Forex Trading in Nigeria

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Contributor, Benzinga
May 2, 2022

Want to jump straight to the answer? The best forex broker for most people is definitely FOREX.com or CedarFX.

Many experts, including famed investor George Soros, call Africa the world’s fastest growing middle class, and Nigeria is leading the way on the continent. Alongside a consumer spending boom and widespread commercial construction, modern Africa is marked by a growing interest in retail investment opportunities. 

The accessible, decentralized nature of the forex market connects investors around the world, and Nigeria is 1 of the countries taking full advantage of the market. A recent report from Dailyfx, a leading forex research firm, tells us that forex attracts upwardly mobile Nigerians looking for stable, consistent investments. If you are looking to trade on the forex market in Nigeria, here is what you need to know.

Get Started with Forex in Nigeria

Follow these steps to get connected with the worldwide forex market:

  1. Get an online connection. You can get connected to a forex broker through any online device, but it’s usually good to trade primarily from a home office. You’ll be taking in a lot of information to make investments, and all of that information is easier to fit on multiple screens. Make sure your connection is strong and latency free.
  2. Pick a reputable broker. Your forex broker is the company that will connect you to the market. Forex is a decentralized market with relatively little regulation, so not all brokers come to you fully-vetted. Do your research and use virtual accounts 1st.
  3. Open your account. Once you pick the broker you like, follow that broker’s process to open the account. You will verify your identity and connect your bank account.
  4. Fund yourself. You need money to make money! Fund your forex account from your 3rd party bank, a check, a debit card or a credit card.
  5. Install your trading platform. Many brokers have proprietary trading platforms. Some integrate with 3rd party providers. Either way, you’ll need to download the trading software. This is the user interface you will use to make investments in the market.
  6. Profit. This is easier said than done, but definitely possible for a hardworking investor!

Nigeria Forex Trading Strategies

If you want to trade forex successfully, you need a core strategy. You’ll also need a working knowledge of multiple strategies so you can understand the reasoning behind short term moves.

Scalping

This lightning fast strategy attempts to skim just a few pips (basis points) off of each trade. If you are a scalper, you may only hold a trade for a second or 2 before exiting. You should have a working knowledge of indicators, and you need a fast trading platform and Internet connection with no latency — timing is everything in scalping. This strategy relies more on a knowledge of how charts move rather than the fundamentals pushing the long-term movement of currency pairs.

Day Trading

A forex day trader performs intraday trades and is in all cash by the end of the day. Day traders want to avoid large overnight moves. This is less of an issue in the forex market because it trades 24 hours a day. However, traders can still avoid the weekend pause with this strategy. Day trades may last for the entire trading period or can last for only a few seconds.

Swing Trading

Swing positions look to profit from short-term moves. These positions may be held for a number of days, but they don’t have to. Swing traders may need to understand the fundamental macroeconomics behind a currency pair in order to make money. Because the potential time frame of a swing trade is longer than a scalp or a day trade, news items and macroeconomic conditions can exercise more influence over them.

Positional Trading

Potential trading is also known as long-term trend trading. These traders are looking for large shifts in the price of a currency pair. If you’re a patient trader who doesn’t care about small, short-term chart moves, this type of trading may be for you. You’ll need to have a good knowledge of market fundamentals and the infrastructure of the individual currency you’re trading.

Forex Trading Example in Nigeria

Let’s say NGN/USD is trading at 0.002575/0.002595 and you think the price will rise, so you prepare to buy the pair. You want ₦1,000,000. The margin rate of this currency pair is 4.02%, so you will only need $103.92 in your account.

The NGN/USD price moves up and is trading at 0.003010/0.003030 after 4 hours. You have enjoyed a move of 4.15 points, and your profit is (₦1,000,000*0.003010)-(₦1,000,000*0.002595) or $415.

Making Money with Forex in Nigeria

There are many ways to make money with forex. Here are some of the more popular vehicles.

