The governor of the Central Bank of Nigeria estimates the bank trades $ million in foreign exchange daily to about 5, BDCs as a whole with annual sales of $7 billion. The money will be deposited with Nigerian BDCs as follows: $2 billion. It is where CBN sells currency directly to BDCs, unlike any other exchange on earth Web26/10/ · HF Markets – Overall Best Forex Trading Platform for Beginners in Nigeria; Exness – Well Regulated Forex Trading Platform in Nigeria; XM Trading – 24/7 WebIncreased disposable income among the country’s affluent middle class has fostered investment and forex trading activity. Forex trading is legal in Nigeria, but earnings are Web11 rows · InstaForex – Best No Deposit Forex Bonus. OctaFX – Best Analytics and Education. Tifia – Best Web16/11/ · Best Forex Brokers in Nigeria. Our 10 best-registered & regulated forex brokers in Nigeria are: Tickmill: Best Broker for Beginners & Experienced ... read more
Chapter 6. Traders can place their trades in the forex market, which is an over-the-counter market that allows investors to trade currencies. This is a platform for investors, institutions, banks, and retail traders. This is larger than all the stock markets in the world combined together. Have you traveled overseas? If you have then the chances are that you have already traded currencies before.
This is because you need to acquire the currency of the country you are visiting by exchange the currency of your home country. In this example you are physically buying USD by exchanging your Nairas. When you change your Naira into a different currency to spend money on your trip, you are actually making a forex transaction. The rate that you get from your exchanger is decided on the basis of the real time exchange rates plus the profit margin of the money changer.
In theory, this is what online forex trading on the internet is all about, but still a bit more than exchanging currencies through a Money Changer. All transactions in the forex market are based on the purchase of one currency for the sale of another currency. It is really important to understand what currency pairs, and how they work before you can start trading Forex.
The opportunities to make profits are higher. These include EUR Euro , GBP Pound , JPY Japanese Yen etc. As you may have noticed that these are the crosses of all the major currencies excluding US Dollar. As a beginner Forex Trader, you need to stick to major pairs only as it offers high liquidity and predictable market movements. While trading forex, you would come across these common terms. We will be explaining all the important terms here.
This price is the quote by the broker. It is the last decimal in the price. For Example: In the quote 1. At this price, you can sell base currency in the pair. This price is shown on the left side in the quote ticker by the Broker. At this price, you can buy the base currency mentioned in the pair. It is shown on the right side of the quote ticker by the Broker.
Spread is the fees charged by forex brokers, so it is essential to choose a forex broker that has lower spread you should also check the overall fees. Forex trading can now be done by anyone in Nigeria, anytime, from home or anywhere through the internet. You need to signup with a Forex broker.
We will tell you exactly who to choose. In order to trade forex, you need to find a CFD broker. There are numerous forex brokers available for local traders such as Hotforex , Exness , XM Forex , FXTM , Forex.
com, FxPro, Oanda etc. We have compiled the list of best forex brokers for Nigerian traders based on 9 factors. Start Trading at FXTM Important: Forex Trading is risky, so have a working strategy before trading with real money. Start with Demo Accounts: Never start trading directly on a live account if you are a beginner becaue your real money will be at risk.
Once you have found the Forex Broker of your choice, you can then open an account with that broker to start trading or demo account to learn. This account will enable you to place your trades in the interbank market at the live currency prices.
Once the verification is complete, you will need to make a deposit to fund your live account. These funds will be used to place live trades at the real market prices. The long position implies that you are buying a currency pair and are betting on it to rise in value in the future. For ex. Buy order in forex is similar to buying an equity stock. You buy the currency at a low price, and once it reaches a higher value, you can then sell off the currency, thus making your profit.
The short position can be taken when you believe the price of the currency will fall in the upcoming period. You can place a sell order when the currency is at a higher price and then when the value falls significantly, you can buy it back at lower price, thus realizing your profit. Profit or Loss? Depending on the movement of the currency pair that you were trading, you will either be profitable or make a loss once you close the trade.
