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Forex trading in Nigeria – A beginner’s guide

It is believed that Nigerian forex traders trade positions worth at least $1.25 million on average every day.

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Overview

The foreign exchange market is more commonly known as the forex market. It is the financial market involved with the trading of currencies. It is the largest financial market in the world where trading volumes of more than $5 trillion occur daily.

These trades are executed over the counter, more commonly referred to as OTC. This means that transactions are executed around the world through online computer networks. In addition to being the largest market, the forex market is also the most liquid and volatile.

Liquidity refers to the ease with which an asset or a security can be converted into cash without it affecting its market price. Market volatility refers to the velocity of price changes which occur in any market.

Pro Tip: View the 26 Best Forex Brokers that accepts Nigerian traders.

The liquidity and volatility of the market is as a result of the significant amount of forex trades which occur daily and higher liquidity also results in lower transaction costs, a benefit for all traders.

Nigerian traders have access to the forex market 24 hours a day, 5 days a week, with the added benefit that trading can be done despite the trader’s time zone. This due to the fact once one market closes, another will open while some are open due to the overlap in time zones.

When considering forex trading specifically in Nigeria, forex trading has become easier in the country. The past decade reflects substantial economic growth as well as an increase in disposable income.

Nigeria is one of the most prosperous countries in Africa and it is believed that Nigerian forex traders trade positions worth at least $1.25 million on average every day.

There are also more brokers that are welcoming Nigerian traders in registering an account on their platform, allowing beginners and experts to connect to global markets.

Open A free Trading Account – Click Here

The Basics – What all Beginner Nigerian Traders Must know

Education

One of the most common mistakes that beginner traders make often is not ensuring that they have adequate forex trading knowledge. Before approaching the forex market, Nigerian beginner traders must ensure that they consult adequate educational resources to build up their knowledge.

One of the most basic areas to begin is learning common forex terms and their definitions. This will help Nigerian traders understand the forex ‘jargon’ that they will be exposed to from the get-go when they start trading.

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READ: How artificial intelligence is changing the narrative in Forex and crypto trading

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Some of the terms that traders are more likely to see include the following:

  • Base currency – this refers to the currency that the trader is currently holding, in this case, the Nigerian Naira. The base currency always appears first in a currency pair.
  • Quote currency – this is the currency that the trader will purchase. The quote currency always appears second in a pair.
  • Bid/Ask Price – the bid price refers to the price at which the broker is willing to buy the base currency. The ask price is the price that the broker will ask the trader in exchange for buying the quote currency of choice.
  • Spread – the spread is the difference between the bid and the ask price which is expressed in pips. The spread is charged by the broker as payment for rendering services. There are floating/variable spreads which change with market conditions and fixed spreads which are determined by the broker.
  • Pip – this stands for ‘Percentage in Point’. It is the smallest measurable value of currency movements and the smallest increment that a price can move. One pip is equal to 1/100th of the base currency of the trader.

In addition to this, another imperative educational tool is a demo account. Numerous brokers offer them to traders. A demo account provides a risk-free platform to traders where they can practice trading in an environment which mimics live trading conditions, without risking actual capital.

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Why you should develop a forex trading plan

All traders who intend to be successful have a trading plan. It consists of a set of rules and guidelines that shapes and defines the trading behaviour of a trader.

Nigerian beginner traders must ensure that they evaluate their needs, goals, and limitations before they start trading. This will ensure that they do not give in to emotional or chaotic trading and ensures that they have a clear goal and objective in mind.

Trading plans also help traders manage their risks more effectively.

READ: How the Coronavirus has impacted Forex trading

How to choose a trading strategy

Once Nigerian beginner traders have a better idea of what they want to achieve through their forex trading and what they are limited to, they can start looking at the different forex trading strategies to use when trading, or they can develop their own.

The trading strategy must be chosen according to the trading style of the trader and it must be in line with the trader’s trading plan. One of the main considerations when choosing a trading strategy is the personality of the trader.

This is because it will be assessed by performance as well as quality of historical data, and the implementation of the strategy. Factors such as time management, dedication, commitment, patience, and others are imperative when choosing a strategy.

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You might like: Latest Africa Forex Trading Stats ( 2020 )

How to choose the right forex broker

When Nigerian traders start considering a broker to facilitate their trades, there are key factors to consider, including:

  • Knowing your needs as a trader such as education, research, trading strategy provision, trading tools, and more.
  • Regulation – beginners must ensure that they only deal with regulated brokers to ensure the safety of their funds
  • Fees and commissions – Traders must ensure that they understand their financials and what they can spend and afford to lose. Here, traders must consider the trading and non-trading fees.
  • Testing the broker’s platform by opening a demo account.
  • Make sure that the broker offers adequate education and research.
  • Look at the ease with which funds can be deposited and withdrawn.
  • Test and evaluate the level of customer service.

What drives the forex market and why is observation important?

When traders start out, they must realize that there are factors that drive the prices and exchange rates in the forex market. These include, but is not limited to:

  • Central Banks
  • News Reports
  • Mark Sentiment, and numerous others.

By staying up to date with news and other reports, traders can more effectively begin to anticipate what the market may do while making extensive use of both fundamental and technical analysis to assist them in trading decisions.

Open A free Trading Account – Click Here

NM Partners represent articles published in paid partnerships with corporate organisations. They include press releases, targeted content, and other forms of corporate communications on behalf of our Paid Partners.