  • Shorting the market You may be good at determining when a currency pair is priced too high. If so, you can short them to profit. Shorting means you are borrowing a currency to sell it so you can buy it back later at a hopefully lower price.
  • CFDs: Contract for differences (CFDs) track currency pairs. The chart of a CFD will look the same as the currency pair you are targeting, but you never actually own the currency. This strategy has more to do with the type of broker you want to use than an actual strategy.
  • All or nothing (binary) options: You can trade in an all or nothing fashion instead of following the price directly. Binary options give you a yes or no scenario — if a currency pair price is above a certain level at a certain date, you win money. If not, you lose.

Best Online Forex Brokers in Nigeria

Study a number of forex brokers before committing yourself. The broker you pick could make a difference in your trading strategy.

FXTM

FXTM, aside from being a lovely brokerage house, helps traders learn how to make the most of their investments. Copy trading and webinars teach you quite a bit about how to trade forex, eBooks give you the opportunity to teach yourself and videos review old webinars and explain the basics of speculating in foreign currencies.

FXTM allows you to use MT4 and MT5. This makes it easy to use robo-advisors or trading bots. Download the MT4 or MT5 platforms on your computer or mobile device so that you can easily start trading.

As an added bonus, you can easily live chat, call or email FXTM for assistance with account issues. With this range of customer service options, you feel a connection to the platform that you don’t get with “hands-off” brokers.

With over 50 currency pairs, FXTM allows you to focus on the most profitable pairings. If that isn’t enough, you can look into CFDs that focus on commodities, stocks or indices. You can diversify your portfolio through the platform, and you might even trade spot gold or silver. Allowing FXTM to improve your investing experience helps you increase your net worth and build wealth from the bottom up.

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OctaFX

OctaFX is a multi-platform trading company, allowing for FX trading in the manner you prefer. You can use MetaTrader 4, MetaTrader 5 and cTrader depending on your comfort level, along with web, desktop, Android and iOS versions of each platform. OctaFX even offers a comparison chart so you know what you get with each trading platform.

Featuring negative balance protection and funds security, OctaFX goes above and beyond with several account levels. Moreover, OctaFX offers an Islamic account with no interest and fixed fees.

With contests, giveaways and a robust referral program, you can earn more simply by using OctaFX over other trading companies. You can even join the CopyTrading program where you copy master traders, thus increasing your net worth.

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CMTrading

When you visit CMTrading, you are entering a platform that allows you to take advantage of advanced technology for forex, CFD, commodity, index and cryptocurrency trading. This platform is the perfect option for Nigerian traders who want to enter the market but want to avoid sites that might feel unsafe or seem difficult to use.

You can trade on MT4 or the Sirix Web Trader. There’s also a social trading partner called CopyKat. Irrespective of what you try, you get all the resources you need to make something out of your forex investments.

If you’re new to trading, you can attend webinars, watch videos, read FAQs or reach out tot he customer service team 24/5 for more information. Choose from one of 4 account types. If you prefer, you may also open an Islamic account to ensure you are managing your money properly.

While the platform is not yet available in the U.S., it brings the power of foreign currencies, alternative tokens, CFDs and commodities to your desktop.

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FOREX.com

FOREX.com is ranked as the No. 1 U.S. forex broker. The company has oversight from the 2 main U.S. financial regulators: the National Futures Association (NFA) and the Commodities Futures Trading Commission (CFTC).

It also has oversight from regulators in the U.K., Australia, Japan, Canada, Hong Kong, Singapore and the Cayman Islands.

Accounts at FOREX.com can be funded with just $250 USD. The broker lets you trade micro lots if your preference is to start trading with smaller amounts. It also offers an Islamic account option in addition to keeping client accounts segregated from its own funds.

FOREX.com offers several web-based, desktop and mobile trading platforms, which include the MetaTrader 4 and 5 platforms from MetaQuotes in addition to NinjaTrader.

Clients also have access to the company’s proprietary Advanced Trading Platform for desktop computers and its Web Trading platform if you prefer to trade via a web browser.

Due to U.S. restrictions, FOREX.com has a maximum leverage ratio of only 50:1 available to clients who trade currencies.

Read Benzinga's full FOREX.com Review

eToro

eToro is a social trading platform with over 10 million account holders worldwide. It has provided forex products and more to retail clients for over 10 years. 

eToro has some impressive features. The most popular include CopyTrader, the Social News Feed and CopyPortfolios.

