For beginner forex traders in Nigeria, it is important you know retail online forex trading is currently unregulated in Nigeria.
But there are foreign forex brokers like HF Markets, Exness & others that accept traders who are based in Nigeria. When you are trading via these brokers, you are doing so at your own risk.
These foreign forex brokers hold licenses issued from overseas regulatory bodies and register Nigerian traders under foreign regulators.
For the safety of your funds, you must never trade forex via a brokerage that is not Tier-1 regulated until there is a local regulation in place. In this guide we will learn how forex trading works & the platforms that accept Nigerian traders, and how to avoid offshore high-risk brokerages.
Best Forex Trading Platforms in Nigeria
Before we understand forex trading, there are some of the top-tier regulated (FCA, ASIC, CySEC) forex brokers that accept Nigerian traders.
Here is a brief breakdown of these platforms, but you can check the above linked guide for more details.
|Number of currency pairs
Mobile-money, Neteller, fasapay,
|FSC Belize- 000261397
e-Wallet, mobile money
ASIC – 406684
FSCA – 45984
CySEC – 347/17
Credit/Debit Cards, Bank Wire
Note that you should do your due diligence before opening an account with any forex broker. Signing up with foreign forex brokers is not without its own risks.
Some forex brokers opt to register their companies in jurisdictions with weak or even self-regulatory laws. This means the broker can engage in unethical practices without regulatory repercussions.
Don’t fall for scams or get Rich Forex schemes
There is also misinformation about forex trading on social media making it look like a get-rich-quick- scheme. Influencers with lots of followers create an image of luxury living and want you to believe forex trading is the source of wealth.
You need to get into forex trading with the right mindset as statistics from various forex brokers show over 80% of retail traders lose money.
What is Forex Trading?
In its simplest form, forex trading is the exchange of one currency for another. For instance you can sell the Euro (EUR) and buy the US Dollar (USD). In this case the pair is called the EUR/USD pair.
Many people wonder where forex trading is done but actually there is no physical office location. It takes place online as buyer & seller are remotely matched to each other by their forex broker via Electronic Communication Networks (ECNs).
How to Trade Forex in Nigeria?
Traders based in Nigeria can start to trade Forex through the following steps
- Choose a Regulated Forex Broker
- Open a Forex Trading Account by completing your KYC
- Download Trading Platform from broker’s website
- Fund your Trading account via local payment methods
- Place Your Trades from the platform
We will explain each step one by one.
Step 1. Choose a Regulated Forex Broker
When choosing a foreign forex broker, you must ensure its regulators are reputable. Some of these international regulators are mere offshore stamping offices where any entity is approved.
You should choose a broker that is registered with more than one tier-1 regulator. Tier-1 regulators are financial institutions that impose very high standards for registering brokers.
Examples of tier-1 regulators are: the United Kingdom’s Financial Conduct Authority (FCA), Australia’s ASIC, Germany’s BaFin, Cyprus CySEC, etc.
Avoid brokers who are only regulated in offshore jurisdictions meaning island nations such as Bahamas, Mauritius, Cayman Islands, British Virgin Islands, and other small nations like Belize, Seychelles, etc.
Many regulatory bodies in offshore jurisdictions named above, allow brokers to regulate themselves or offer weak regulatory oversight.
However, a good broker should hold multiple regulatory licenses in addition to any offshore license they may hold.
So, if a broker has a license from an offshore jurisdiction like Bahamas, they should also have another license from a Tier-1 jurisdiction like the United Kingdom.
When looking for reliable forex brokers in Nigeria, we are talking of foreign brokers accepting Nigerian traders. Simply go to the bottom of the brokers website or click on the ‘about us’ tab to find the regulator/license number of the broker.
For example, HF Markets is a forex broker that accepts Nigerian traders, and when you click on the ‘company>about us’ tabs you find they are also regulated by tier-1 regulator- Financial Conduct Authority (FCA) United Kingdom & tier-2 regulator DFSA Dubai.
HF Markets FCA license/reference number is 801701 as seen on their website but don’t take their word for it. Head to the FCA website and run a search and view the financial services register. When you enter the reference number and search HF Markets information should be displayed.
Also beware of scammers who build cloned website versions of legitimate brokers.
The regulators’ website also shows you the phone number and other contact information of the broker. Endeavour to call the phone number gotten from the regulator’s website to be sure you are dealing with the right broker.
Step 2. Open a Forex Trading Account
After choosing a regulated broker, the next step is to open a trading account.
On how to open a forex account in Nigeria, you are meant to fill out a Know Your Customer (KYC) form.
It is meant to ensure companies verify the background of the customers and prevent illegal activities like money laundering.
Keep KYC information ready as you will need them to complete the registration process. Some required information include:
- NIN Number
- BVN Number
- Proof of address
For proof of address, you can use your utility/power bill that shows your current address and is not older than 3 months.