You will make a loss in this case. To understand it more, let's use an example again. If you place a 'Short' trade for EURUSD at 1. But if in this same example, the price of EURUSD goes to 1. Also Read: Our detailed guide on How to Trade Forex in Nigeria. There are many different strategies that are followed by successful forex traders. But most of them fall into 2 categories which are 'Technical Analysis' and 'Fundamental Analysis'. While the fundamental analysis is mainly related to trading based on Economic outlook for a currency which could be impacted by news events like GDP, Unemployment data, balance of trade, capital outflows etc.
Most technical forex trading strategies involve some level of study and analyse of the chart or trend patterns of the currencies before making an actual trade. Good thing is that almost all brokers around the world now offer MT4 or MT5, which are excellent platforms for sound technical analysis. Only based on your strategy, you can make actually get the best returns in the future.
We call the high the resistance. There can be resistance levels on lower time frames as well, but we will use a higher time frame to find important levels for positional trends. Once the price crosses the previous high to achieve a higher high price crosses 1. The low is now called the support. If you are a new investor, it is a good strategy to begin trend trading on one of these pairs.
This is because these pairs are very liquid, have low spreads and have stable volatility. Since these currencies are stable in their movements, they will help you in managing your risk initially by reducing volatility against your direction.
It is always a good strategy, to begin with, a USD pair because of stability. There are various other pairings available which do not include the USD.
Day trading is not strategy per se, it is more of a trading routine. In this strategy, you place your trades, and close them within the same day or within a hour window to book your profits or loss. You can realise profits quicker in this strategy although the risk is also higher, as most of the traders try to gain high returns with small capital.
This is a very common strategy followed by a wide variety of traders, but you must understand its risk as well. Another strategy is known as scalping. This strategy is based on opening a position for a short time and closing it to make a small profit. These strategies can be a great way to book profits quickly. If you are ready to start Forex trading then you may have doubts on which broker or app should you choose to trade online.
Forex Trading, like any other market investment has many benefits but also carries significant risks. On the positive side , forex trading has the potential to bring good income if you trade with a sound working strategy while properly managing your risks. You don't need very high capital to start. It is really important to understand all the risks. How you can manage these risks?
Be cautious, have a fully tested trading strategy on demo and use good risk management to be successful at forex trading. At Forextrading.
NG our ultimate aim is to help you choose the best broker for your trading needs. Get A Free PDF Version Of This Guide: Contains all the tips, resources and case studies found here. NG is an Investment Comparison website with an aim to help Investors in Nigeria find the best forex brokers.
Read More. Read full risk disclaimer.. NG: Your Guide to Forex Trading in Nigeria. All Rights Reserved, See Best Brokers! It offers up-to-date financial news, trading instruments, analysis tools, and technical analysis charts.
Although, read our honest Exness reviews and explore the platform well. Regarding commissions and fees, Exness offers a flexible structure if a trader chooses a classic account.
This account requires the minimum deposit of USD, starting spreads from 0. FXTM is a short form of Forex time and is a known trading platform and that focuses on foreign exchange. The platform is an international forex broker with specializing in several sectors that offer trading platforms and a lot of forex trading tools, including risk management.
FXTM is open 24 hours and operates 5 days a week; this broker firm is functional in Cyprus and is licensed by IFSC international financial service commission , the Cyprus securities and exchange commission CYSEC , and other top tier regulators from the EU. That is one of the best forex brokers have offices in Nigeria. The best forex brokers provide a demo-free account, and a swap-free Islamic account type is provided to users to practice and familiarize themselves with different tools to stay up to date, which are available with the broker.
Which is a great way to begin your trading journey. Being the top brokers, FXTM is regulated and overseen by Cyprus Securities and Exchange Commission CySEC , International Financial Services Commission IFSC , FCA of the UK Financial Conduct Authority , and several other top-tier regulators around the EU. It is the best forex broker Nigeria suited for traders who are well versed in using the MetaTrader 4 MetaTrader 5, and more trading platforms.