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Cryptocurrency

The Bitcoin market you know today was built by people, not institutions

This dominant and decentralized currency has proven that people can be its driving force, as its users practically own the market.

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Bitcoin recently gained significant global attention, as the richest man in the world, Elon Musk, invested 1.5 billion USD in it. This asset, which was selling for under 1 USD just 11 years ago, has reached new highs in the market with a current price of over 40,000 USD—a phenomenal growth in a decade that no asset class in the market can match.

Some institutions and jurisdictions seem threatened by the existence of digital currencies, which is why the occasional objection about Bitcoin has surfaced on the Internet. Still, this dominant and decentralized currency has proven that people can be its driving force, as its users practically own the market.

A few years ago, when people were still skeptical and unconvinced about BTC and its potential, there were those in the industry driven by the ideology that this asset class could create a better global financial system. The reality is that transferring money and processing payments using the current financial system comes with some setbacks.

In one way or another, monetary transactions using traditional payment systems can be laborious and limited, especially to those who have no access to banks and other financial services. This motivated Ray Youssef and Artur Schaback to create a platform that can reach billions of people worldwide.

They explored Bitcoin and discovered opportunities to provide people access to a new financial market. This discovery and enthusiasm led to the creation of Paxful.com, a peer-to-peer trading platform that enables people to buy and sell crypto with anyone, anywhere, at any time.

Currently, Paxful offers over 350 ways to buy and sell Bitcoin and other digital currencies, making it easy for anyone to acquire fractions of BTC and join in on the 900 billion dollar market. Ultimately, Bitcoin has the potential to help people support various financial limitations by allowing them to:

  • Pay for goods and services
  • Donate to charitable organizations
  • Build and grow a business
  • Protect the value of their wealth
  • Send money faster at a cheaper rate

Apart from providing financial opportunities through the platform, Paxful also uses BTC to uphold quality life and education through the Built With Bitcoin initiative. Every crypto donation goes towards the construction of schools in emerging markets to empower people through learning to live a better life.

The platform has and continues to financially enable millions of people around the world through digital currencies. It’s never too late to start—join the growing Bitcoin community today and be a part of the global people-powered market.

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MyManilla – Driving the future of financial technology in Africa

The purpose of MyManilla is to create a platform that eases access to financial services for everyone; especially those in the informal financial sector.

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MyManilla is a digital financial platform driven by modern technology to eliminate all forms of barriers faced by users while trying to access financial services. MyManilla is a product of Manilla Digital Application Ltd; a tech company based in Abuja, Nigeria.

The purpose of MyManilla is to create a platform that eases access to financial services for everyone; especially those in the informal financial sector. With this, petty traders, civil servants, students, artisans, cooperative societies, trade unions, and other income earners can have unhindered access to necessary financial services.

According to a PwC fintech and banking report done in 2020, the Nigerian fintech industry investments over the past eight years stood at $204 million. Nigerian fintech secured $103.4 million in funding by end of the year 2018. This represented more than half (58%) of the total start-up funding in the same period under review.

This goes on to show that the nature of financial services is fast-changing, and with time, access to these services will completely become virtual. MyManilla is at the forefront of these advancements with cutting edge technology aimed at eliminating all forms of stress associated with accessing financial services.

MyManilla provides uncommon benefits compared to using the conventional financial institutions.  Some of these benefits include – easy and seamless account opening, zero hidden charges, bills payment, automated savings, insurance and a lot more. “We are very keen on making life easy for our customers and consumers and we are making sure that this will provide them with the ease they need for accessing financial services to cater for their daily needs” – ‘Goke Alade Olateju, Co-Founder/CEO, MyManilla.

Manilla Digital believes that MyManilla is the future of financial technology as we have created an All-In-One digital financial platform that focuses on driving inclusiveness, financial literacy, support for cooperative communities and automation of their processes, low-interest loans, secured pension schemes amongst other features. We are delivering the future of finance today; “No queues, just clicks”.

Consequently, Manilla Digital recently signed an agreement with Federal Civil Service Staff Multipurpose Cooperative Union which has over 150 cooperatives and in excess of over 100,000 individual members. This agreement is aimed at making savings, loans, bills payment and other financial services easily accessible for these cooperatives and their members.

According to Maimuna Sabo Abubakar, the Co-Founder/ Chief Growth Officer, agreements and collaborations like this, would further close the financial gap in Nigeria especially within the northern region of the country. She expressed confidence that within a few years, there will be significant growth in financial literacy within this region which will result in an upward progression of people living below the poverty level.

In these days where financial activities are heavily scrutinized and with an increasing level of distrust among consumers, we have created a very transparent process to help you keep your money, guide you on where to invest it, and help you prepare for a financially secured future. You don’t have to worry about how to invest because we will constantly present you with safe investment opportunities and guide you every step of the way.

The MyManilla website and application launched earlier in March 2021 and is now accessible to people of all age brackets, works of life and social class. The beta version of the application has been released and made available first to Android users on Play Store, while the iOS version will be released very soon.

MyManilla is set to change, forever, the way Africa and Africans see and access financial services. It is set to be Africa’s foremost all-in-one digital financial platform, driven by technology to ease access to financial services for the common man, in other to help them cater for their daily needs.

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Follow us on our social media platforms @mymanillang, or send an email to [email protected] for further enquiries.

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