7 Best Ways to Become a Forex Trader in Nigeria
During the past decade, it has become significantly easier for Nigerians to get involved in Forex trading with the improvement of economic growth along with the increase in disposable incomes despite economic issues that were faced in 2014.
Nigeria is one of Africa’s most populous countries, with over 186 million inhabitants with the population set to surpass the 250 million mark by 2050. Despite being an African country that is relatively prosperous, there are still some challenges that exist.
Forex trading has seen a substantial increase in Nigeria with statistics indicating that Nigerian traders trade positions worth as much as $1.25 million on a daily basis, on average.
What are the best ways in which Nigerians can become Forex Traders?
1. Formulating a trading plan
Before Nigerians who are interested in trading can start, it is important to formulate a trading plan in order to provide a guideline that will help them make trading decisions based on several factors or components such as:
• Their current level of skill with regards to trading – which can be evaluated through a skill assessment.
• Mental preparation as trading can be extremely stressful and substantial discipline is needed to avoid emotional or chaotic trading.
• Evaluating their risk level and setting an outline to manage exposure to risk.
• Setting financial goals and outlining current financial capital that can be put towards trading along with capital available to compensate for any losses.
• Based on these factors mentioned, evaluate the level of research and education necessary in obtaining adequate knowledge and skills.
• Steps toward trade preparation.
• Exit and Entry rules for trades – stop loss and take profit levels.
• Record keeping in the form of a journal to keep track of trades, successes, and failures, along with mistakes made so that improvements and adaptions can be made.
2. Learn the Forex basics
There are numerous guidelines and tutorials available to Nigerians who want to start trading Forex that offer extensive advise along with recommendations.
Beginner Nigerian traders will first have to learn about the financial markets, specifically the Forex Market along with basic keywords and terminologies that are used in Forex trading.
The Forex Market is the largest financial market, with the globally daily turnover exceeding $5 trillion. Due to such volumes, the Forex Market is the most liquid, which means that trades are executed faster and thus transaction costs are lower.
There are also numerous price movements driven by specific forces such as economic and political conditions in various countries and with price fluctuations, comes high levels of volatility which makes it challenging to accurately speculate such price movements.
Beginner Nigerian traders will need to learn commonly used terms such as:
• Currency and Currency pair
• Exchange rate
• Bid and/or ask price
• Spread and pips
• Leverage and margin
• Going long and/or going short, and more.
3. Choosing a Forex Broker
Once the beginner Nigerian trader has a fundamental understanding of the Forex Market, how it works, what the terms mean, along with other crucial information, the next step is to choose a Forex Broker that caters for the trader’s needs.
When choosing a broker, the trader must keep their trading plan in mind as this is the foundation of what they will need along with what they set out to achieve in trading Forex.
There is a vast majority of Forex Brokers and it may seem extremely intimidating at first, but by exploring the broker’s website and comparing reviews, Nigerian traders can identify brokers and narrow down a list of possible choices.
There are some key aspects that traders need to consider when evaluating brokers, such as:
• Regulation and authorization
• Fees – both trading and non-trading
• Minimum deposits
• Types of accounts and features
• Trading platform provided
• Deposit and withdrawals
• Education and research resources
• Customer Support
In addition, Nigerian traders also need to know that not all brokers do not offer their services in Nigeria, but there are, however, a few reputable, well-regulated brokers that do welcome Nigerian traders including, but not limited to:
4. ForexTime (FXTM)
5. XM, and numerous others.
4. Opening a demo account
Before registering a live trading account, beginner Nigerian brokers need to explore the offer of the broker first to see if it suits their trading needs.
Forex demo accounts are also useful to test out trading strategies along with using it as a practice account to familiarize the trader with the trading environment and it helps greatly in developing trading skills and building experience.
5. Learn to analyse the currency trends
To become a successful Forex trader and to minimize the incurrence of losses, beginner Nigerian traders will have to spend a substantial amount of time learning to analyse financial markets to identify current trends and movements in the Forex Market.
This can be done by conducting either technical or fundamental analysis, and often using a combination of both to identify not only the price movement trends, but why they are moving in a certain direction.
When trading Forex, Nigerian traders will be trading currency pairs such as EUR/USD or USD/GBP, depending on what they want to trade and, in every transaction, the Nigerian trader is essentially buying one currency while selling another.
It is crucial to understand the driving forces behind price movements when speculating a movement in either an upwards or downwards trend to prevent potential losses while increasing the gains of making profits.
6. Develop a Trading Strategy
When Nigerian traders have a more in-depth understanding of Forex Trading and what it entails, they will be in a more advantageous position to start developing a trading strategy that they can apply to aid them in making profits and minimizing risks.
There various trading strategies that can be used, and it will depend on the skill, experience, needs, limits, risk exposure, trading style and various other factors pertaining to the trader that will determine which strategy suits them.
There is no holy grail of trading strategies that will guarantee success from the first time it is used, every time that it is applied, and thus Nigerian traders need to make use of demo accounts to test their strategies.
A lot of brokers also offer platforms for strategy testing in a risk free environment. Having several trading strategies that are complex is not the way in which success can be achieved.
Professional traders only have one or two strategies that have been tested thoroughly and which are not complex. Beginner Nigerian traders need to ensure that they know their strategy inside and out, and that they master it before exploring others.
7. Start Trading in a Live Environment
As soon as Nigerian traders feel comfortable that they have sufficiently covered the basics and taken the necessary steps in preparation for a live trading environment, it is time to open their first position.
When trading, it is essential that Nigerian traders constantly manage their risks by considering the following:
• Only invest disposable capital.
• Always consider the risk tolerance and stick to the formulated trading plan.
• Keep the risk and reward ratio at 1:3
• Control risks with every trade by only investing a small portion of capital at a time.
• Ensure that risks are consistently managed, do not increase position sizes when profits are made.
• Understand and control leverage, do not abuse it.
• Always take currency correlations into consideration – how one asset evolves in relation into the other.
Trading Forex may seem like an overtly complex task at first, but by making use of guidelines and tutorials, and following steps such as indicated in this article, Nigerian traders will be well on their way to becoming more advanced traders. The fastest growing forex trading platform during Covid-19 was Exness – read the full Exness review here.
There are crucial factors that need to be taken into consideration and these parts cannot be skipped to move onto the next step as it may lead to substantial losses if traders do not educate themselves efficiently in what Forex Trading entails.
There are great rewards and substantial profits which can be gained from trading Forex, but when approaching the process with disregard, it can lead to great losses that exceed the capital of the trader.
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