FXTM was founded in FXTM has trading platforms that offer leverage of and one of the largest collections of financial instruments such as CFDs on commodity futures, Forex, commodities, and Cryptocurrencies you can trade. It takes charge of a local bank transfer or Neteller. Get more insight about the platform in our FXTM broker review , where we have covered everything.
FXTM offers a variable spread, and it does not charge a commission to users. The trading platform offers no charge or fees for NGN Nigeria Local Bank Transfer. It offers 0. Founded in , Pepperstone is a known reputed forex brokers Nigeria that has a global online presence when dealing with foreign exchange.
Being the most prominent broker, it provides CFDs with margin, tight spreads , and social trading around the world. Pepperstone is supervised and is well-regulated by reputable regulatory authorities, and it is headquartered in Australia. The traders can add a low minimum deposit of USD when they sign up on the platform to trade on this platform. You can sign up with your email address and your account is ready.
Pepperstone also offers a demo account to learn before you invest real money in a live account and an Islamic account for Nigerian traders to familiarize themselves with the Pepperstone platform and try out various trading strategies.
The leading and award-winning broker platform is helpful for traders; whether they are new or experienced, it is the best suit for any trader willing to trade the forex market. Pepperstone is well-regulated by the ASIC Australian Securities and Investments Commission , FCA of the UK Financial Conduct Authority , and DFSA Dubai Financial Services Authority. The recommended minimum deposit to fund the account with Pepperstone is USD for a Nigerian Traders.
It offers maximum leverage of , and there are many tradable assets offered by the Pepperstone platform, such as shares, equity, energy, forex, commodities, cryptocurrencies, indices, and metals that you can trade.
But, it charges CFD broker financing rates, that is, the charges for holding CFD positions overnight, which are high for certain asset classes. IC Markets is a most well-known online best forex broker in Nigeria, which provides foreign exchange for CFDs, spread betting, forex, share trading, financial instruments, and digital currency trading for traders with raw spread.
One of the best forex brokers in this region was founded in and provides both MT4 and MT5 Metatrader 4 and Metatrader 5 and cTrader trading platforms for its users, along with a swap-free account type. IC Markets headquarters are located in Australia. The minimum account deposit required for opening a trading account is USD for Nigerian traders.
It provides a demo account where you can sign up for practice before you trade real money. This award-winning platform also provides an Islamic account for users who would like to get acquainted with the IC markets platform and test different strategies.
IC Markets is authorized and well-regulated by the Australian Securities and investment commission. This trading platform IC Markets has been rated the highest overall with smooth trading conditions , and it is best suited for all kinds of traders who are willing to take benefit of the lowest spreads along with several trading tools whether they are new or experienced traders.
The initial deposit required to begin trading for your account with IC Markets is USD for Nigerian traders. Note: Your capital is at risk as CFDs are complex financial instruments and may not be suitable for all traders, and you should be aware of the high risk of losing any of your money when trading CFDs with real money and how much you strategize to invest.
So always make sure to choose a broker with a good repo. Free deposits and withdrawals with low spread. Hot Forex was founded in and is the top brokers known. This trading platform has the highest overall rating, with competitive spreads and commissions, enhanced charting, different trading account types, financial instruments , educational offerings, and value-added functionality for its users.
The features of the HotForex account provide different 5 trading accounts, such as the MT4 and MT5 Metatrader 4 and Metatrader 5 , for both mobile and desktop devices. It also provides its proprietary app where the users can track their preferred asset classes, stay updated with the current market situation, analysis tools, and perform technical analysis.
HotForex is a well-regulated forex broker with tons of features and is licensed by the FCA Financial Conduct Authority in the UK, and it is also licensed in South Africa by the F inancial Sector Conduct Authority , the UAE by Dubai Financial Services Authority, and Saint Vincent and the Grenadines to offer financial services to Nigerian clients.
This HotForex is the best for Nigerian traders who are looking for flexibility with low minimum deposit account balances and commissions and the spread is very low. The initial deposit required for HotForex is USD for zero spread trading.
The leverage offered by Hotforex is , which is high than most other brokers; the high degree of leverage can affect you both positively or the other way around.
