Online Forex Trading - Tips to Make Money in Nigeria

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Posted by Felix Okoli on Friday March 9, 2012 16:0:0:

Online Forex trading is one of the fastest and riskiest ways of making money online in Nigeria. You could make a good amount of money from it but you could also lose the same, most especially if don't know the rudiments of the business. Forex trading requires a lot of discipline and you need to follow some basic rules in order to be successful at it. What seperates successful online traders from gamblers is that the former tends to stay much longer in the game as they have more wins than losses unlike gamblers or untrained forex traders who tend to lose more than they win. Truth is, no one knows for sure where market prices will go but some are able to easily identify the market direction and just follow it to earn good money. Identifying the market trend and knowing where to enter and exit a trade is what seperates winners from losers.
Online forex trading is a relatively new but fast growing internet business in Nigeria and is helping a lot of young and internet savvy people make a lot of money. Some Nigerians are even fully into forex trading as a career as they make a lot of money to live by it.

How much can one make from forex trading in Nigeria?
This is a good question when it comes to investing one's time and effort in this line of business. Is it really profitable? There is really no limit to the amount of money you can make from trading forex. Online fx is one of the few internet businesses that allows you to start making money from day one. No need for waiting for monthly cheques as some other online businesses do, you can put in money today and get your money out within 3 days including your profits. In fx, you can start to calculate your profit in days, weeks or months by deducting your current balance with the starting capital you invested. With a capital of about $100, you could make a profit of $1 to $10 with modest trading techniques. With $1000 trading capital, you could make as much as $10 to $100 per day as profit. The idea behind making money in forex trading is to invest in a currency and hold it until it earns you profit. You could, for instance buy a currency like the euro with your dollar, and only sell it when it appreciates. You could also sell the euro if you are already holding it in if you suspect that it is going to depreciate and then buy it only afterwards. So there are two ways to make money in forex, buying or selling also referred to as going Long or short.

How much you can make will depend on a couple of factors such as:
- Your trading capital
- Currency pair you are trading
- Trading strategy
- Units purchased or sold

Some helpful rules in forex
1. Enter with a Stop loss:
This is mostly accepting a loss before it happens. How much are you willing to lose assuming your predictions don't go as expected. Stop loss is the price at which you have decided beforehand to exit a trade or position assuming it is not favourable to you. As a good forex trader, you should know where to exit a trade since it is depleting your capital
It is based on the losses you want to accept in order to still conserve your capital. It is a price that can also be expressed in pips(percentage in points). Let's say you want to set a stop loss of 50 pips per trading position for a currency pair like the eur/usd, it means that if you bought the eur/usd at 1.3500, you expect that trade to close, at worst, at 1.3450 since it is most likely a loss. So in essence, you would be losing about 50 pips or 0.005. The rule is that you should always set a stop loss that would help conserve your capital. Some currency pairs tend to flunctuate a lot and for some like the eur/usd, it tends to flunctuate at a range of 30 to 50 pips so setting small stop loss within 10 pips could be too small to hold a profitable trade.

2. Use proper money management:
Try to manage your capital well so you don't end up losing all of it. Assuming you have a start up capital of $1000 and to be able to trade for at least 20 days, then you should use maybe use a trading strategy that limits your daily loss to $50 per day. You could decide on a stop loss of maybe $5 per position and then trade about 10 positions a day or simply trade only one position a day that is limited to a $50 loss. Going with the former could be stressful but it could help you make more wins than just sticking with a single position that could lose you big time. Normally, if you use a modest trading technique like 10 positions each worth $5, you are not expected to lose all ten positions unless you are not studying the market well. So by holding ten or even 20 positions each with small losses or gains, you could have more wins than losses as trading more makes you a better trader. So it's better to trade about ten positions than just once since you could have 6 wins and 4 losses which would still give you a total profit of $(6-4) = $10 for those trades.
The common rule with money management is not to risk more than 1 - 2% of your capital in any position. Assuming you have $1000, you should limit your loss to about $10 and for $100, try to limit it to about $1.

