How Africa
The forex market is a massive, fast-paced financial market that never truly rests. Currencies are constantly being exchanged worldwide, and Nigerians form part of this process regardless of whether they exchange currency for profit, business, or leisure.
The forex market is decentralized, and millions of market participants contribute to its over 6 trillion USD daily trading volume.
Most retail traders in Nigeria speculate on the movements in the exchange rate between different currencies, allowing them to profit from small movements in the forex market.
According to forexbroker.ng, while there are over 170 official currencies worldwide, some are traded more than others, including USD, EUR, AUD, GBP, NZD, CAD, CHF, and JPY.
Advantages of Trading Forex in Nigeria
Easy Access
The forex market operates 24 hours a day, 5 days a week, and has several sessions. While there are several, the Sydney, Tokyo, London, and New York sessions are the largest and most liquid, which means that most trades happen when these markets are open.
This means that Nigerian traders can trade at any given time during the day and night from Monday to Friday. However, traders must note that there are times of low and high liquidity that could affect their trades.
Low barrier of entry
Because the forex market is the largest, most liquid, and most volatile, it costs less to trade forex. Nigerians can easily register a trading account with an investment of 1 USD / 400 NGN. The spreads (difference between the bid and ask price) are low, and brokers charge competitive commissions.
This means anyone can start trading forex, even if they have never done so. However, familiarizing yourself with the forex market is always recommended.
High trading Volume
Because currencies must be exchanged continuously, the forex market sees over 6 trillion USD in trading volume daily, which is more than all other financial markets. The high trading volume means that there is significant liquidity in the market.
Increased Liquidity
High liquidity means that Nigerian traders can easily buy or sell currency pairs in the forex market, often allowing them to profit from price movements.
Range of currency pairs
With more than 170 currencies worldwide, forex brokers offer various currency pairs that are spread across major, minor, and exotic. However, EUR/USD is one of the currency pairs that is traded the most. Therefore, Nigerians can expect some of the tightest spreads on this pair.
Choice between strategies
The forex market is fast-paced, but that does not mean your strategy must be. Nigerians can use a wide range of short- and long-term trading strategies in the forex market, including scalping, hedging, algorithmic trading, swing trading, news trading, and more.
Leverage
Leverage is one of the main reasons why so many traders are drawn to forex trading. Leverage is a tool offered by your broker that you can apply to your initial deposit to allow you to open much larger positions. For instance, if you apply 1:10 leverage to your 400 NGN deposit, you can open a position worth 4,000 NGN.
Can be done on any device
You access the forex market via your broker’s trading platform. These applications are available on internet browsers such as WebTraders or portals, mobile apps for iOS and Android, and Software applications for desktop computers and laptops.
Volatility
The forex market experiences drastic and sudden price movements, which cause volatility. During times of volatility, prices can move significantly, and if it is in your favor, you can make large profits.
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Final Thoughts
The forex market is the most popular worldwide, with millions of participants. However, Nigerians must never underestimate the inherent risks associated with the forex market. While there are several benefits, Nigerians must safeguard their capital when trading.
