Forex Trading in Nigeria
The Ultimate Guide for Beginners (updated June 2019)
By ForexTrading.NG
ForexTrading.NG: Your Guide to Forex Trading in Nigeria. All Rights Reserved, 2019
Introduction of this guide:
For Nigerian Investors, forex trading can be a way to earn wealth.
It involves speculating on the rise and fall of the currency fluctuations. It has become really
popular in Nigeria with an estimated daily trading volume of N300-450 million naira. You may
be attracted to forex trading because it offers opportunities to make high profits in less time
(minutes & hours instead of months) with minimum investment.
But is trading in the forex market really profitable for individual investors? How much
income can you earn from trading forex part time or full time? What are the risks?
There are so many other questions that may come to your mind if you are a beginner forex
trader. We will answer all these questions and more with this guide.
Go to Table of Contents
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Table of Contents
Chapter 1 Chapter 2 Chapter 3
What is Forex Trading? Understanding Currency Pairs How to start Forex Trading?
Chapter 4 Chapter 5 Chapter 6
Forex Trading Strategies Forex Trading Platforms Advantages & Risks of Forex
Trading
Helpful Resources/Links for Nigerian Forex Traders
1. Free Forex Trading Tutorials
2. Best Forex Brokers in Nigeria
Best Rated Forex Brokers in Nigeria
1. Hotforex Nigeria (100% bonus)
2. Exness
3. XM Forex (50% Bonus)
4. FXTM Nigeria
5. Avatrade Nigeria
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Chapter 1
What is Forex Trading?
Forex trading is the buying & selling of currencies with an aim to make a profit. 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 traders.
Foreign Exchange Market is the largest trading markets and has an average turnover of US$5
trillion on a daily basis around the world. This is larger than all the stock markets in the world
combined together. Trading activities are conducted through the “Interbank Market” which
allows you to execute trades 24 hours in a day, for 5 days a week from Monday through
Friday.
Real Life example of Forex Trading
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 an exchange the currency of your home country.
Let’s say that you change ₦350,000 to US Dollars for travelling, and you get 1000 USD from
the exchanger. 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.
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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 changers. If the current market rate is NGN340
per USD, then you would probably get around ₦350 rate from your changer. The difference
of ₦10 (350 – 340) for each USD is your changer’s profit margin.
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.
Go to Next Chapter
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Chapter 2
Understanding Currency Pairs
All transactions in the forex market are based on the purchase of one currency for the sale of
another currency. So you are trading or exchanging the 2 currencies simultaneously for one
another, hence known as ‘currency pairs’.
For example: EUR/USD (Euro & the US Dollar), NGN/USD (Nigerian Nairas & the US Dollar)
etc.
There are 100s of currency pairs, including the so called Majors, minors & exotic. It is really
important to understand what currency pairs, and how they work before you can start
trading Forex.
In this chapter, you will learn everything you need to know about Currency pairs. Let's start!
Types of Currency Pairs
Currency pairs are mainly classified into 3 types:
1) Major Currency pairs: These are the currency pairs that include US Dollar as one of
currency in the pair. Almost 85% of the global trading volume is traded in the majors.
Majors include 7 currency pairs: EUR/USD (Euro/US Dollar), GBP/USD (Pound/US Dollar),
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USD/JPY (US DOllar/Japanese Yen), AUD/USD (Australian Dollar/US Dollar), USD/CHF (US
Dollar/Swiss Franc), NZD/USD (New Zealand Dollar/ US Dollar) and USD/CAD (US
Dollar/Canadian Dollar).
Since most of the trading is done in majors, so they are highly liquid & it is easier to get in &
out of trades. The opportunities to make profits are higher.
2) Minor Currency Pairs: Minors, also called the cross currency pairs, contain all the
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currencies in the major pairs except for US dollar. These include EUR (Euro), GBP (Pound),
JPY (Japanese Yen) etc.
Examples: EUR/GBP, EUR/JPY, GBP/JPY etc. As you may have noticed that these are the
crosses of all the major currencies excluding US Dollar.
