Online forex trading has recently experienced rapid growth in Nigeria, both in terms of trader participation and industry development. This rise in popularity has introduced new challenges for local traders.
In order for Nigerian traders to become skilled professionals, it is necessary for them to find ways of moving beyond the myths of forex trading, coming to grips with technological challenges, climbing a steep learning curve, and taking the right steps towards efficient trading.
Forex trading myth #1 – getting rich overnight
There’s a myth that traders can become rich overnight when they start investing in currencies. This is not the case. As most successful traders will tell you; it takes preparation, strategy, research, experience and an effective risk management plan to make money in this business
There are no magical Holy Grail or trading systems that can guarantee profits in forex trading.Instead, there are endless resources to educate oneself about how the markets and trading platforms work. The Internet now offers unprecedented levels of transparent market news, analysis, educational tools, tips and real-life experiences from experts
Learning the methods behind Fundamental and Technical Analysis trading used to be much more difficult because the information was restricted. Now all you have to do is open Google, type your query in the search box, and a whole world of expertise opens up.
Forex trading myth #2 – trading forex is a form of gambling.
Forex trading has a risk factor, but it is not gambling. Each trade should be based on the right research and analysis, not on a wing and a prayer. By keeping your finger on the market’s pulse, you can link each asset price movement to definitive causes. Is the price of Gold going up? Check your fundamentals, technical analysis charts for possible strategic turning points, and the financial news for market event causes.
Knowing the markets, turns your trading into a science instead of a gamble.
Cultivating the character of a good trader – including patience, knowledge, and the ability to research your trades –ensures the best use of your funds and investments. Remember that these skills can be acquiredthrough careful monitoring of the markets, andby developing a robust trading strategy that balances the probable risks against the possible rewards.
The learning curve
A trader’s system is as good as the trader’s understanding of the markets. Becoming the right kind of trader is important; it depends on your natural approach to investment and your awareness of the inherent risks. To climb that learning curve, it is essential to select a broker thatis committed to providing a valuable and balanced trader education, viaboth online resources and actual seminars which investors can attend in person. Using these tools, traders can learn about position sizing, risk and money management, various trading strategies, emotional intelligence, discipline, consistency, and the psychological side of trading –all vital elements for making successful, well thought-out trades.
Technological challenges
As a nation, Nigeria has made giant strides with regards to technology in recent years. There are still issues with maintaining a consistentpower supply and fully-functioning Internet facilities, but I still commend the evolution of our technology with regards to Internet accessibility and progress of trading devices. With the advent of mobile Internet packages provided by the ISP, more traders have access to the Internet at lower costs. Technology is not being treated as a luxury anymore, but as the basic tool for trading and business growth that it is.
Selecting a trustworthy online forex broke
To avoid increasing your trading risk, it is extremely important that you select a fully regulated and reputable broker –one that will ensure fair treatment and security of your funds.
Beware of those brokers who offer unfair Terms of Agreement. Choose a broker with a clear policy of transparent risk management and a reliable technology base so that stop orders and the placement of trades are as accurate as possible.
Network with other trader
Networking with other traders for mutual benefits turns colleagues into potential partners. Prior to social media –particularly Facebook –becoming popular in Nigeria, it was difficult for traders to even begin interacting with each other for mutual benefits. But now there are huge opportunities to meet up with others and exchange ideas.
A number of trading groups have emerged that promote networking among traders, such as the weekly Interactive Forum at the FXTM Nigeria office. They provide an environment for traders to exchange trading strategies and share ideas about the market. Positive word-of-mouth about growth and career development would spread from these initiatives if more groups were created
Overcoming the challenges
The first step local traders should take in managing the abovementioned challenges is to select a fully regulated online broker that is committed to providing: a trustworthy and transparent service, engaging educational resources, and a high-quality trading platform with fast execution speeds. I can also say that, although Nigeria has faced challenges, the nation’s issues are being addressed and our traders are improving on a daily basis. They have shown that they have what it takes to develop the discipline and money management skills needed for the rapidly-growing forex markets.
Abiola Akinyel
Akinyele is Country Manager at FXTM Nigeria