CopyTrader and CopyPortfolio allow you to locate a successful trader and copy their strategy. You can copy up to 100 traders with this feature.

With the Social News Feed, trader updates from those in your network can be accessed in a Twitter-like thread. Traders are able to get alerts based on certain market factors and can discuss markets and their strategies.

Read Benzinga’s full eToro Review

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    eToro USA LLC; Investments are subject to market risk, including the possible loss of principal.

AvaTrade

AvaTrade has been facilitating online trading since 2006 and has offices all over the world. 

With the firm’s intuitive and simple interface and the solid customer support team, you can easily navigate the complex investing world. It also provides specialized educational content for beginners like its Trading for Beginners section.

Avatrade offers multiple trading softwares, including an in-house platform. AvaTradeGO and MetaTrader 4 are available. And you can copy trades of experienced traders with automated trading softwares like ZuluTrade, DupliTrade or MQL5.

Open your account with a minimum deposit of $100 via credit card or wire transfer.

Read Benzinga’s full AvaTrade Review

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Pepperstone

When you trade with Pepperstone, you can invest in CFDs, forex, stocks and crypto. The platform gives you quite a bit of versatility, including allowing you to trade in a number of different countries.

Operating out of Australia, the platform offers access to:

  • 61 forex markets
  • 60 stock CFDs
  • 5 cryptocurrencies
  • Up to 500:1 leverage
  • 24/7 customer service

If you want to learn more about Pepperstone, you can check out Benzinga’s review here.

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What to Look for in a Nigerian Forex Broker

Whether an online forex broker is based in Nigeria or somewhere else, the best online brokerage should generally have these 11 elements covered:

  • Oversight from a reputable regulating agency
  • A good reputation among forex traders
  • Allow you to open and trade in the type of account you want
  • Require a minimum deposit you can afford
  • Give you access to trade all forex pairs and other assets you may want to trade
  • Maximum leverage ratio high enough for your trading strategy
  • Competitive dealing spreads
  • Provide you with protection against negative balances
  • Keep slippage and re-quotes on orders to a minimum
  • Maintain client funds segregated from your own money
  • Withdrawal and deposit options to suit your needs

Another important consideration is the trading software the broker supports. While some brokers offer clients a proprietary trading platform, many provide market access and platforms from 3rd parties such as MetaTrader 4 and 5 from MetaQuotes, as well as cTrader and NinjaTrader.

Forex Terminology

There are some basic terms that every forex trader must know:

  • Pip: Usually equated with U.S. $0.0001, the pip is the smallest distance that a currency can move up or down. This is also known as a basis point.
  • Lot size: This is the amount of currency that you will trade at once. If you choose a standard lot size, you will trade 100,000 units. You can also trade in microlots (fractions of a standard lot).
  • Orders: The order is the description of how you enter and exit the market when investing.
  • Calls: A call option gives the buyer the ability to buy a certain amount of currency at a certain price on a certain date. They can be traded as well as currency pairs. Their values are correlated closely with the currency pairs they represent.

Money Around the World

Connecting your personal economy to the world can be an exciting proposition. Forex gives anyone from any country the ability to move in the global economy. With skill, you can improve your financial valuation, create a stable income and build a nest egg.

Frequently Asked Questions

Q
Can I legally trade forex in Nigeria?
A

Forex is unregulated in Nigeria.

Q
What are the best forex brokers in Nigeria?
A

There are several to include Pepperstone, FXTM and IC Markets. 

Get a Forex Pro on Your Side

FOREX.com, registered with the Commodity Futures Trading Commission (CFTC), lets you trade a wide range of forex markets plus spot metals with low pricing and fast, quality execution on every trade. 

You can also tap into:

  • EUR/USD as low as 0.2 with fixed $5 commissions per 100,000
  • Powerful, purpose-built currency trading platforms
  • Monthly cash rebates of up to $9 per million dollars traded with FOREX.com’s Active Trader Program

Learn more about FOREX.com’s low pricing and how you can get started trading with FOREX.com.