The liquidity & volume are lower than majors, so trading opportunities may be lower than
with majors.
3) Exotic Currency Pairs: Exotic Currency Pairs are made from one of the currency from
major pairs and other one from the emerging economies like: Brazil, South Africa, Mexico,
Russia etc. Examples of such pairs include: USD/BRL (United States Dollar/Brazilian Real),
USD/HKD (United States Dollar/Hong Kong Dollar), USD/ZAR (US Dollar/South African Rand),
USD/RUB (US Dollar/Russian Ruble) etc.
Exotic Pairs usually don't have high liquidity & trading volume but they have high volatility
plus they have high spreads as compared to Major & Minor Pairs.
As a beginner Forex Trader, you need to stick to major pairs only as it offers high liquidity and
predictable market movements.
Currency Pairs Lingo
While trading forex, you would come across these common terms. We will be explaining all
the important terms here.
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1) Quote: When you open an account with the Broker they give you Bid/Ask Price for you to
buy & sell the currency which is quoted like here in this example: EUR/USD 1.2812/15
2) Pip: Pip is the smallest unit in the currency quote given by the Broker For Example: 0.0002
is the pip in the quote 1.2812.
3) Bid Price: Bid price is the price, the Broker is willing to buy a currency pair from you. At
this price, you can sell base currency in the pair. It is shown on the left side of the quote
ticker by the Broker.
For Example: If you see the quote as EUR/USD 1.2812/15, it means you can sell 1 EUR for
1.2812 Dollars.
4) Ask Price: Ask price is the price, the Broker is willing to sell a currency pair to you. At this
price, you can buy base currency mentioned in the pair. It is shown on the right side of the
quote ticker by the Broker.
For Example: When you see the same quote as above it had 2 values in it: EUR/USD
1.2812/15, the second value tells you about the Ask price, it means you can buy 1 EUR for
1.2815 Dollars.
5) Spread: Spread is simply the difference between the Bid & Ask Price quoted by the Broker.
So, in the above example: in which quote is EUR/USD 1.2812/15, the difference of 1.2812/15
i.e: 0.0003 or 3 pips.
Go to Next Chapter
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Chapter 3
How to start Forex Trading?
Forex trading can now be done by anyone in Nigeria, anytime, from home or anywhere
through the internet. All you need to trade forex online is a laptop, good internet connection
& capital as low as ₦20,000.
You need to signup with a Forex broker. There are many 'good' & 'scam' brokers. We will tell
you exactly who to choose.
Finally, once you have a trading account we will show you the Forex Orders that you can
place, and the profit/loss calculation.
Let's start!
1) Open Account with a Forex Broker
In order to trade forex, you need to find a broker. There are numerous forex brokers
available for Nigerian traders such as Hotforex, Exness, XM Forex, F XTM, Avatrade, etc.
We have compiled a list of best forex brokers for Nigerian traders. All of the brokers that
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we recommend on our website have proven track record for honest dealing with traders, are
authorized & regulated with Government bodies for safety of your funds.
All reputed brokers have some sort of KYC (ID & Address proof verification) & you cannot
start trading in the market without verifying your account with any of the popular broker.
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.
Hotforex is the best broker for Forex trading in Nigeria.
● Very Low Spread on majors (and zero fees on deposits &
withdrawals)
● Free demo Trading account
● Easy to use (mobile-friendly) MT4 & MT5 platforms
● 49+ Currency Pairs, 3 Cryptocurrencies, 100s of Stocks
● Fast Withdrawals & Good support
● Your funds are safe – regulated with UK's FCA (Financial
Conduct Authority) and CySEC (Cyprus's Securities and
Exchange Commission)
Start Trading at Hotforex
Important: Forex Trading is risky, so have a working strategy
before trading live.
Once you have found the forex broker of your choice, you just need to open an account with
that broker to start trading. This account will enable you to place your trades in the interbank
market at the live currency prices.
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2) Place your First Trade
After you have created your live account & funded it with your Forex broker, you can then
open your first trade. The two positions that you can take in the Forex market are either the
“long position” or the “short position”.
