Currency trading occurs in the forex market. Instead of taking place on a single centralized exchange, currency trading is handled electronically over the counter (OTC), meaning that all transactions take place via computer networks among traders across the world.
The differential between two interest rates in two economies can be exploited by purchasing the currency with the higher interest rate and selling short the currency with the lower interest rate.
Here, we show you everything you need to start currency trading now and start earning profits on the Forex market.
- Open an account with a Forex broker
To enter the foreign exchange market, you must first open a forex trading account with one of the numerous Forex brokers in Nigeria.
The commission structure of the foreign exchange market is unique. Forex brokers profit from the difference in price between buying and selling, or spreads (or pips).
- Research the Forex market
Despite its apparent simplicity, trading forex is actually quite unique and calls for expert-level understanding. Forex trades, in contrast to equity trades, have a higher leverage ratio and are driven by factors other than supply and demand. Numerous websites provide courses for newcomers to the world of foreign exchange trading.
Research the different Forex brokers to get an idea of which offer the most competitive trading conditions, such as by reading this HF Markets review.
- Start trading on a micro account
Opening a micro forex trading account with a small initial investment is a smart option for novice traders. Brokers can set their own trading limitations for these accounts, with some allowing them to trade as little as 1,000 units of a currency.
A standard account lot is equivalent to one hundred thousand of a given currency. To learn the ropes of foreign exchange trading and find your own trading groove, start with a micro account.
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- Set up a trading strategy that works for you
Trading strategies let you define broad boundaries and a road map for trading, even though it is not always possible to foresee and time market movement. The foundation of any successful trading plan is the honest assessment of your current circumstances and financial resources.
It considers how much capital you are willing to risk and how much volatility you can withstand before selling. Keep in mind that most Forex trades take place in highly leveraged settings. To those who are daring enough to try it, though, greater returns await.
- Record your trades
After you start trading, it’s a good idea to double-check your accounts every night. Daily trade summaries are typically included in trading platforms. Make sure you have enough money in your trading account and no open positions that need to be filled.
- Keep your emotions in check
When you’re just starting out in the foreign exchange market, you’ll face a lot of uncertainty and emotional ups and downs. But don’t let your trading positions affect your emotions, and strive for equanimity regardless of your gains or losses. Maintain the self-control to exit your positions when the time comes.
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