All information can be submitted online via the broker’s account opening portal. For your passport photo, you simply take a picture with your phone and upload it to the portal.
Step 3. Download Trading Platform
Click on the app icon on the forex broker’s website which will redirect you to your Google Playstore or Apple store. You then download the trading app and create a password.
Beginners should choose atrading app or account option that allows them to trade small lots of currency using small capital. Some brokers offer Cent and Kobo Accounts to beginners, so they don’t risk too much capital.
Step 4. Fund Your Trading Account
Depending on your trading account type, you can fund your account through your bank, mobile payment platforms, mobile money, cards, cryptocurrency etc.
The base currency of your account is also important. For some forex brokers, the base currency is usually the USD, GBP, EUR etc. while others have NGN. If there is no NGN base currency, your broker will charge you a conversion fee for converting your deposit from Naira to your account base currency.
Forex brokers with Naira Trading Account include HF Markets, Exness, & FXTM.
Step 5. Place Your Trade
Before placing a live trade, you are advised to test your strategy with a demo account where you learn to trade using fake cash. After practicing on the demo account, you can trade live. As a beginner remember to set a stop loss order and not only trade with money you can afford to lose.
How to Learn Forex Trading in Nigeria?
Step 1. Understand common forex terminology
In this section we will discuss some common terms and explain how they work.
What is a CFD in Forex?
A CFD is an acronym for ‘Contract for Difference’ and whenever you hear people say CFD, just know that you don’t get to own the underlying asset you are trading & you are just speculating on the price movement for profit.
Let us see some examples of common CFDs:
- Forex CFD: you don’t get to own the physical currency, you just predict if exchange rates will rise or fall, and get compensated if you are correct, or get debited if you are wrong.
What is Lot size in Forex Trading?
A lot size is the unit of measurement for trading orders you can place. A standard lot size refers to 100,000 units of CFD for any underlying asset.
|🛒 Lot Type
|🎯 Number of CFDs
For example, a standard lot of EUR/USD CFDs means 100,000 units of EUR/USD currency pair. A standard lot of Tesla Stock CFDs means 100,000 units of Tesla stock, etc.
The current price (exchange rate) of USD/NGN as seen on HF Markets mobile forex trading app is N1362 so a standard lot of 100,000 units will cost you N136, 200,000 (meaning N1,362 x 100,000 units)
You don’t always have to trade a standard lot;you could trade a fraction of a standard lot.
For instance, you can check your budget and trade 0.01 of a standard lot. So, if a standard lot costs N136, 200,000 you can trade a position size worth N1, 362,000 (meaning 0.01 x 136,200,000)
Forex brokers allow you to trade smaller sizes so it can fit your budget, they also give you a loan so you can pay back after you finish trading.
Forex brokers like Exness & HF Markets provide forex lot size calculators so that you know what lot size to open as per your available budget.
What is Leverage in Forex?
Leverage is the ability to open big trading orders with small capital & this is possible because your forex broker gives you a loan which you repay when you finish trading. The loan from your forex broker is what gives you the leverage to open bigger trading orders than you would have been able to.
Every forex broker displays leverage ratio for each asset class. The leverage your broker will grant you for forex trades will not be the same as what they would for Crypto trades. It all depends on how volatile the asset you’re trading is.
Leverage is always expressed as a ratio say 1:1000 meaning for every $1 you agree to commit to trading the asset, your broker gives you a loan of $1,000.
If you are trading 0.01 of a standard lot of USD/NGN forex pair the actual cost is about N1.3 million but with a leverage of 1:1000 you only pay around N1, 300 while your broker lends you the difference.
Leverage is dangerous because if your trade ends in a loss you are expected to repay the loan and any money you deposited in your trading account will be taken and used to offset the loan.
What are Pips in Forex?
A pip is how we measure an increase or decrease in an exchange rate.
For how to calculate pips in forex, let’s assume EUR/USD exchange rate value increases from 1.0878 to 1.0879, then that is an increase of 0.0001 or 1 pip.
We simply subtract 1.0879 from 1.0878 to give us 0.0001. It’s easier to just say 1 pip instead of saying 0.0001.
The monetary value of a single pip is always $10 depending on the following conditions are met:
- You are trading a standard lot of 100,000 units
- The currency on the right side of the pair is USD (example EUR/USD or GBP/USD)
However,if you are trading less than a standard lot of 100,000 units the pip value is lower. For example, if you are trading 0.01 lot of EUR/USD, then a pip value is 0.01 x $10 = $0.1
This means if you close your trade when the value of the exchange rate falls by 10 pips, you automatically record a loss of 10 pips x $0.1 = $1
Beginner forex traders usually trade popular pairs like EUR/USD (or pairs with USD on the right hand side) because they have more liquidity & calculating profit/loss is easier.
