Foreign exchange (Forex) trading involves buying and selling foreign currency to make money off an international foreign exchange market. Since the value of the world’s currencies is constantly changing, the purpose is to time the buying and selling of currencies, trading one against another, so that the trader profits from currency swings with minimal losses. If you’ve ever traveled outside the country, you’ll know the importance of foreign currencies and exchange rates.
One of the biggest advantages of trading Forex is that you don’t need to have any formal requirements for starting a forex trading business. In this post, we have compiled a comprehensive guide on how anyone can make money online in Nigeria by trading Forex on a smartphone device or laptop.
Step 1. Learn about Forex market & terms
Trading is a journey that can last a lifetime. Hence it is important to be equipped with the right knowledge of trading before venturing into it. There are several steps you should take before you start transacting in the forex market. You need to first learn about the financial market and basic keywords and terminologies used by Forex traders.
Forex is one of the largest trading markets, with a global daily turnover estimated to exceed US$5 trillion. Trading is conducted over the ‘interbank market’, an online channel through which currencies are traded 24 hours a day, five days a week. All transactions made on the forex market involve the simultaneous purchasing and selling of two currencies.
Step 2. Find a good and reliable Forex broker
If you’re just starting out as a Forex trader or even casually considering the idea of Forex trading, signing up with a reputable broker can be extremely helpful but choosing which forex broker to trade with can be a very overwhelming task especially if you don’t know what you should be looking for.
The forex market is so competitive that just thinking about having to sift through all the available brokers can give you a major headache. To get started, look around for Forex broker reviews on the internet most especially online broker services that operate in Nigeria. Make sure you conduct enough due diligence before deciding which broker offers values and services that best meet your needs.
Step 3. Start trading with a demo account
These days, a demo account is being offered by almost every forex broker. Demo accounts are virtual accounts with virtual money which is connected to a real trading platform, receiving real data on the market. That means you can open and close trades without a single penny.
A forex trading demo account is a trading account with monopoly money in it that is connected to the live market. Trades can be placed in real time and represent what would be true losses and gains if the money were real. Before you put any money on the line with trading, you’ll need some practice. A demo account will give you the ability to practice trading without the pressure.
Step 4: Learn to analyze currency trends
For you to be able to make the right forecast about currency trends, you need to be able to analyze current trends and movements in the Forex Market. There are two main types of analysis that forex traders generally focus on, which include fundamental and technical analysis. Fundamental analysis is the study of macro events that will alter the course of a currency pair. Technical analysis is the study of price action, including looking at momentum, trends and reversal patterns.
Currencies are always traded in pairs, such as GBP/USD or USD/JPY. The reason they are quoted in pairs is that, in every foreign exchange transaction, you are simultaneously buying one currency and selling another. Remember, if you are able to trade one currency pair – you will be able to trade all of them. If you will be trying to trade all currencies at once, you will slow down your success process.
Step 5: Start trading with Real Money
After perfecting the initial 4 steps highlighted above, its time to start trading with real money. While the idea of ‘buying low’ and ‘selling high’ might sound simple enough; in actuality, profitable trading is considerably more difficult than just buying when price moves down, or selling when price moves higher.
Many of the best currency traders have taken a highly technical approach in their trading strategies. Even if you don’t consider yourself a technical trader it would be foolish to ignore what the charts are saying before making a trade. Many brokers offer traders access to charting tools that give historical price patterns indicating whether to buy or sell.
You can learn to start trading Forex yourself by following the steps shared in this article. Always learn to be patient before you start trading with real money amounts. Only when you have carried out enough free trades and you have developed a successful trading Forex trading strategy, you should consider trading with real money.
Also, remember that emotions are not good in the Forex trading world. Sell or buy at or near your price target you set in your head. Don’t let your emotions convince you that the stock is going to go a lot higher than reality. When you become greedy and don’t take your profits you’ll see them get swept up in the pullback and kick yourself for not sticking to your initial plan.