You need to study and analyse the trading charts or the market news & then decide whether
you want to place a buy order or a sell order.
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. If you currenny market price of EUR/USD is 1.1000 & you believe
that it would reach 1.25 in the near future then you can place a buy order, hence you would
be buying Euros & selling US Dollars.
See the example below for a profitable Long/Buy Order in Forex.
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. If the present price of EUR/USD is 1.10 & you think that it would fall to 1.0
in the near future then you can place a sell order in the marker.
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Below is an illustration of how you can make a profit with a Sell Order in Forex.
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 a lower price, thus realizing your profit.
3. Close the trade
To realize your proft (or loss), you need to close the trade that you opened.
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.
Example: If you have placed a buy/long order on EUR/USD, and the price of the pair goes up
by 100 pips, and you decide to close the trade. You would have made a profit of around $100
(minus spread) if you are trading 1 Mini Lot.
But if the EUR/USD goes down 100 pips, and you decide to close the trade. You will make a
loss in this case.
Also Read: Our detailed guide on How to Trade Forex in Nigeria
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Chapter 4
Forex Trading Strategies
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'.
Technical Analysis involves the study of charts patterns, currency trends etc. and then placing
the order based on the chart patterns. While the fundamental analysis is mainly related to
trading based on the news events like GDP, Job data etc.
In this chapter we will only analyse popular technical analysis strategies.
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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. Good thing is that almost
all brokers around the world now offer MT4 or MT5, which are excellent platforms for sound
technical analysis.
Advise: Building an understanding of the current market scenario & having a working
strategy before placing a live trade is highly recommended. Only based on your strategy, you
can actually get the best returns in the future.
Now let's look into some of the most popular forex trading strategies.
1) Trend Trading or Support & Resistance trading
In theory, trend trading involves identifying a trend, waiting for the pullback in price & then
following the continuation wave. This is one of the most profitable trading strategy in a
trending market & was also the main strategy for highly successful traders like Jesse
Livermore.
Let's say the high for EUR/USD for the last 3 months is 1.31 (making it a price level of
importance). We call the high resistance.
Once the price crosses the previous high to achieve a higher high, there is a huge chance that
the old high will become the new low in a trending market. The low is now called the
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support.
Stick to the Majors: In the current scenario, there are seven major currency pairs which
constitute almost 80% of the transactions. These major pairs include USD/EUR, USD/GBP,
USD/JPY, USD/CHF, USD/AUD, USD/CAD, and USD/NZD.
If you are a new investor, it is a good strategy to begin trend trading with one of these pairs.
This is because these pairs are very liquid and have stable volatility. Since these currencies
are stable, they will help you in managing your risk initially. 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.
2) Day Trading
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 24-hour window and book your
profits (or loss).
You can realise profits quicker in this strategy, although the amounts might be smaller. This is
a very common strategy followed by a wide variety of small investors. 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.
Go to Next Chapter
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Chapter 5
Best Forex Trading Platforms
for Nigerians
If you are ready to start Forex trading then you may have doubts on which broker should you
choose to trade online.
In the table below, we have compiled a list of brokers that we have found to be best in terms
of platform, withdrawal time & more in meeting the expectations of profitable traders in
2019.
We have only selected brokers that are regulated & offer both Mobile & web trading
platforms.
Here’s our list…
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2019's Best Forex Trading Platforms for Nigerians
Forex Broker Regulation Leverage Account Forex Trading Visit Broker
minimum Platform(s)
Hotforex FCA (UK), FSCA 1:1000 ₦1800 MetaTrader 4, Visit Hotforex
(Offers 100% Deposit (South Africa), MetaTrader 5, (Get 100% Bonus)
Bonus)
CySEC Webtrader, iOS,
Android apps
Exness FCA (UK), CySEC 1:2000 N350 MT4, MT5 for Visit Exness
Mobile & web
XM Forex FCA(UK), CySEC, 1:888 ₦1800 MetaTrader 4, Visit XM
(Offers 50% Deposit ASIC (Australia), MetaTrader 5 for
Bonus)
IFSC(Belize) web & mobile
FXTM FCA, FSCA, Cysec 1:1000 ₦2000 MetaTrader 4, Visit FXTM
MetaTrader 5 for
web & mobile
Avatrade ASIC, FSCA 1:1000 $100 MT4 4, MT 5, Visit Avatrade
Mobile App
Go to Next Chapter
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Chapter 6
Advantages & Risks of Forex
Trading
Forex Trading, like any other 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
working strategy. And you don't even need very high capital to start.