What is spread in forex?
Spread is the difference between the price your broker shows to you on the trading app (buy or ask price), and the actual market price (sell or bid price).
The broker will always give you a higher buy or ask price so he can make a profit from the price difference.
For example, if you open your trading app and see EUR/USD exchange rate written as 1.0878/1.0879, you buy from your broker at 1.0879 while the true value of the FX pair (the price at which you can sell it) is 1.0878.
For EUR/USD 1.0878/1.0879 quotation, the spread is (1.0879 – 1.0878) = 0.0001 or 1 pip.
What is short selling in forex trading?
Short selling refers to borrowing & selling something you don’t own, then rebuying it when the market price is lower and returning it to the person you borrowed it from.
Short selling exposes you to unlimited risk because the exchange rate can suddenly start rising and there is no limit to which it can rise. So, you could incur heavy losses if you were wrong in your prediction.
If you predict the EUR will fall and USD will rise in value, it means you predict that the EUR/USD exchange rate figure will reduce.
To benefit from this fall, you can go short (or short sell) the EUR/USD currency pair. These are the steps to short sell a currency pair:
- You approach your broker and sell units of EUR/USD CFDs at the current exchange rate value of say 1.0879. You then wait for the exchange rate to fall. This is the first turn of the transaction.
- If you were right & the EUR/USD exchange rate falls to say 1.0875 you then rebuy it for cheaper and return to your broker. Your profit is the difference in sell and rebuy price (minus any broker fees)
What is going long in Forex?
Going long refers to buying and waiting for the price to increase then you sell and make a profit. It is the opposite of short selling, and your risk is limited to the exchange rate dropping and it can’t drop to zero.
Step 2. Read Forex Broker reviews
It is possible to have forex CFD trading accounts with several forex brokers. You should read reviews and carry out research on trading conditions for different brokers to see which one works for your strategy.
For example, brokers like HF Markets provide a Cent Account for beginners who have used the demo account and want to try their hands-on real-world trading but with little capital.
There are also brokers such as Exness who allow swap-free trading where you can leave your position open overnight without paying any interest fees.
There are also brokers like AvaTrade who charge a fixed spread fee when you trade, and this is different from many brokers who charge variable spreads which keep changing every time.
Step 3. Practice on a Forex Demo Account
Choose a regulated forex broker and open a practice (or demo) account.
A demo account is an account that is not real and contains fake cash. A demo account tries to mimic real-life trading so you can practice with fake cash till you are experienced enough to open a real trading account with the broker.
Regulated brokers are under the supervision of governments who licensed them so the risk of them defrauding you is much lower.
Best Time to Trade Forex in Nigeria
The best time to trade forex in Nigeria is the London session from 8AM to 5PM.
Let’s understand this more.
The international forex market is open 24 hours daily, five days a week. While you can leave your trade and go do other things, you must monitor it constantly.
There are certain times of the day when the market is very active that is witnessing a lot of activity and volatility. This is because the international forex market is unofficially divided into sessions according to the time zones. There is the London session, New York, and Asian session.
In Nigerian time, the Asian session begins at midnight and ends at 9 am.
This means if you are to trade in these currencies and follow technical analysis, you should be active during these odd hours of the day to monitor your trades.
The London session is most suitable for forex traders in Nigeria because Nigeria and the United Kingdom are just one hour apart in time.
Activities in the London session usually tick between 8 AM and 5 PM. This fits into Nigerian working hours. This allows the Nigerian trader to benefit from the activities and currency pairs that dominate these two sessions.
For the London session, the dominant currency pairs are; EUR/USD, GBP/USD, USD/CHF etc. Since the New York session starts at 3 PM Nigerian time, it allows the Nigerian trader to participate in both the New York market and the London market. In fact, during this brief period, there is high liquidity in the market.
Forex Trading Strategies
There are two trading strategies in forex- technical analysis and fundamental analysis.
No one is better than the other, it all comes down to your understanding of the dynamics of forex trading. It is advised you combine both strategies to better your chances of making profits.
This strategy deploys the sociopolitical and economic condition of a country to determine the value of a currency. The idea behind fundamental analysis is that the true value of a financial asset (in this case a currency) is usually not reflected in its price but macroeconomic forces surrounding it.
The macroeconomic factors the fundamental forex trader looks at are reports on interest rates, GDP growth rate, unemployment rate, consumer spending, the balance of trade receipts, manufacturing etc.
The fundamental analyst believes all these come to bear in forex analysis and to determine the future price movement of a currency against others.
Fundamental analysis also factors in geopolitical events and news to determine the price movements of a currency. The political health of a nation or region goes a long way to determine the rise and fall of its currency. It is why the speeches, reports, actions and inactions of political leaders have effects on the forex markets.
