How to invest in forex trading in Nigeria, how to invest in forex trading? This is a question that every beginner in the forex market wants to know. Especially in Nigeria, investing in forex trading seems like a risky business but this is not entirely true.
The concept of foreign exchange or forex trading refers to buying and selling currency on the foreign exchange market. Forex trading has become very popular among individuals and institutions whereby it is often used to manage money.
Want to start forex trading but don’t know where to begin? You’re at the right place. In this article, we are going to be discussing everything there is to know about forex trading in Nigeria, and give you details on how you can start a profitable trading career.
Points to keep in mind
- How to invest in forex trading in Nigeria
- You need to learn the basics
- Find a good forex broker
- Open a demo account and practice
- Understand the risk involved
- Open a real account when you are ready
How to invest in forex trading in Nigeria
Forex (or foreign exchange market) is a global decentralized market for the trading of currencies. In other words, it is the largest financial market in the world. The foreign exchange market is open 24 hours per day from Monday to Friday, and from 8:00 am to 5:00 pm on Saturdays.
The forex market has been around for decades, but only recently has it become accessible to the general public. This has allowed millions of people to invest in the forex markets and earn substantial profits.
Most people trade on their own or through a broker, but there are also other options available such as forex robots and automated trading software that can help you make money with less effort than manually trading yourself.
Step 1: Choose a forex broker
You can trade forex online through a broker. To choose a broker, look at the types of products they offer, their reputation and their fees. Also consider the amount of money you want to invest and the size of your account balance.
Step 2: Fund your account
Most brokers require that you fund your account before you make an initial trade. Some brokers allow you to use a credit card or electronic funds transfer to fund your account while others require bank wire transfers or checks.
Step 3: Open an account
Social security number and other identifying information such as passport number or driver’s license number if required by regulators in the country where you live or reside.
Once you open your account, you can begin trading currencies. You do not need to be a trader who buys and sells currencies at the same time because there are several types of traders in the market who sell their positions when they are no longer profitable.
The first type of trader is called a scalper who looks for small movements in price that can be made within minutes or seconds of time. Scalpers may use technical indicators to help them find these opportunities but they do not use fundamental analysis when making trades.
The second type of trader is called a day trader who makes small profits from buying and selling currency pairs during the course of one day but does not hold any positions overnight because he believes that market moves are too volatile to allow him to make a profit.
The third type of trader is called the position trader who holds his positions for days, weeks or even months and does not worry about daily fluctuations in price. Before you start trading, it is important to understand what your goals are and what type of trading suits you best.
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You need to learn the basics
The world of currency trading is a jungle and it can be very tempting to dive in without any knowledge or experience. However, if you have no idea what you’re doing, you could end up losing your money.
Even worse, you could end up losing your life savings. The best thing to do is to learn about how currency trading works and what strategies are used by professional investors.
Once you have this knowledge, you can make an informed decision about whether or not it’s right for you. Forex is short for foreign exchange and refers to the buying and selling of different currencies across borders.
It used to be very difficult for individuals to buy and sell currencies because they were locked into one country’s economy. If there was a recession in that country, then everyone would suffer from it even if they were living abroad.
Forex changed all that by allowing people to buy and sell currencies easily across borders so they could profit from economic booms in other countries while protecting their wealth during downturns back home.
There are three main types of forex traders: spot traders, swing traders and position traders. Spot traders trade directly through the spot market which means they open a position at a specific price and then close it out at another price at some point in the future.
Swing traders try to predict where prices are going within a range of time frames.
Position traders will hold onto their positions for longer periods of time with the intention of riding out swings in prices over weeks, months or even years.
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Find a good forex broker
Regulation: Look for companies that are regulated by an internationally recognized regulatory body such as the Financial Services Authority (FSA) or the Financial Conduct Authority (FCA).
Customer service: As with any business, it’s important to find out how responsive and helpful customer service is before opening an account with a particular company.
You might also want to ask friends who trade through this broker what kind of experience they’ve had with customer service representatives.
Trading platform: The type of trading platform offered by different brokers varies widely in terms of its design and functionality. Some platforms have many advanced features while others are simpler but more intuitively designed so choose carefully according to your needs.
Trade execution: Trade execution refers to how quickly your order is filled by your broker. If there are delays in this process, it could cost you money since the price may move against you while waiting for confirmation from your broker that your trade has been executed correctly.
It can also depend on whether it’s a standard account or a margin account which allows for higher leverage options than the standard. In general, however, the minimum deposit required is $250 or less.
Rates: The most important thing to look at is the spread, which is the difference between the buy and sell prices. This can range from 2 pips up to 200 pips depending on what you’re trading. Some brokers will offer lower spreads on certain currency pairs as well.
Leverage: Leverage refers to how much money is available on your account relative to how much you have deposited with them. For example, if you have $100 in your account and use 10:1 leverage then you will be able to trade with $1000 worth of currency pairs!
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Open a demo account and practice
If you want to learn more about trading stocks and ETFs, we recommend starting with the following resources:
Learn How to Trade Stocks – This tutorial explains how to buy and sell stocks on a stock market. It also includes tips for finding companies to buy, selling shares at the best time and avoiding mistakes.
