How to Trade Forex in Nigeria: A Beginner’s Guide
Table of Contents
- What is Forex Trading?
- Tips to Be a Successful Forex Trader in Nigeria
- Define your Goal as a trader
- Chose a Reputable Broker
- Understand Brokers policy
- Choose a Consistent Trading Methodology
- Determine your entry and exit point
- Don’t risk more than you can afford to loose
- Avoid trading multiple correlated trades
- Keep a record of your trade
- Which trading method should you use?
- Understanding Forext Trading Terminlogies.
- Forex Market Driving Forces
- Forex Trading Signals: Why You Need Them?
- What Are Forex Trading Signals?
- How Can Forex Trading Signals Be Used?
- Where to Get Forex Accurate Trading Signals?
- Reliable Forex Brokers in Nigeria
The Nigerian economy has been growing rapidly in recent years. With the increase in economic activity, so too has the interest of Nigerians in trading Forex as a business or for their own personal use.
The process can be confusing at first and it is important to fully understand how to trade Forex before you start.
It covers all of the fundamentals of Forex trading – from what it is and why people trade it, to how investors can make money by correctly predicting currency prices.
What is Forex Trading?
Forex, or foreign exchange trading, is the process of exchanging money from one country’s currency for another. It involves taking a position on how different currencies are going to change in value relative to each other and then buying these pairs of currencies accordingly.
When forecasting what will happen with Forex rates over time, investors study economic reports and data in order to identify patterns, make predictions about future trends, and then invest accordingly.
The Forex market is global with millions of people worldwide trading currencies at any given time.
Forex can be a risky business that attracts the interest of many traders. The risks are often worth it because there’s usually a lot of potential for profit.
A major factor in the risk-reward ratio is leverage, which refers to borrowing money from a broker and using it to invest in Forex markets. Leverage can magnify gains but also losses.
Forex trading involves two currencies, so traders must first identify what they want to trade before examining pricing. Nigeria forex traders have to look at the Nigerian Naira and also what other currencies are being traded in Nigeria. If you want to trade with more than one currency, then a trader will need an account that supports multiple currencies.
Forex traders who do not know how to read charts may find it hard to make decisions on where and when to trade. Forex trading is now easier in Nigeria than what it used to be. Also the country now has more are brokers than it did before.
Nigerian Forex traders can trade online or in person, depending on what the individual is most comfortable with. There are many factors to consider when trading Forex and a trader may need assistance at first until they get more experience.
Tips to Be a Successful Forex Trader in Nigeria
Trading skills come from experience and a trader must be willing to learn. The Forex market is 24 hours, so traders will need to find the time that suits them best.
Decide on an account with minimum requirements such as trading volume or experience level before making any trades. A good starting point would be taking online courses that can help you to learn.
Some brokers offer free courses such as Investopedia, which is a good place to start and get an overview of Forex trading. One can also sign up for seminars or webinars that are offered by some brokers for the same purpose.
Define your Goal as a trader
A trader’s goal will be determined by his or her objectives. One could set a realistic and achievable target, such as to generate positive returns on their trades over the course of three months.
It is important for traders to understand that not every trade they make will result in a profit; losses are part of trading too! Having a clear cut goal in mind will help traders to stay focused and disciplined when trading.
Chose a Reputable Broker
When it comes to choosing a broker, there are many factors that one should consider. In general, the more experience a trader has in Forex trading and other investments, the higher their risk tolerance level will be.
Many brokers have low minimum deposit requirements for new traders or those who wish to trade with small amounts of funds.
Understand Brokers policy
It is important that traders understand the broker’s policy on withdrawals.
Brokers will have different policies, such as requiring withdrawal requests to be made at a certain time of day or week, and/or trading a specific amount before withdrawing funds.
Different brokers also offer various types of deposit methods, which may include bank wire transfers.
Choose a Consistent Trading Methodology
Having a trading methodology is essential, as it will help traders take the necessary steps to make sound decisions about when and how much they trade.
Consider some of these different methods:
Technical Analysis involves making trades based on an analysis of historical price movements, while Fundamental Analysis examines economic indicators such as GDP or unemployment rates in order to make trading decisions.
Trend Trading emphasizes the importance of following and taking advantage of trends in market movements, while Swing Trading involves holding trades for a longer period of time until certain patterns emerge.
It is also important to keep up with current events that may influence forex rates – global economic developments (such as interest rate changes), geopolitical factors and more.
Determine your entry and exit point
Know to use charts and other factors to determine your entry and exit points in your trading, Forex charts as an entry point, and stop-loss points for exit.
Forex traders make their buy or sell decisions based on price movements in a currency pair.
Don’t risk more than you can afford to loose
When trading Forex, know that your account balance is the only thing at stake. Therefore, you should not risk more than what you can reasonably afford to lose in a trade.
Avoid trading the same currency pair with two other related currencies that are also correlated to each other, this can lead to a situation where you could lose on all your trades if one of them moves against you and it is almost impossible to predict which will happen first.
Keep a record of your trade
It is important to keep a record of your trades, because you can learn from them and see how successful or unsuccessful they were. Print out chart records and keep them in a safe place so they are accessible for future reference.
