Forex trading in Nigeria is a regular way to make money online, Many Nigerian investors trade Foreign Exchange currencies online in Lagos, Kano, Ibadan and other cities, ForexSQ experts explain how dose forex trading work in Nigeria and how to open free online trading account with top Forex companies in Nigeria. Review and comparison list of the best Forex trading companies in Nigeria by “ForexSQ” FX experts.
How Dose Forex Trading In Nigeria Works
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Linguistically speaking, the word “Forex” is a blend word, the result of combining the two words “foreign” and “exchange.”
Forex is an investment opportunity whereby you can make money online by trading one or more foreign currencies for another at an agreed exchange price in the online over-the-counter (OTC) Forex trading market (Fx trading).
The Fx trading market is like any other market where goods are traded except that Fx involves only trading foreign currencies. Foreign currency exchange is the most traded market in the world even more than stock markets, The Forex market is turning over an average of $5.3 trillion each and every day.
The FX trading market involves free-floating currencies (or those not supported by any specific material like silver or gold), which are treated like goods in the Fx trading market. You can buy Euro dollars by paying Australian dollars or you can buy the Japanese Yen by paying U.S. dollars, etc.
Profits and losses in the online Forex market are based on fluctuations in the values of different currencies, with the two most widely traded currencies being the U.S. dollar and the Euro (kings of currencies). The Japanese Yen, Canadian Dollar, Australian Dollar and New Zealand Dollar are also popular for currency exchanges.
In Fx, traders use leveraging to profit from differences in exchange rates between two countries. Since Forex is a “leveraged” product, you are only required to make a deposit equal to a small percentage of the full value of the currency and the remainder is a “loan” (or leverage) provided to traders by the Fx broker who is handling their account(s). This translates to significantly higher profits (or losses) from initial capital spent than in traditional trading. The leverage that is attainable in the Fx market is one of the highest for investors.
In order to participate in the Fx market, a trader must first open a currency trading account with a broker. In order to trade $100,000 worth of currency with a margin of 1%, a trader only has to deposit $1,000 into his or her account. The amount of leverage provided is usually 1:50, 1:100 or 1:200 or more, depending on the broker and the amount the investor is trading.
You may think 100:1 leveraging seems extremely risky, but it’s significantly less considering that currency prices usually don’t change by more than 1% in daily trading. If currency values fluctuated as much as equities, brokers wouldn’t be able to provide as much leverage.
Forex trading is conducted 24 hours a day Monday through Friday, but the best Fx players (like big banks and large international corporations) are online all the time for trading currencies, This is only one of advantages of currency trading.
Forex trading in Nigeria starts with high leverages that contain high risk. The trading of foreign currencies online is a leveraged product, which means that you are only required to deposit a small percentage of the full value of your account funds to place an Fx trade. This translates to the potential for profits or losses from an initial capital outlay being significantly higher than in traditional trading.
When an investor decides to invest in the Fx market, he or she must first open a currency trading account with a broker. In Fx trading, investors use leverage to profit from fluctuations in exchange rates between two different countries. Leverage is basically a loan that is provided to a trader by the Fx broker who is handling an Fx account. The leverage that is achievable in the Forex market is one of the highest obtainable by investors.
Usually, the amount of leverage provided is either 1:50, 1:100 or 1:200 or more, depending on the broker and the size of the position the investor is trading. Standard trading is done on 100,000 units of currency, which is called “one lot.” For a trade of this size, the leverage provided is usually 50:1 or 100:1. Leveraging of 200:1 is usually used for positions of $50,000 or less.
The leverage provided on a currency trade is 100:1. In other words, in order to trade $100,000 of currency with a 1% margin, a trader will only have to deposit $1000 into his or her margin account. Leverage of this size is significantly larger than the 2:1 leverage commonly provided on equities and the 15:1 leverage provided by the futures market.
Although 100:1 leverage may seem extremely risky, the risk is significantly less when you consider that currency prices usually change by less than 1% during one day of trading.
If currencies fluctuated as much as equities, online brokers would not be able to provide as much leverage.
Once again is you want to start Forex trading in Nigeria as a beginner trader then use low leverage.
Foriegn Exchange Pricing
All Forex trading is quoted in terms of one currency versus another. Each currency pair has a “base” currency and a “counter” currency. The base currency is the one appearing on the left of the currency pair and the counter currency appears on the right. For example, in “EUR/USD,” the EUR is the “base” currency and the USD is the “counter” currency.
Currency price fluctuations are triggered by currencies either appreciating in value (strengthening) or depreciating in value (weakening). For example, If the price of EUR/USD fell, this would indicate that the counter currency (US dollar) was appreciating, while the base currency (Euros) was depreciating.
When trading in Fx, you would buy a currency pair if you think that it will strengthen against the counter currency. Alternatively, you would sell a currency pair if you thought the base currency was weakening in value against the counter currency and make profit.
