We would be discussing Forex Trading in Nigeria relative to the risk and potential gains.
WARNING: Forex Trading is highly speculative in nature. Do not trade what you can not afford to lose. The opinion shared in this piece is informational only and not to be considered formal investment advice.
- What is Forex Trading?
- How is Forex Trading carried out?
- What are the leading currencies with the best opportunities?
- How to start trading foreign currencies?
What is Forex Trading?
Forex (retail foreign exchange market) Trading is one of the potential ways of making money in Nigeria. It is simply based on the premise that the leading currencies used in international trading do fluctuate in value, relative to one another. The opportunity is then to rightly speculate when a currency is likely to gain value and then hedge against it.
In the simplest terms, you buy a currency when its exchange rate is low relative to another currency, and sell at the best moment when the rate increases significantly – for a profit.
How is Forex Trading carried out?
Foreign Currency Trading is not new and has existed for a very long time. It has only become more accessible to the average person through the much smaller retail market.
What has changed? The internet has become much more available in Nigeria like most of the world. Technology has since developed in the forex market with many companies developing tools intended to facilitate electronic trading and making it easy for average people to buy and sell.
The typical way to trade is to open a brokerage account with a company that specializes in offering access to global trading marketing. A healthy deposit is typically required to gain access.
Once the deposit is received, the trading company would credit the same to the trader’s account. They would typically offer a dashboard that enables the trader to monitor their balances across the various currencies.
Considering the dashboard would serve as the central point for the trading activity, it would usually include many more tools like
The best forex broker companies would usually offer software. The software could be a Windows or Mac version for laptops and desktops or a smartphone app for Apple iPhones and Android smartphones. The software would enable the trader to not only monitor their account but also carry out some trading transactions.
A factor in considering when trading remotely through a downloaded software is that an excellent and sustained internet connection is highly recommended. Added to the risk of a power outage in Nigeria, a virtual server is a strong alternative.
You can install your forex trading software on a virtual server running a Microsoft Windows operating system. Considering servers are hosted in data centres with 100% power supply and come with excellent internet connectivity, virtual servers are a strong tool in a country like Nigeria.
What are the leading currencies with the best profit opportunities?
Honestly, this fluctuates from time to time. The leading global currencies tend to have a higher volume of trading but the exchange rate between them is always changing. Factors affecting the changes include but are not limited to:
- political situations
- economic prospects
- value of the country’s natural resources (if any)
Foreign currencies are trading in pairs. The major currency forex pairs include:
- USD/EUR – US Dollar / Euro
- USD/GBP – US Dollar / British Pounds
- USD/JPY – US Dollar / Japanese Yen
- CAD/USD – Canadian Dollar / US Dollar
- CHF/USD – Swiss Francs / US Dollar
- AUD/USD – Australian Dollar / US Dollar
It is worth noting that trading the above pairs do not necessarily offer the best profits but the list is only intended to highlight the most popular ones.
How do I start forex trading?
While just about anyone can start trading in the retail foreign exchange market due to its accessibility, it might not be advisable for just about anyone. I cannot highlight the risk of losing all your invested funds enough.
If you have read this far, you are probably a beginner looking to make money. To start, you would need to go through intensive training and tutorials. Where possible, go with an offline face-to-face training with a reputable forex brokerage company who already have a verifiable result.
The only real chance of turning a profit is to have the very best of intensive training in forex trading and then buying/selling at the best moment.
I should mention that the best traders don’t have time to train others. There are some individuals whose main method of making money from forex is to offer training and tutorials for money. The don’t trade much with their own funds.
Practicing on a demo account
After training, it is still a very good idea to practice your skills and build a trading experience. Do so by opening a demo account with the forex broker you intended to trade through. All the best trading platforms would offer a demo account to beginners. You can tune your skills further here and practice what you have learned. You should only move to the live trading platform when you are very sure of your skills and have gained sufficient confidence.
Trading in the real market
Once you feel ready, you can fund your forex trading account and start trading in the real world based on the currency pairs you feel would offer the best returns on investment at that particular point in time.
Be aware of forex fraud and avoid it by all means. Don’t be greedy. Good luck!