Apart from simply knowing the forex trading companies in Nigeria, you may also want to learn how to trade for. This post in a great guide for people who are interesting. You will learn a lot- from what the different forex terms mean to when be the best time to trade forex. Forex is a great way to make money. Ironically, it is also a great way to lose money.Carefully read the information below- as they say, information is power!
Forex is an acronym for the word Foreign Exchange Marketplace. It is a place for trading currencies. Since currency must exchange hand before any trade can happen, this means Forex exchange is the place you can easily have this trade. A very good example is if you want to buy a perfume from one of the numerous stores in France. This trade, when done would, would be considered as an import. And because of that, the company or individuals making the purchase would have to do so, paying in Euro. This means that the Nigerian Perfume importer would have to exchange the amount of Naira that would be needed to get the perfume to Euro before the exchange can take place.
In this same way, if you need to travel abroad, Naira, your local currency, is no longer of use to you because it cannot be used in the country you are travelling to. Consequentially, you would have to exchange the money to the currency of whatever country you are travelling to. There, you have to exchange the money according to the rate put on ground by the country, and this is where the use Forex comes in.
Meaning of The Exchange Rate
Exchange rate simply means that you will have to pay for a single unit of a certain currency using your own currency. In essence, the unit depends on how much it is worth with your currency.
Reason for The Use of FOREX
- The Biggest Market Place: Statistics has shown that the trading done on FOREX garnered close to $5 Trillion per day. Placed at the top of the markets, it has beaten Stock to the second place. The Great Britain hold close to 40% of the trading taking place in London.
- London’s Infrastructure: the infrastructure in London encourages people in the inducing of currency trading.
- The Spine of Imports/Exports: it has positioned itself as the spine of global investment. International trading has been built on Forex. Without Forex, many international trade would have been impossible.
- Rare Goods and Service: Forex makes untapped goods and services available to anyone that can pay for it. Also, it gives the opportunity to discover untapped resources and it is used to demand for services as well as make it available.
Why Forex Is So Popular
- Many of the companies that use it to trade will not charge you for commission. Instead, their requirement is that you ask for bid/ ask spreads.
- Especially as modernization sets in, a lot of people find pleasure and comfortability while trading on a 24hour format.
- Despite the fact that it can increase the chance of your gain or loss, it is possible to leverage on the platform.
- There, you are able to reduce the options you have to the one that would profit you. You have the chance to always to pick the best currency and not be lost in the numerous misleading options available.
- You do not really need all the money in the world before you trade on the platform. The platform is opened to everyone that has a passion for such business.
What Happens Behind the Scene?
The Forex Market has its operation done through many institution and the levels from which the trade moves up.
- The First step is such that the bank who are referred to as the invisible entity would go to a lesser financial firm. These financial firms are referred to as dealers.
- The next step is for these dealers to take large quantities of Foreign currencies which are based on the exchange rate. This step takes place behind the traders’ eyes.
Major Players in Forex
- Banks: every big banks in the world depend on Forex trading to carry out most of their businesses. Meanwhile, they also help in making Forex transactions by customers. More so, they are involved in speculative trading which takes place from their trading desk.
- Central Banks: they are the major players in Forex Markets. The operation they take in the open market and their policy of interest rate is a big part in the influencing of currency rates. Any action taken by the Central banks is always done in the interest of the country and to stabilizing the economy.
- Corporations: Firms that are involved in importing and exporting of goods would also rely on Forex to easily get their goods and services provided.
- Individuals: among the gentry, the popularity of The Forex market has grown. These are people who make consult or research about Forex, then decide to try it.
Spread is the difference between two prices. It is what is given to the broker when you lose or gain.
Pip is the abbreviation from Percentage in point. It indicates a change in the price of a currency. For example, when the price of currency moves from 1.510 to 1.520, the 10 pip increment is the Pip difference.
Here, in case a dealer says he had made 40 Pips, it means the Pip had increase in his favor.
How to Start Forex Trading
- Signup for a forex trading account with a Forex broker. The broker would then make it his duty to connect you to the market.
- Open a liberty reserve or domiciliary account. This is a place you store value like U.S dollars, Gold gram etc. You can also use this as a means of bank transfer. So far, the most recommended bank in Nigeria is Guarantee Trust Bank.
Have a startup capital. Like every other business, you must have this handy.
- Ensure you have a good computer, fast internet connection and a constant electricity supply.
The Best Time to Trade On Forex
From different successful view, the best time to trade is when the market is the most active. At this point you are opened to a lot of buyers and seller. Since the market is very active there a lot of direct sales that are likely to happen there.