These are some of the tradable asset classes offered by the broker, which are commodities, stocks, shares, indices, cryptocurrencies, bonds, energy, and customer support is decent. However, read our review to know all the insights of the Hotforex trading platform in detail.
Commissions are charged based on the type of trading accounts. The zero accounts are offered by the Hotforex platform, which has very low spreads and has commissioned Forex trading.
Other trading accounts have no forex trading commissions, but shares, ETFs, indices, and cryptocurrencies are charged a commission of rates displayed on the website across different account types. The website supports local deposits with minimal trading fees. AvaTrade is one of the best forex brokers in Nigeria and is also known for providing CFD trading, Forex trading, spread betting trading, copy trading, and social trading, expanding its office in Poland.
It was founded in , and it caters to all types of traders; it has several millions of active users trading on its platform internationally. It offers the MetaTrader 4, MetaTrader 5, and more trading platforms in Nigeria and provides excellent trading conditions to speculate trades of Forex, commodities, ETFs, bonds, equities, cryptocurrencies, etc. Reputed authorities regulate this broker company in the World.
It does not charge trading fees for the deposit or withdrawal, and it is commission-free. Avatrade also offers fixed spreads and an Islamic account for its users also called a swap-free account.
It comes with its risk management tool known as AvaProtect. That will help you buy time to decide if you want to reverse your trade in Nigeria. Avatrade is a well-regulated and licensed platform by the tier 1 authorities of the Australian Securities and investments commission ASIC , Central Bank of Ireland, Financial services authority FSA , the British Virgin Islands, the financial service commission, and the Financial stability board.
Avatrade is a famous trading platform and that is available for all types of traders who want to trade Forex and CFDs with an easy sign-up for a demo account to practice and need time to learn. The base currency support is USD mostly and is commission fees are nil. The minimum deposit required for Forex trade for this ECN broker platform is USD. It offers leverage of , and some of the assets that can be traded on the Avatrade platform are cryptocurrencies, commodities, Forex, bonds, ETFs, financial instruments, the spread, and equities.
Although, read our Avatrade review to learn more about this platform that is supported in Nigeria and which accepts Nigerian traders. If the user wants to trade Forex with the best forex brokers in , this broker does not charge any trading fees or commissions but charges the traders through the bid-ask spread.
It also charges inactivity fees of up to 50 USD if the user does not use their trading accounts for three consecutive months. T he spread offer is depends on the chosen instrument and no commission fees. Founded in , OctaFX is a popular international ECN broker that is providing Forex trading for experienced and new traders with a minimum deposit of 5 USD.
Traders can quickly deposit, and the withdrawal process is easy. OctaFX provides the MetaTrader 4, MetaTrader 5, cTrader ecn account, demo account, and micro account provided for its users. It also provides a mobile app exclusively for Android and IOS devices for mobile trading. OctaFX has won many industry awards in the past few years and does not charge any trading fees or commissions on CFD assets in Nigeria and other countries as well.
OctaFX is well-regulated and licensed by the FCA Financial Conduct Authority of the UK. This platform is best suited for different types of investors who are looking to trade for a trader that offers a wide choice of assets with technical charting tools, analysis tools, and financial instruments that can be used in your trading, even for beginner traders and the base currency is generally USD.
To start trading on one of the best platforms, an OctaFx minimum deposit of at least 25 USD is required. OctaFX provides leverage of , and some of the tradable assets offered by the OctaFX platform are currency pairs.
A few of these are GBP, USD, and Euro, with live quotes, cryptocurrencies, CFDs, stocks, and commodities in exchange for your money in Nigeria. This platform accepts Nigerian traders so the overall process is always smooth. OctaFX does not charge any fees from its Nigerian clients.
But the user should be aware that there are specific fees that may be charged in certain cases in Nigeria as we as your respective country. Founded in , FP Markets Broker is a well-regulated online broker with a Forex trading service for its users. It is an ECN broker offering the raw account with its head office in Australia and provides its services to international players.