3. Don't go against the market:
When trading forex, you normally make use of a platform or window that displays charts. These charts represent currency price movements and they help you in understanding or get an idea of the market trend. It if is bullish(rising) from left to right for instance if there are 3 consecutive rising candled or bars, then it means prices are rising and a bullish market so the best thing to do in such a situation is to buy or go long. If it is bearish meaning going downwards, the best thing to do is to sell such currency. If you are going to hold a position for a shirt time, say 5 to 15 mins(scalping), then you should setup your chart on the 15 mins timeframe, else if you are going to to hold for much longer positions, the best thing to do it to use 1 to 4 hr charts or daily and weekly charts. Following the charts would ensure that you win more and lose less. You can make money trading short timeframes as well as long time frames. The former is called scalping and it requires faster decision making and hodling positions for only a few mins. Scalpers tend to trade with higher capital than long term traders. However long term traders tend to make better decisions althought profits may be slow in coming.

If you are able to work on the above rules, you should find that forex trading can really be exciting for you.

Example of how to trade forex profitably
Assuming we have the following setup and alrleady have an online forex account with a broker:

Capital: $1000
Target Profit: $10
Risk:Reward: 1:2
Currency pair: EUR/USD
Platform: Streamster
Broker: Marketiva

Steps:
- I look a the chart and identify the market trend, whether bullish or bearish
- I order a long position with a buy stop if it is bullish at 1.3500, putting stop loss at 1.3475 and target profit at 1.3550 and for 1000 units of eur/usd
- This will ensure that if I win, I get 50 pips and if I lose, I lose 25 pips, hence maintaining my 1:3 risk-reward ratio
- The trade opens when price touches 1.3500 and I'm in a long position.
- If the position closes in a win, I earn 0.005*1000 = $5 and if I do this for two trades, I get $10 but if I lose 2 times conscutively, I would only lose $2.5

Tip:
You can try investing with smaller units to tie only a small amount of your capital down. For eg. you could buy only 500 units and then open multiple positions and if 4 position closes, you still gain $10. Do it again and again and you can gain $100, even in a day.

Higher Capital allows higher credit
With a broker like marketiva, they offer you a credit line of about $100 for every $1 you bring in but the maximum amount they can give you is $100,000 if you bring in $1000. You can trade with as much as $100,000 if you have $1000 as you capital. When trading with marketiva, the levarage is automatic once you enter a trade that surpasses your capital but you can always decide not to use their credit by simply sticking to trades within your capital base. So, even if you have $100, you can trade forex with a capital of $10,000 i.e $100 * 100. This doesn't mean you have to trade with all the capital made available to you because if you lose, you could lose a big chunk of your actual capital. Howeverm if you know what you are doing, you can really make higher profits if you trade with the loand your broker offers you based on your capital. Assuming you have a $10,000 trading capital from your $100, you can gain up to $10 for every 10 pips and $1 for every 1 pip. Most scalpers or short term traders tend to use this method to make a lot of money as they can gain up to $50 if they get 50 pips. Unless you are scalping for short term intervals, it can be a risky way to trade. SO you can just limit a pip to about $0.1 or so.

Some Key terms in Forex trading
Bullish: The market is said to be bullish if it keeps going upwards since prices are rising. Traders tend to buy in a bullish market in order to make good profits

Bearish: This is when the market price of a currency is falling or depreciating over a period of time and traders tend to sell or go short during this period

Pips: This means percentage in points and refers to the percentage change in points of a curency price over a period of time. So if a currency pair like the eur/usd moves from 1.3500 to 1.3510, it has moved by 10 pips or 0.0010

Long: This means to buy and hold a currency in order to make gain when it appreciates.

Short: This means to sell a currency when it is about to fall in price in order to buy moroe if it after it falls.