Learn How to Trade Options – This tutorial explains how to buy and sell options on a stock market. It also includes tips for finding companies that may rise or fall in value, buying calls or puts and avoiding mistakes.
It’s a cliché, but it’s true: If you want to be good at something, you have to practice. The same thing goes for trading stocks. You can read all the books and articles you want about how to trade stocks but if you don’t actually practice trading stocks, it won’t do you any good.
That’s why it’s important that you open an account with a broker and start trading on a demo platform before putting real money at risk.
A demo account lets you trade with “play money” so that you can learn how the market works without risking any real money.
Once you’ve mastered the basics of trading with a demo account, then it’s time to start practicing with real money so that when the time comes to make your first trade, you’re ready!
Read more articles: Forex Trading Basics Rules
Understand the risk involved
The risk involved in forex trading is not limited to the loss of money. There are many other risks that you need to be aware of. For example, you may have invested in a currency and then the government changes its policy, which could result in your loss of money.
The following are some of the risks that you need to be aware of:
1. Risk of losing money – This is the primary risk involved in forex trading. You can lose all your money if you do not follow the right strategies and techniques while trading currencies.
2. Currency rate fluctuations – The value of currencies fluctuates over time due to various factors such as economic factors, political issues and social conditions etc.
3. Risk of losing your investment capital – A trader can lose all his investment capital if he does not know how to trade currencies properly and does not follow a good strategy for making profits from speculation on currency rates.
4. The risk of not being able to predict currency exchange fluctuations – Some traders fail to predict the fluctuations in exchange rates and lose money because they could not decide when to buy or sell their currencies.
5. The risk of investing in an unregulated market – There are no laws regulating the forex market and some unscrupulous companies may cheat their customers by offering false promises of high returns on investments.
Read more articles: Setting Up Your Own Forex Brokerage
Open a real account when you are ready
The first thing you need to do is open a real account. The second thing is find out what the minimum deposit requirements are. You are going to need some money to get started, and it’s best if you get it from somewhere else than your savings account.
While there are some forex brokers that allow you to trade with small amounts of money, most require at least $1,000 or more to open an account. If this is too much for you, then you may want to consider using an account that allows micro-trading or scalping with smaller amounts of money.
Zero Deposit Bonus – This type of bonus requires no initial deposit requirement at all; however, it often comes with high rollover requirements (sometimes as high as 200%). So if you don’t meet those requirements, then you could lose all your winnings and possibly even be charged a fee by the broker.
Free Real Account – This type of bonus also requires an initial deposit but provides traders with free trades on stocks, futures and even options! In fact, they are usually one of the best ways to learn how to trade because they allow users to try out different strategies before risking their own money with real trades.
Leverage – This type of offer allows traders to leverage their positions by borrowing money from their broker at low rates (often 0%). That means that if you invest $5,000 in your account and use leverage of 100:1 ($500), then your total investment is now $5,000 + $500 = $5,500.
Leverage can magnify gains or losses. If the asset goes up 10%, then you make 10% on the original investment plus 100% on the borrowed money. That is a total profit of 110%. On the other hand, if the asset drops 10%, then you lose 10% on both investments for a total loss of 20%.
Option contracts are sold in units called lots. A standard lot size is 100 shares (you can trade 1 share per contract). Options contracts are always traded in multiples of 100 shares per contract.
Strike price – The strike price is the price at which an option may be exercised or sold prior to expiration date. The strike price must be equal to or greater than zero and less than or equal to the current market price of underlying stock plus premium paid for buying or minus premium paid for selling.
Exercise date – The exercise date is the date on which an option owner exercises his/her rights under his/her contract. This date is most often on or before expiration date.
Expiration date – The expiration date refers to the last day that an investor can exercise his/her rights under an option contract. An option contract has no value beyond its expiration date because exercising an option after its expiration will not change its value above zero.
Read more articles: How do I Start a Forex Brokerage
End of the line
Forex trading is a lucrative financial investment opportunity in Nigeria. It is a secure, convenient and high-income generating business to many investors on the global scale.
It is easy for one to become an investor in forex trading as long as one has access to the internet, laptops, personal computers as well as ample cash reserves at his or her disposal.
An interested person may read more from different websites that specialize in forex trading through the internet and make an informed decision before setting out on an investment adventure.
Nigeria is home to millions of under-served, under-banked, and un-served consumers. This problem has been tagged as the ‘unbanked’ market which has been short-changed of financial services that could have transformed the lives of Nigerians massively.
Forex trading is one of the solutions to this serious economic and social problem facing the country in the perspective that Nigerians can now trade in foreign exchange markets directly with each other with minimal bank intervention.
The challenge however lies in how a Nigerian wishing to enter into forex trading can open a forex account with top global brands such as UBS or CitiBank despite having a valid international passport, visa and proof of physical address.
The solution is for a Nigerian to use their existing card facility from their local bank which can be used for foreign currency remittance provided by some top American card providers such as VISA or MasterCard.
We hope that you’ve found this article on how to invest in forex trading in Nigeria helpful. As always, we welcome comments and suggestions from our readers, so make sure to share your thoughts in the comments section below.
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