For Nigerian traders, it offers the MetaTrader 4 forex trading platform, demo account, and swap-free Islamic account type for its traders. FP markets can also be accessed by traders through mobile apps for android and an IOS devices to aid in trading ease. This broker is also well-regulated in the EU by the Cyprus securities and exchange commission CySEC. FP Markets offers trading conditions for scalping and EAs Expert Advisors to carry out for forex trading.
Great customer service as well. The amount of AUD is required as the minimum deposit to start trading , and it offers a leverage of If you want to learn more about the platform check out our FP Markets review and the list of features as it also accepts Nigerian traders.
FP Markets charges low non-trading and forex fees, and it does not charge inactivity fees. On the contrary, this broker may be charging a high level of fees for international bank withdrawals.
Nigerian investors are showing an interest in trading in the FX market as it has expanded in recent years due to its economic growth. It is challenging to identify licensed and reputable brokers in the Nigerian forex industry; your trading needs cannot be met without the best forex brokers in Nigeria. The best forex brokers in Nigeria need to be well-regulated by the CBN authorities. Later the trader can proceed with opening an account with them.
The Central Bank of Nigeria CBN is an authorized body to regulate brokers. Thus it is legal to trade in Nigeria because of the supporting regulations. Even though Nigerian Forex trading is accepted and legal, the earnings received by traders through trading are taxable under the law in Nigeria. Since Forex trading is legal in Nigeria , people are showing interest in finding the best forex brokers in the country. We highly recommend that users research the well-regulated and reputable forex broker in Nigeria based on the recommendations and reviews offered that you can use while choosing the top forex brokers in Nigeria.
Several fx brokers in Nigeria offer a generous deposit bonus for their users. There are several steps the user should take if you want to trade with the best forex brokers in Nigeria. In this article, we have listed a few steps that will provide you with great trading conditions , and they are as follows In Nigeria, the users can trade with the best forex brokers in the country anytime from the comfort of their home, using the internet.
The main requirement for trading Forex is that they should have the appropriate laptop with a stable internet connection. The user can check their trading strategy using the CBN-regulated demo trading option, as this fx broker is always available for Nigerian traders. The best forex brokers in Nigeria users should check whether the chosen forex broker is a scam broker or not. They should also check whether any regulatory authority approves the forex broker before finalizing any platform after completing the essential details with regulated forex brokers in Nigeria.
The trader can start using the FX platform in Nigeria. In our opinion, you should choose the best forex trading platform in the World that allows you to make money hassle-free on any of the assets you choose to trade.
As there are many scammers available in Forex trading, as a trader, you should find a trustworthy and reliable broker since it is essential to protect your money i. e, hard-earned from money launderers, illegal brokers, and scammers. Here is the list of the essential pointers you should consider to help forex traders as they will choose the best forex broker in Nigeria. While searching for the best forex broker in Nigeria, the significant factors you must check is the forex trading platforms.
Several forex brokers in the Nigerian offer MT4, MT5, and more platform support; if the brokers offer Metatrader 4 or 5, the user can consider opening any types of accounts with the broker. The user should also check whether the forex trading in Nigeria platform has an easy-to-use interface, live chat support, whether it is commission-free, has an ECN broker, and offers a variety of forex trading technical tools.
Check whether they offer different types of accounts standard account, micro account , chart station, the lowest spreads, and assets like metals, currencies, and indices. You may need to check them with different time frames. The user can also check whether they offer technical indicators and try out different types of trading strategies through the demo trading offered by the broker. Most forex brokers in Nigeria have demo accounts to offer.
If they use demo trading, this is an easy way to learn; they can use it to analyze the different strategies and choose the best one for them. Also, the user should check whether the broker offers mobile apps for android and IOS devices to ease mobile trading. Many best forex brokers that are in are offering attractive deals these days. Several forex brokers in Nigeria have the flexibility to offer different types of deposit withdrawal methods for their users. The user should check whether the copy trading and the backtesting functions are integrated into the trading software.
If you are copy trading, you can also check how the trading strategy works. You might check a few forex trading platforms that offer copy trading services where the trader can copy the profitable strategy of the other forex traders. A good forex broker in Nigeria should provide excellent customer support for their users.
