1) Open Account with a Forex Broker
In order to trade forex, you need to find a CFD broker. There are numerous forex brokers available for local traders such as Hotforex, Exness, XM Forex, FXTM, Forex.com, FxPro, Oanda etc.
We have compiled the list of best forex brokers for Nigerian traders based on 9 factors. All of the brokers that we recommend on our website have proven track record of honest dealing with traders, low spread, and are authorized/regulated by top-tier global Regulatory bodies (FCA, FSCA, CySEC & ASIC) for the safety of your funds.
ForexTime is a well-regulated broker (Tier-1 & Tier-2 regulated) for Forex trading as per our research & comparison.
- Competitive Spread on majors (and zero fees on deposits & withdrawals). For ex. typical spread of 0 pips + $4.88 commission for major like EUR/USD. This commission gets lower with higher trading volume.
- Free demo Trading account
- Easy to use (mobile-friendly) MT4 & MT5 platforms
- 63 Currency Pairs, 100s of CFDs on Metals, Commodities, Indices etc.
- Fast Withdrawals in Nigeria & Good support
- Multiple Account Base Currency options including USD, EUR & NGN
- Local deposit & withdrawal options are available, including online bank transfer.
- Your funds are 'considered' safe – FXTM is regulated with UK's FCA (Financial Conduct Authority), CySEC (Cyprus Securities Exchange Commission) and FSCA (Financial Sector Conduct Authority in South Africa)
Start Trading at FXTM Important: Forex Trading is risky, so have a working strategy before trading with real money.
Start with Demo Accounts: Never start trading directly on a live account if you are a beginner becaue your real money will be at risk. We advise you to first create a demo account with the broker of your choice and then learn to trade by building & testing out a trading strategy, and figure out what works for you in different market conditions. Only once you are confident about your trading style & strategy, only then you should decide to trade with real money on a Live account.
Once you have found the Forex Broker of your choice, you can then open an account with that broker to start trading (or demo account to learn). This account will enable you to place your trades in the interbank market at the live currency prices.
If you are creating a Live account: 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 regulated 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.
2) Place your First Trade
After you have opened your Live account & funded it real money 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.
Below is an illustration of how you can make 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 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.
To understand it more, let's use an example again. If you place a 'Short' trade for EURUSD at 1.0000, expecting it to go to 0.9900, and the price does go in your direction, you would profit from this trade.
The exact profit that you make will depend on your position sizing (which depends on your account size & leverage used).
But if in this same example, the price of EURUSD goes to 1.1000, and you have your stop loss at that level (or probably you don't have enough margin to keep the position open), then you will realize a loss of 100 pips, because the price has moved again your direction.
Also Read: Our detailed guide on How to Trade Forex in Nigeria