On the downside, one bad trade without proper money management can be disastrous, or
trading with real money without practising on demo. These are just a few risks.
Let’s analyse the benefits & risks of trading Forex!
Go to Pros & Risks
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Pros of Forex Trading
1. Start with Low Capital: You can start trading in the forex market for as low as NGN
1000 with the leverage that brokers offer these days. But it is highly recommended that
you trade with a capital of atleast ₦50,000 & not place more than 10% of your capital
on a single trade.
2. Huge Trading Volume: Forex market is the largest market in the world with close to 5
Trillion USD daily trading volume. This makes it very liquid & you can easily place very
large orders as well & close them without having to worry about price volatility because
of your trade (unless there is some major event).
3. Buy/Sell: In forex, you can open take both short or long position to make a profit. If you
feel that the particular currency is on the way up, you can buy it and go long. On the
other hand, if you feel that a currency is not performing well, you can sell it and go
short.
4. Open 24 hours: Another key benefit of forex trading is the ability to trade 24 hours a
day, for five days in a week. These trading hours are much longer compared to
traditional stock exchanges which allow you to place an order or close it during limited
trading hours. In forex, you can place a trade & close it anytime during the week instead
of waiting for the markets to open during the day. You might want to check out our
guide on best time to trade forex in Nigeria as the opportunities to make profits are
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higher during certain market hours.
5. Currency choices: Another major benefit is that forex trading allows you to trade in a
wide range of currencies from around the world. This includes the traditional major
currencies such as EUR and USD as well as exotic ones such as CZK and MXN.
Risks of Forex Trading
There are certain risks attached with forex trading, which you need to be aware of.
1. High Risk with Leverage: Forex brokers offer very high leverage, as high as 1:1000 in
many cases. This means that you can place $1000 worth of trade in the market with just
$1. Using very high leverage puts your trading capital at huge risk of depleting very fast
with even a single bad trade. Ex: Let's say that you deposit $100 in your trading
account, and you use 1:1000 leverage to place a 1 standard lot buy trade on EUR/USD.
In this example, you can lose your full capital if the price goes just 10 pips against you.
We advise you to use proper risk management & never risk more that 10% on a single
trade.
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2. Avoid Bad Brokers: There are so many forex brokers out there that lack transparency &
are not even regulated. You should definitely avoid brokers that promote get rich quick
schemes. Be wise enough to choose a broker that is regulated by Government bodies
like FCA, CySec etc, has years of experience, must have good reviews & is transparent in
their dealing of any issues.
3. Risk of Volatility: There are a wide range of factors which can influence the value of
currencies (causing extreme volatile, especially for the non-conventional currency
pairs), not limited to political or macro & micro economic factors. And unfortunately,
you cannot control these factors. So it is really important to watch out for any news
before placing or closing a trade & have strict stop loss limits in place to control any
losses in case of bad events.
4. Emotional Stress: Let's face it, forex trading can be extremely challenging emotionally.
One bad trade can result in big losses & dealing with losses can prove to be very
difficult. This can be emotionally stressful for you.
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.
Thank you for reading our guide!
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How does ForexTrading.NG help you?
At Forextrading.NG our ultimate aim is to help you choose the best broker for your needs.
We have tested all the Top Brokers in Nigeria to give you unbiased reviews & comparisons.
Don’t choose any broker without going through our Top list.
We have also created tools, guides to help you learn & successfully trade forex.
You can reach us by emailing us at: [email protected] for any help regarding our website
or guide.
This guide is brought to you by
ForexTrading.NG is a Forex Education website with an aim to help Investors in Nigeria to learn forex trading and find
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