Before signing up with the FX platform, you may have to check customer support and how they can be contacted via live chat, email, or phone.
They should also check whether the customer service offered in their native language is available online 24 hours a day throughout the week, and it is a good sign of their support. After checking the customer service, if the user finds problems, questions, or issues that the customer support team does not solve, it is better not to engage with that forex broker. You might try searching for another best forex broker in Nigeria for beginners that provides excellent customer service and customer support when needed.
To conclude, several regulated forex brokers in Nigeria are available for international trade. Registering and trading for Nigerian traders with them is very simple. Nigerian traders should use the best forex brokers in their country that are regulated by the FSCA financial services conduct authority of S outh Africa , formerly known as FSB. Even though most brokers look similar, few differences can make every broker unique, and it should be adopted by different types of traders as found in a local trading market.
Risk Warning: Trading for Nigerian traders can be tricky as the FX market carries risk, and the user should be aware of the risk involved in trading with CFDs and forex.
Before proceeding to trade the market, the user should evaluate their risk, realize their objectives, the choices of trading platforms , commission-free trading conditions, and their willingness to face the type of risk when trading CFDs as these are complex financial instruments.
user should seek professional advice before trading in this FX market to minimize loss to his capital and make sure to choose a broker with a good repo. According to our review, among all forex brokers in Nigeria, the best forex broker is Avatrade, and it is one of the best forex broker for executing Forex trading. Forex trading is legal in Nigeria and regulated by the CBN Central Bank of Nigeria. forex brokers in Nigeria can operate by abiding by specific rules that can be regulated.
In our experience of all the brokers available, one of the best brokers that charges the lowest fees in Nigeria is the IC Markets because of the low spreads offered by the broker. It is based in Australia and regulated by tier 1 regulators ASIC Australia i.
FXTM, HotForex, and FBS platforms are well known for their trading app in Nigeria with lots of features and are user-friendly. Risk Disclaimer — CFDs and forex are complex financial instruments that involve a significant risk of loss for your capital, so trade with capital you can afford to lose. Trading can be tricky as trading instruments like forex are not suitable for everyone, and we strongly advise you to trade with the money you can afford to lose and thus choose a broker of a good repo.
The content of this article is for information purposes only and to help you understand whether forex trading is for you or not. Any of the loss of money will not be covered by us.
Retail Forex Trading via online CFD brokers is not illegal in Nigeria, but it is still unregulated. You can trade forex via foreign regulated forex brokers in Nigeria like Hotforex, Exness etc.
In this guide we cover all the basics of forex trading for beginner traders in Nigeria. You should carefully read this guide to learn the risks of CFD trading before you start, especially if you are a beginner trader. Here are our best-rated forex brokers for Nigerian traders. Reading this full guide would take about 30 minutes and you will get to learn everything that you need to know about forex and CFD trading in Nigeria. Are you interested in the economics of a country?
Possess knowledge on factors affecting the GDP of a nation on a micro as well as macro-economic level? In that case, trading in the forex markets can be an option for you as a trader. Forex markets involve the highest volume of trading with the use of margin. Forex trading involves buying and selling a currency in return for another, hence each currency pair has two currencies.
Generally, the stronger or less volatile currency takes the position of quote currency and vice-versa. Forex trading has its uses starting from retail investors, pension funds, global banks, governments, and major corporations.
On the other hand, when the USD value is expected to decrease in terms of NGN, the trader takes a short position. Forex Markets are used heavily to hedge and are a key component in different derivative products. For example: If a retailer has payments to be received in a foreign currency and is expecting that the FX pair value will go south in a couple of months, they usually buy FX contracts to lock in the FX rates and get guaranteed amounts at the mentioned payment dates.
We will learn more about the usage and market mechanism of Forex Markets in later parts of this guide. In the International Forex Market, the average daily trading volume is nearly 6. The currencies need to be exchanged for every transaction across the border of a country.