Fundamental analysis is most suited for long-term traders- those who can wait for days, weeks or even months for their prediction to play out. This is unlike technical analysis which looks at data and charts by the second to give insights into price movements.
If you want to apply fundamental analysis to your forex trading, you will have to read up on timed reports from financial institutions such as the World Bank, the United Nations etc. Aside from these, fundamental analysts are always current with general news on politics and- both local and foreign.
Here you use knowledge from past price movements, to try and predict the future.
Technical analysis is based on three assumptions- history repeats itself, price moves in trends and price action accounts for itself.
There are certain tools used by technical analysts which include:
- Candlestick Charts: They display Open, High, Low, & Closing price (OHLC) of a currency pair at a certain time.
When the exchange rate of the currency pair closes below what it opened at, the candlestick is red or solid.
When the exchange rate closes higher than what it opened at, the candlestick is green or hollow. The wick or tail shows you the high and low price for the day.
Candlestick chart time frames can be set by you. It can be 1 day, 1 week, 1 month etc. However shorter time frames have more ‘noise’ and chances of error are higher than with longer time frames.
Below is an example of candlestick price chart on Meta Trader 4.
- Drawing Tools: After reading a candlestick chart, you have to be able to interpret what you read. Drawing tools help you draw trend lines across the charts so you can determine if the trend is going up or down.
Drawing tools are also helpful to identify various chart patterns such as head and shoulders pattern, piercing line pattern, etc.
Below is an example of Fib Retracement on EUR/USD chart.
- Indicators: There are several indicators which help you determine market sentiment. For example, volume indicators tell you if traders are entering or exiting the market, so you know if a trend is about to change.
Volatility indicators such as Bollinger bands, ATR, & VIX also tell you how stable exchange rate prices are. During excessively high volatility risk management should be increased.
Frequently Asked Questions
What Is Forex Trading?
Forex trading is the exchange of one currency for another in the global market. People trade forex for different reasons ranging from business, tourism, education, health and finally to speculate its rise and fall for profit making.
How do I Learn Forex Trading in Nigeria?
You can learn forex trading by using a demo account to practice. Many forex brokers like HF Markets provide you with free demo accounts, some of which expire after a period.
You can also join a social community created by your forex broker where you interact with other traders and exchange ideas. There are also several forex educative materials and even games online which you can use to sharpen your skill.
Is Forex Trading Legal in Nigeria?
Currently there are no local regulations for forex trading in Nigeria. But it is not illegal to trade forex.
Given so, you are trading forex online at your own risk, and you can lose your money without any regulation to help in case of scams.
How do I Make Money from Forex Trading?
Note that forex trading is risky & there is no guarantee that you will make money. More than 80% of the retail traders in Nigeria lose money in forex.
But for the sake of explanation, you can go long or go short to make money in a trade. If you think a currency pair’s exchange rate will appreciate, you go long. If you think it will fall in value, you go short.
You can make money from both rising and falling exchange rates in the forex market. If you bought or went long on 100,000 units of EUR/USD at an exchange rate of 1.0704 you wait for it to appreciate to say 1.0705 then you sell and make a profit.
Your profit becomes 100,000 units multiplied by 0.0001. This is a 10 USD profit. This is just an example; you also need to pay the spreads & brokerage fees.
On the contrary if you think the EUR/USD will fall you can sell 100,000 units at an exchange rate of 1.0704 and receive 107,040 USD in your account which will be held by your broker not you.
You then wait for the EUR/USD exchange rate to fall to say 1.0704 then you buy back 100,000 units for 107,040 USD. You make a profit by subtracting the sell price of 107,050 USD from re-buy price of 107,040 USD which gives you a 10 USD profit. This is called shorting the market.
Who Is the Best Forex Broker in Nigeria?
The best forex broker in Nigeria would be a broker that is well-regulated by tier-1 regulators and offers favorable trading conditions. For Nigerians, there are multiple brokers like HF Market, Exness, which are reputed.
They are both regulated by the Financial Conduct Authority (FCA) United Kingdom, and this makes them somewhat less risky. HF Markets also has Naira base currency accounts, so you avoid paying any conversion fees since you trade in Naira.
HF Markets also offers a US Cent base currency account for beginners who have little capital to trade in US Cents. The Cent account also has a higher leverage of 1:2000.
What are the forex trading fees?
Forex trading fees are Spread, Commission, & Overnight swaps.
Spread is the difference between the price given to you by your broker and the actual market value of the currency. Always check spreads with different brokers to get the best deal.
Commission is a flat fee charged for every trade you make. Some CFD trading account types are commission-free, but their spreads are higher.
Overnight swap is an interest you are charged for leaving your trade open till the next day. This is because forex trading has to do with borrowing money from your broker to trade so you pay interest.
Overnight swaps can also be earned meaning you are credited but that happens when you sell a low interest rate currency to buy a high interest rate one and leave the position open overnight.