domiciliary Account:
For an effective transaction, it is important for you to have a domiciliary account. It also makes it easy for you to make a withdrawal from your profit when there is any. Some traders make use of currencies but it all goes to the domiciliary accounts in the end. The domiciliary account is used for depositing funds into your Forex trading account.
High Performing Device:
most times, many people lose money in Forex trading as a result of insufficient trading devices. A good device such as a Laptop or a Tab is very necessary for efficiency and accurate performance in live market.
Fast Internet Connection:
You will also need a very fast and reliable internet connection to be able to trade without stress in Nigeria. Fast internet connection is essential because there are times you need to take quick actions and your connection must be strong. Check your area to see which of the network is best for you.
People are making a lot of profits in Forex trading in Nigeria. But it all depends on the level of skills applied. Forex trading is a type of business you grow in. you should always sharpen your skills and remain current because that is how you can make profits.
After you ensure that all the things listed above have been put in place. The next and important step to take is to start. It is advisable to start with little funds but it should be substantial enough to make reasonable profits.
Forex Trading Strategy
If you intend to become a master in Forex trading in Nigeria, then you will need to choose the right strategy that will work just fine for you. Every Forex trader has their own Forex trading strategy but still look for a news every time. Keep it in mind that, different strategies work for different individuals.
There are many Forex trading strategies but we have selected few that are well suited to the Nigerian market.
Scalping: This type of Forex trading strategy is for short-lived trades which hold for just a few minutes or even seconds. As a scalper, your concern is how the market is now and how you can take advantage of it. What a scalper seeks is to quickly beat the bid or offer spread and skim just a few points profit before it closes.
Daily Fibonacci Trade: This strategy combines Fibonacci retracements and extensions with daily, weekly, monthly and yearly pivots. The emphasis, in this case, is using the combinations with only daily pivots. It can be extended easily to longer timeframes incorporating other combination of pivots.
The Pop “n” Stop Trade: For those who have tried to chase price when it bounds away to the upside, only to suffer lose when the price goes to the opposite way, then you will need to use the pop and stop Forex trade strategy. This strategy helps you determine whether or not price will continue in the direction of the breakout. You need to know the direction of the price in other to profit from the situation.
Position trading: This is a longer-term trading approach where trades can be held for weeks or even months. Position traders mainly rely on fundamental analysis of the trade like NFP, GDP, and Retail to give a bias. For example, you analyze the fundamental of USD and determine it’s bullish. You wait for the USD to get support before you take your position because you don’t want to go long at any price.
Swing Trading: This is a medium-term Forex trading strategy where you only hold trades for days and weeks. Swing traders concern themselves with capturing a single move in the market. Traders likely buy support, trade the bounce of moving average and sell resistance. In swing trading, it is also important to learn technical concepts like moving average and candlestick patterns.
Day Trading: Day trading is a forex trading strategy similar to Swing trading but at a faster pace. In Day trading, the trades are held for only minutes and hours and trades are done during the most volatile session of your instrument because that is where you can make profits. As a day trader, you don’t need to concern yourself with the fundamentals of the economy or the long-term trend because it is irrelevant.
Successful Forex Traders in Nigeria
Despite the fact that Forex trading in Nigeria is not as popular as it is in other countries, there are Nigerians that have success stories in the trade.
Any serious minded person can make profits in Forex trading just like any other business. Determination, commitment and using the right approach or strategy are what are required to make profits. The trade is for everybody.
Here, we have a list of successful Forex traders in Nigeria, who have shared their success stories to encourage those who want to join in the trade.
Mayowa Owobamirin: He is the sales account manager at PBFX global Market. He is a binary options trader. According to him, binary option is a method that guarantees the best possible financial prospect because he has been able to, maximize profits with it. He started with just $100 but he had made thousands of dollars while trading.
Benjamin Ajimoko: Ajimoko said one’s mindset can determine his/her success in Forex trading. He said one thing that made him a successful Forex trader in Nigeria was how disciplined he was while trading. Forex trading involves winning and losing, but he was not emotional about it but he sticks with the strategy that works for him.
Blessing Ezeako: She is a trader with Lite Forex. She started trading as an alternative source of income but it has become a full-time job. To her, Forex trading in Nigeria is not a “get rich business” but when the right strategy is applied, there is no limit to one’s profits. She said, she attended different pieces of training and acquired knowledge. She advises new traders to also attend training and seminars because that was what propelled her to where she is today.
Bade Afioluwa: In a bid to try out new business, Bade Afioluwa came across Forex trading online. He decided to invest much money because he heard that it was a get rich quick scheme. But he lost all his money. However, he was able to realize his mistakes and decided to learn more before he started again. He later contacted Global Forex traders, who introduced him to better tricks of trading. That was how his success story started.
His friend and family members began to entrust their money to him when they saw how lucrative Forex trading is. He then employed a strategy that has since then yielded much profit for him. The strategy involves extracting profits from up and down trends, which result to a stream of profits that comes consistently.
He said he only trades when the timing is right and when the odds are in his favor. He is not just a successful Forex trader in Nigeria but also a coach and mentor that have trained new traders into becoming successful traders.
Forex trading brokers in Nigeria
Forex brokers are financial institutions that are licensed and regulated by the relevant authorities of countries where they operate. The Forex brokers are the ones that enable traders to access and trade the Forex market. They also play intermediary roles between the Forex traders all over the world and the Forex market.
Below is a list of Forex trading brokers in Nigeria that you can trade with.
InstaForex: With a minimum of $1 deposit, you can start trading with InstaForex with a bonus rate of 250%. They are one of the leading Forex trading brokers in the world and they are opened to Nigerian traders. They have a leverage of 1:1000. With InstaForex, nobody has a reason not to trade.
FXTM: FXTM is an award-winning broker with clients from over 180 countries including Nigeria. They have their headquarters located in Cyprus and offer a minimum deposit of $5. Their platform is easy to operate because they support MetaQuutes platforms.
EToro: One unique reason why EToro is one of the leading Forex trading brokers is that they give their users the ability to look at other user’s financial activity, which helps them to know the right decision to take. They have a minimum deposit of $200 with the trading bonus of $1000.
Avatrade: Avatrade is one of the top players when it comes to Forex trading in Nigeria. They have their headquarters in Ireland but are one of the Forex trading brokers that support traders from Nigeria. Their platform offers a minimum of $100 with 40% trading bonus.
Rally Trade: this is the only Forex trading broker in Nigeria that actually has its headquarters in Nigeria. As a means to encourage Nigerian traders, they offer welcome bonus from 40% up to 100% from the first deposit. The minimum deposit is $100 for a basic account.