For example, if you want to visit Europe, being a Nigerian, you will need Eurodollars to purchase, travel, or even to stay in Europe. This is applicable vice-versa too. There are many non-residents across every country, who send funds to their loved ones back at home. This is possible only due to international currency markets. These are just a few examples of FX markets usage, there are plenty more.
The forex market can be termed as one of the oldest existing markets, at least its existence is supposed to date back years ago. Greeks and Egyptians started to trade silver and gold coins based on their actual weight and size. This was one of the key moments for Forex market history, as currencies were freely traded to stabilize currencies across the world. This then spread across the entire world. Forex Trading firms had grown exponentially and continued to grow in all parts of the world.
Today the most traded currencies are USD, EUR, JPY, and GBP arranged with highest to lowest volume. Important historical events for FX Markets would include the Bretton Woods conference held in It was a group of 44 countries coming together to decide that the USD would be the back of the present-day FX markets and gold can be valued in USD terms.
At that point in time, 1 ounce of gold was agreed at USD 35, today it trades at around USD ! Policies including the Smithsonian agreement and Plaza Accord led to depreciation of the USD against all currencies in the free float market. This went on till the s until Internet Trading started wherein anyone with the help of a few clicks started to trade currencies and not only the top 5 but every other legal currency too. With more and more trusted participants joining forex trading, this became a very robust asset class and is now pegging at USD 6T transactions each day.
We will now understand how these currencies are traded in the current forex markets. The modern FX market is driven by financial derivative instruments that are used by traders and investors.
ranging from FX futures, forwards, options and even CFDs. There are majorly 4 types of transactions that take place in forex markets and we will discuss them all briefly:. Spot basically means immediately. The asset being traded using the spot rate is usually a future, forward, or option contract. Given the rate is uncovered at the current market situation, liquidity is high, and placing orders with less spread between the bid and ask price is expected.
As the word indicates, Forward transactions involve the trading of currency pairs using forward rates that are deliverable at a future date. The future price fluctuation is locked in such transactions benefitting buyers in case of high volatility. Forward transactions have issues of liquidity when compared to spot markets.
If Party A requires AUD currency while residing in Europe and Party B requires EUR currency residing in Australia, they would want to indulge in a currency swap transaction.
This basically leads to Party A paying AUD to Party B in exchange for EUR, so that both the parties can fulfill their needs. Usually, these transactions are over the counter, which basically means the trades are directly done between the parties without any intermediary.
Similar to futures contracts, option contracts are traded on exchanges with the underlying of an FX currency pair. Whenever the price of the currency pair moves high or lower, the contract value moves accordingly. Options are heavily traded in the markets given the low initial payment required in the form of a premium. Most corporates and banks use FX option contracts to hedge their bets in other asset classes using exotic option products which limit losses for investors while providing the benefit of market price action.
As previously mentioned, exchange rate is the rate at which 1 currency can be bought in terms of other currency. However, it is very critical to understand why the rate is pegged at a current rate and why does it move in the first place?! Let us understand briefly the 5 main factors listed below briefly:.
Inflation — Inflation is the rate at which the prices of goods and services increase. The country is dependent on imports from other countries or has a failed economic policy in place. If it goes high, it implies excessive money circulation in the market. Monetary Policy and implementation — When the central bank of a country announces its monthly or quarterly reports, markets become volatile.
The country started having street fights and riots in protest and is still one of the poorest Latin American countries. This had a massive impact on inflation and hence the Venezuelan bolivar crashed to record low levels of economic depletion.
Apart from the above-mentioned major factors, the prices of currency pairs can move due to several other reasons. The forex market is active 24 hours a day and it is nearly impossible to identify or predict each and every price movement.
Now that we have understood the main factors affecting forex markets and the types of transactions taking place, we will move on to understanding the basic terminologies of the market in a minimalistic way.
Currency Pair — Currency Pair defined is the combination of two currencies clubbed as a pair which numerically defines what is the worth of one currency when valued against the other. However, the values will be inversed whenever we inverse the currency pair numerator and denominator. So, we will the NGN in terms of the USD. Any pair which contains USD and a developed market currency is considered a major currency.
