Many Nigerians have varying perspectives of what forex trading is all about. Whilst some see it as an absolute scam which is in no way profitable, others see it as a risky business which can be transformed into a money spinning venture.
What really is forex trading?
The word ‘forex’ is coined from two words, ‘foreign’ and ‘exchange’. So you’ll be correct to refer to ‘forex trading’ as foreign exchange trading. However, understanding what forex trading means, goes beyond just knowing that forex trading is the same as foreign exchange trading. Forex trading is a business that deals with buying and selling of foreign currencies.
Currencies invariably translate to money, and we all know the importance and value of money in our everyday life. So long as money remains relevant, forex trading will remain a relevant business. Forex trading is also a vital necessity for international/foreign trade.
The forex market is said to be the largest financial market in the world. Forex trading is also made unique because of its intangible nature. Trading is carried out predominantly via electronic means (online). Major financial markets exist all over the world with, countries such as Britain, France, Germany, Japan, China, Switzerland etc. acting as a financial hub for foreign exchange trading.
By the time you are done with reading this article, someone would have made a lot of money via forex trading and someone else would have accrued some financial losses too. This tells you that forex can be traded 24hours a day, every day of the week.
Another interesting feature of forex trading is the unpredictable nature of the business. A minor economic incident in any of the top financial countries around the world can send tremors through the financial market. This could mean huge losses or huge profits for various traders.
Forex trading is basically facilitated through a broker, traders are expected to choose a currency pair which they expect to be profitable in value and place a trade; for example, a trader might choose to purchase £500 of currency which cost $900, this could appreciate and become £800 in the next couple of weeks or months. An online broker usually helps to facilitate this trade. I don’t need to explain what happens if the pounds invested in doesn’t appreciate do I?
Can Nigerians trade forex successfully?
There’s no definite answer to this question. The hard truth is, the ball is in the court of the trader or wannabe trader. Any Nigerian with $300 and above can enter into the world of financial trading with forex. However, as was said earlier, a minor incident in any of the financial powerhouse countries could spell huge losses for any trader who is not conversant with how the business works.
It is quite easy to register with a broker and start trading forex, but this can quickly transform into huge losses if you do not have a good understanding of how the financial market works.
It is advised that any Nigerian who intends to go into forex trading, takes time out to thoroughly study the financial market and understand how the business works. Research deeply about forex before going into it.
It is also advised that prospective traders start off trading by first using demo account before going ahead to trade with real money.
A Nigerian trader is required to create a domiciliary account before going ahead to create an account with a broker.
That’s it. Now you know what forex is all about…or maybe you’re still confused. Well that’s because forex is a business that can only be mastered through careful research and experience. So if you interested in forex beyond theoretical knowledge why not spend time on conducting in-depth research before plunging in.