Why Forex trading is becoming popular in Nigeria

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Why Forex trading is becoming popular in Nigeria, Why Forex trading is becoming popular in Nigeria 


In a recent report released by Dailyfx (a forex research firm) in 2020, it was found that Nigeria’s forex traders trade currency positions daily worth $ 1.25 million.

Forex trading happens around the globe and is open 24 hours a day for 5 1/2 days a week. This means you can trade forex whenever you want, giving you time flexibility. You don’t have to wait for an opening bell or struggle to run your order before a market closes daily. So you have the option of either being aggressive or passive as you choose to switch to the desired schedule.

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Some experts interviewed by Nairametrics divided the reasons why forex trading is becoming popular in Nigeria.

Sir. Abdul-Rasheed Oshoma Momoh, Head, Capital Markets at TRW Stockbrokers Ltd, a veteran of forex trading, spoke with Nairametrics about the need for any discerning investor to diversify by asset classes and sectors. According to him, Forex trading is a reliable option. He said:

“Forex trading is among the most rewarding asset classes for traders and investors. Although Forex has a reputation for being short-term high-risk speculators, there are trading styles that are suitable for both short-term and long-term traders.

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“Forex trading allows you to earn a steady income from various types of currency trading or from investing in bonds, dividend stocks and other income vehicles.“

(READ MORE: Naira drops to N387.25 in the Investor and Exporters window)

Take advantage of choices

Forex trading offers one of the highest leverage rates compared to other financial markets. Small trading accounts offer higher leverage due to small deposit requirements,

Adegbotolu Kehinde Erastus, a professional currency trader with over a decade of experience in currency trading, but supported the advantage that leverage brings in the currency market. He said:

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“Forex trading gives you access to currencies and commodities that you can trade with high leverage unlike the stock market.

“This means that you can actually trade with larger sums of money than the invested capital. Note that this varies between different brokers.

About leverage increases your profits; however, any move towards you will result in greater loss. With proper risk management, the Forex market is very lucrative. “

(READ MORE: The U.S. dollar ignores red flags, wave against major currencies)

Nairametrics research dug deep to find out why those who do forex trading do so and we came to the following;

liquidity

The most liquid financial market has always been the foreign exchange market. With trillions of dollars exchanged daily, you do not have to worry about whether your trade will be processed when you trade in one of the largest currencies, including the US dollar, euro or British pound.

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In the last few years, theforextrading market has risen to one of its highest ever levels with $ 6.6 trillion transactions per day on average in 2019, according to the Bank for International Settlements.

Ayodeji Edordu a global market analyst at Alphagold Capital told Nairametrics how forex trading builds a person’s personal character. He said:

“As a forex trader, you have control over your finances. It is also an opportunity to earn extra income. With a “small” invested amount, a trader can earn some good income while trading. Trading also exposes one to the financial markets and current events.

It also teaches a trader to get disciplined. There are many opportunities as the market is very liquid with many volumes.

“With a click, you can buy and sell as you please, as there is usually someone at the other end willing to trade back.”

(READ MORE: Global trade with the worst decline in 2020 since the global financial crisis in 2008)

Opportunity to buy or sell at any time

In forex trading, you trade currencies in pairs; when you are bearish (short) on one currency, you are bullish (long) on ​​the other. For example, if you are bearish on USD / NGN, you go short by buying naira and selling dollars at the same time.

List of successful currency traders in South Africa by 2020 ▷ Briefly SA

If you are bullish (long), you can go long by selling the naira and buying US dollars. This is different from stock markets where you are only allowed to sell during an uptick. This is a big advantage for forex trading as you can take advantage of both bullish (upward) and bearish (downward) trends at any time.

Funmilola Olajide, a professional forex trader and tutor, spoke with Nairametrics in a phone chat interview and explained the flexibility that forex trading brings. According to her;

“Even if the market rises or falls, you can trade, and some forex trading strategies even depend on the latter.

“You can find opportunities in any market situation, and you can trade when you think the price of a currency pair is going up or when you expect it to fall. Some traders even thrive during high volatility periods.

Although they carry more risk, these sudden price changes can be useful if timed. Whether you follow longer market trends or trade day to day, there are plenty of trading opportunities to be found. “

(READ MORE: Naira hits N388 to $ 1 in I&E as IMF dollars boost foreign exchange markets )

Low transaction costs

Currency transactions are conducted using the counter method, with currency traders dealing directly with market makers and market participants such as banks.

As such, there are no exchanged fees or clearing costs that you experience when trading stocks, ETFs or bonds. In forex trading, such fees do not exist. Typically, Forex market makers will not charge commissions on currency trades you process through their currency trading platforms.

No regulators

Forex trading in Nigeria is still not regulated, although the current market is one of the most active in Nigeria.

Trading in the forex market, unlike stock trading, does not attract any fee. No one is legally supervised, and the current pricing is done based on supply and demand from currency traders. This is in contrast to Nigeria’s stock market where local stocks cannot go up or down over 10% of its current value for that day.



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