Study patterns and tendencies so you can be more successful in the future. Keep a journal of your trades and refer back to them often for ideas on what to trade next, or how to refine strategy.
Which trading method should you use?
It depends on what your goal is – whether it’s to make a quick buck or grow and maintain the value of an investment. Some people also choose different methods for different types of trades (for example, day trading versus swing trading). Ultimately, only you can decide which strategy suits your personal.
Understanding Forext Trading Terminlogies.
Pip in forex means the smallest unit of price in a foreign exchange transaction. It is also the term for one hundredth, or 0.0001, of a currency unit
Pips are used to measure investments as they change from minute to minute and give traders an idea how much their trades have made after executing them. A pip value ranges between -100( pips) and +100(pips).
When trading on the Forex market, there are two types of orders that traders often use. A limit order is an instruction to execute a trade at or better than a specified price; while a stop-loss order is used as protection against sudden changes in prices.
Spread means the difference in the bid price and the ask price. A spread is a small, but important cost for investors who trade on margin or use leverage to execute trades which magnifies gains as well as losses by using money borrowed from brokerages.
If market participants think currency rates will move up, they buy; if they believe rates will drop, they sell. The trader is able to buy and sell the same currency at a price that is different from the market’s spot rate, or current exchange rate.
A large gap in forex rates will cause traders to take advantage of this difference by opening trade positions on one side of the spread while closing their position with an offset.
Bid or ask price is the price that a currency is offered for sale or purchase at any given time. They are called bid and ask prices because when you place an order to buy, we will offer it to a seller on your behalf with one of two conditions: they want to sell their market (ask) or if someone wants to buy from them (bid).
Quote currency is the one you’re buying or selling. It could be USD, EUR, GBP or any other major currency.
Spot rate refers to the current exchange rate between two currencies at a given point in time. This is also often referred to as “the market price” and it’s what you’re actually trading.
A long position is when an investor or trader buys a currency with the expectation that its value will increase in time, and then sells it at a profit. This can be done by entering into a buy/long trade for any of the currencies available on the platform such as USD, EU.
Base currency is the one being bought or sold. The Base currency usually appears on the right-hand side of a currency conversion.
A short position is when an investor or trader sells a currency with the expectation that its value will decrease in time, and then buys it back at a lower price to make up for their loss. This can be done by entering into a sell/short trade of any of the currencies available.
Forex Market Driving Forces
The Forex market is driven by a number of forces. They include supply and demand, the interest rate differential between two countries, central banks, economic data releases from various countries, geopolitical events such as natural disasters or political unrest that impact trading activities in the world’s major currencies.
Forex Trading Signals: Why You Need Them?
As a Forex trader, it is important to know the various signals that are available. These help you make better trading decisions and avoid mistakes. In this post we will discuss what they are, how to use them and their importance in your trading strategy.
What Are Forex Trading Signals?
Forex signals can explained as an alert or notification telling the trader that some event has happened and it may be worth trading based on this event.
How Can Forex Trading Signals Be Used?
Signals can help in two ways: they either indicate a possible buy signal, which means traders should look to open new long positions; or a sell/short signal, which means traders should look to open new short positions.
Forex Signals Are Indispensable For The Forex Trader. Signals are very important when it comes to trading because they provide extra information for the trader that is not found on price charts or news stories and can help them make better trades with a higher probability.
Where to Get Forex Accurate Trading Signals?
Forex signals can be found at a number of sites and the trader is advised to research them thoroughly before deciding which one they will go with.
Reliable Forex Brokers in Nigeria
It is difficult to determine the best broker for a Forex trader in Nigeria. However, there are some that stand out from the rest like NairaEx and FBS Capital Markets (FCM).
Nairaex has many advantages when it comes to trading because no matter where you live or what currency you trade with they have a solution that works for you.
FCM is the best Forex broker in Nigeria because they offer traders with great packages at an affordable rate and also trade on more than one currency. They have offices in Lagos, Abuja and Port Harcourt which make it easy to visit them if any problems arise or questions are needed answered.
HotForex is a good broker, but only offers one currency and is more expensive than NairaEx. Hotforex is an excellent broker for beginner traders who are looking to invest in the Nigerian market.
They offer a wide range of trading services, including low-cost trades and high order execution rates on all major currencies.
Many brokers have been known to break regulations or unfairly manipulate markets; with Hotforex you can rest assured that these issues will not arise as they specialize only in STP (straight through processing).
OctacFX is a good broker, but may be better for traders who are looking to trade in more than one currency.
OctaFX is an all-inclusive forex broker that also accepts Nigerian clients. They offer competitive trading conditions with fixed and variable spread MT4 accounts, local Nigerian deposit & withdrawal methods, and multiple platforms to trade on including mobile web or desktop for those who are always on the go!
Their low-cost trades and high order execution rates on all major currencies make them an excellent choice for beginner traders.
XM forex is a great choice for Nigerians, but it’s not an STP broker. XM Forex is another broker that we definitely recommend to new Nigerian traders. If you are looking for a brokers regulated, offers 100% order execution in less than 1 second, has low spread and free research- look no further! XM also supports multiple platforms including mobile trading apps so the choice of when or where one trades is all up to them.
The only downside with XM? They don’t have an office located on our turf but they’re coming soon, hopefully.