The word “pip” is an acronym for “price interest point” or “point in percentage.” A pip measures the amount of fluctuation in the exchange rate for a currency pair. For currency pairs displayed with four decimal places, one pip is equal to 0.0001.
Most currency pairs are quoted to five decimal points, with the change from the 4th decimal in price commonly being referred to as a “pip.” For example, if the price of the EUR/USD currency pair moved from 1.33800 to 1.33920, it is said to have climbed by 12 pips (92-80=12).
Simply stated, a pip is what we in the Fx market consider a “point” for calculating profits and losses.
The difference between the bid and asking price of a currency is referred to as the “spread.” For example, for EUR/USD dealing at 1.33800/1.33808, the spread is 0.8 pips or 0.00008. The exceptions to this are the JPY pairs, which are quoted with just two decimal places. For example, a USD/JPY price of 97.41/97.44 displays a 3 pip spreads.”
Now you know how Forex trading in Nigeria works so its time to open a currency trading account from Nigerian forex brokers.
Best Forex Trading Companies In Nigeria
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- FxPro – Originated in 2006, London-based FxPro is an online broker providing Forex trading along with CFD’s. Mt4 and trader trading platforms are available. Fxpro Forex broker is one of the Top Forex Brokers in Nigeria.
- Plus500 – The Plus500 broker was established in 2008 as an online international trading platform that is popularly used in South Africa, Nigeria, Europe and Australia and elsewhere in the world.
- FOREX.com – Forex.com is owned by parent company GAIN Capital (NYSE: GCAP). Operating since 2001, it was a first mover in getting currency markets to the selling trader.
- FXCM – provides a no dealing desk model along with competitive spreads. FXCM brokerage provides trading in a wide variety of currencies including the Chinese Yuan.
- Markets.com – The Markets.com maintains its headquarters in Cyprus, UK and is an investment services firm that is operated by Safecap Investments Limited (Safecap), which was founded in 2006 and is a subsidiary of Playtec PLC.
- AvaTrade – The AvaTrade company was founded in 2006 in Dublin, Ireland and is licensed and fully regulated in the EU and BVI, as well as Australia, Japan and Nigeria.
- eToro – The eToro company is a social trading and multi asset brokerage company in Nigeria that has registered offices in Cyprus, Israel and the United Kingdom.
- HYCM – In trade for 30 years, HYCM offers several trading platforms and a wide variety of trading instruments. HYCM forex broker is one of the Top Forex Brokers Nigeria, It is a division of the Henyep Group, a global corporation with a presence in 20 countries.
- XM – The XM.com forex broker was established in 2009 in the Republic of Cyprus using the name Trading Point of Financial Instruments Ltd. The broker is regulated by CySEC as well as the UK’s Financial Services Authority (FSA).
- Fxstay – foreign exchange Company provides professional managed forex accounts service in Nigeria with competitive management fees, their specialty is trading on big investment safely. You dont need to know foreign exchange trading with them as their team handle trading or you.
Top Nigerian Forex Trading Companies Provide Spread Betting
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IG Group are the most recognized spread betting brokers. However IG group in not a Nigerain base forex broker but if you want to start Forex trading in Nigeria you can open free account with this broker.
As well as their own platform, customers can trade FX, Index and supplies through MT4. They also have a very nice welcome bonus for new customers. New customers can get a minimum deposit bonus of up to £3,750. It is one of the unique and biggest spread betting brokers. It can also offer access to the markets through MT4 as well as their own online platform.
Invented in 1974 as a spread betting business under the name IG Index broker. The company provides trading in sets including EUR/USD, AUD/USD, and USD/JPY with spreads as low as 0.8 pips. IG group are one of the largest Top 10 Forex Brokers Nigeria. Customers mostly trade through their own well recognized platform. Though, as MT4 is such a popular choice for FX traders recently IG Markets launched an MT4 option.
CMC Markets was founded in the UK in 1989 and listed on the London Stock Exchange (LSE) in 2016. Almost thirty years of experience trading in financial markets has created a loyal following of traders who regularly use this award winning platform for investing their money in various international financial marketplaces. To start Forex trading in Nigeria CMC markets is a good broker.
ETX Capital is a broker that was established in 2002 and is headquartered in London, England. The broker also provides financial spread betting for Nigeria traders.
Recognized in the UK in 1983, City Index provides Forex trading, CFD’s and spread betting. However the broker is UK company but its good choice to start Forex trading in Nigeria.
The MT4 platform is offered with added tools and features. CityIndex is one of the unique and biggest spread betting brokers. City Index can offer access to the markets through MT4 as well as their own online platform.
Now you know how Forex trading in Nigeria works and how to open account with the best Forex trading companies in Nigeria, So help ForexSQ experts please by share this article on social networks.