Exotic currencies on the other hand are emerging market currencies, which are less liquid and more volatile, therefore these are non-deliverable currencies. Non-Deliverable currencies are those currencies that cannot be transferred or delivered in a financial transaction while trading futures, forwards or options. This is mainly due to the instability and higher downfall probabilities in those currencies. Examples are ZAR, MXN, TRY, INR, MYR, etc. Pips — Pips or Percentage in points reflects the smallest amount of change in forex rates.
Usually, 1 pip represents a 0. It is kept this low for easy conversion and allows traders to take advantage of the smallest price movement.
Leverage — Leverage is a facility provided by brokers and liquidity providers while trading forex using financial instruments. Here an investor can purchase or sell instruments in multiples of money initially invested. However, leverage varies from broker to broker, so it is better to know the leverage ratio beforehand. The bid price is usually less than the ask price which is usually higher. The psychology of the market is to buy as low as possible and sell as high as possible.
Therefore, forces of bidders and askers in the market to drive market trends. Spread — The difference between the bid and ask price of a financial instrument is known as the spread. If the bid price is 1. Higher the spread, lesser is the liquidity of an instrument. If a market has 0 spread as there is always a difference between the bid and ask prices.
Lot Sizes — Lot size is usually the number of underlying assets comprising the Nominal and the FX rate. The minimum units are defined in the contract. Usually, it is units but can also start with 10, units in case of forward contracts. Trading Forex in Nigeria is like trading in other major financial markets but with few exceptions.
We will discuss the same and the alternative options available accordingly. All we need is close to USD or close to N, for a mini trading account. Explained below is a step-by-step guide:. Open a Forex Account — Procedures like KYC, Bank account verification, and customer data filing is important and leads to the broker opening the account in usually hours for trading.
Account Type — There are many account types for trading forex such as micro, Mini, Standard, VIP, etc. Each account type comes with an initial investment amount to be deposited and as per the names start small at micro and go higher until the VIP accounts. New Investors can start anywhere between micro and mini accounts and can move ahead with the experience. Demo Trade — Before starting to trade, many brokers provide demo accounts which provide the entire feature of trading platform.
One can also start with paper trading.
Web26/10/ · HF Markets – Overall Best Forex Trading Platform for Beginners in Nigeria; Exness – Well Regulated Forex Trading Platform in Nigeria; XM Trading – 24/7 WebIncreased disposable income among the country’s affluent middle class has fostered investment and forex trading activity. Forex trading is legal in Nigeria, but earnings are Web16/11/ · Best Forex Brokers in Nigeria. Our 10 best-registered & regulated forex brokers in Nigeria are: Tickmill: Best Broker for Beginners & Experienced Web8/6/ · Is Forex trading illegal or legal in Nigeria? Forex trading is a legal business in Nigeria subject to trading with licensed and authorized broker. Who can trade Forex in Web11 rows · InstaForex – Best No Deposit Forex Bonus. OctaFX – Best Analytics and Education. Tifia – Best Web14/12/ · GTB Bank, on its part recorded N billion as forex trading income in , up by percent from N billion in Union Bank also increased its forex ... read more
Forex Trading Platforms. FBS prides itself as an official trading partner that offers a comprehensive affiliate program. Cons of Trading in Foreign Exchange Several aspects and situations might make effective trading in the forex market more difficult than it seems. Tickmill few best forex brokers Nigeria with a low fee structure that could be used by all various Nigerian traders. If you are ready to start Forex trading then you may have doubts on which broker or app should you choose to trade online. Geopolitical Activity — When Brexit was first announced, the strength of GBP started decreasing against every other currency.So, it is really important to self regulated your leverage, and not trade with over leverage with Forex. Technical Analysis Most technical forex trading strategies involve some level of study and analyse of the chart or trend patterns of the currencies before making an actual trade. Currency values are influenced by the stated economic health of the area they represent. Until sellers are available, you would not e able to exit the position and this is a liquidity risk. Forex trading in nigerian banks have a more pleasing appearance and are simpler to understand than the previous chart kinds.