Margin call: This is a call which traders don't like geting from their broker. It is not really a phone call but a closing of an open position by the broker when the trader fails to maintain his capital margin. If someone receives a margin call, it means thath his positon has been closed as a result of excessisive loss which he can't keep holding.

Things needed to start trading forex in Nigeria
- An internet connection
- An online forex account
- Funds
- Source of funding: eg. domicilliary account, liberty reserve or alertpay

Useful tools for trading forex
There are lots of tools that can help forex traders perform better in their business. They are:

- Forex charts: This is the basic tool displayed on your trading platform. It is a graphical representation of currency prices over a time period. You can use it to determine the direction of the market

- Forex indicators: These are other statistical tools embedded in your trading platform. You can use to analyse the market more efficiently and make the right decisions. Forex signal providers tend to make use of this to predict the market direction

- Economic calendars: This is just a calendar of economic events that are likely to affect currency prices. It consists of daily, weekly, monthly and yearly activitied that are planned before hand by countries and economic groups around the world. If you are trading a currency pair like the eur/usd, you'll need a calendar on significant reports of countries using the euro as well as the US dollar. It also consists of timeline of events by groups like the EU, Fed, OPEC and so on.

- Breaking news: This is just events that are being reported as htey happen. It also consists of live reports of events already listed on the economic calendars. If news is positive for the country, it's currrency is likely to appreciate and vice versa. For e.g. the terrorist attack at world trade center, london train bomb, Japanese earthquake, bail ouf funds, US FED reports and interest rates are all factors that could affect the currency market and you get if much quicker on news reports.

When to trade Forex
When can one really trade forex? Is there a time line? Well you can trade forex online for 24 hrs every working day from Monday to Friday except saturdays and sundays. Markets actually open later on Sunday evening and runs till Friday. The market may be open for 24 hrs during these days but the major markets where the big money players trade happens at certain times as follows:

London Market: *8am to 5pm (9hrs)
New York Market: *1pm to 10pm (9hrs)
Asian market: *1am to 10am (9hrs)
Sydney market: *10 pm to 7am (9hrs)

*During certain months of the year like winter, the markets tend to open about 1 hr late so a market like London would open by 9am rather than 8am and then closes by 6pm.

The most popular and vibrant markets are London and New York. During their time, there is a lot of money changing hands and a lot of trades made. That is where big money is made and if you want to trade during those time, then you need to be more cautious. You don't have to trade during those times if you don't want to but there is a much higher price movement within those periods.

Can you trade forex for a living?
Ofcourse you can. Nowadays, more and more intelligent people in developing countries trade forex for a living, more expecially now that there is a global recession and narrowing job opportunities. People even oiut of college trade forex by simply understanding the market and how to make best use of opportunities. It is really all about moving money for profit. In Nigeria, you can really do it for a living if you have the right understanding. Even companies get registered as investment companies and get themselves involved with forex business. You could earn as much as $100 per day and even $3000 per month.

What to do to get started
Sign up for a free forex account today with a broker like Marketiva
Download the trading application called streamster
Get access to the virtual funds in your account and learn to do virtual trading
Get more tutorials on trading concepts and how to make capital gains
When you are ready to make or lose real money, add money into your account and do live trading

In online forex trading, you are your own boss and you can decide on your target. You go to work when you want and make profit when you like. It can be risky but it can also be very rewarding if you know how to trade very well

Get a Free Forex account today

Comments:

Re: Online Forex Trading Reply by akanbi olawale on Wednesday June 6, 2012 at 12:54:14:

please,after opening the demo account.and i evenually exaust my my $5.
1.How will i continue the demo training?
2.Will i need to open another demo account?
please i need an urgent reply .looking forward to hearing from you.
Thanks
AKANBI OLAWALE.

Re: Online Forex Trading Reply by Felix Okoli on Wednesday June 6, 2012 at 12:54:14:

You still have about $10,000 in your demo account. You may not have even started doing demo trading else you would not have exhausted your $5. Using the $5 means you were doing live trading rather than demo trading.

Re: Online Forex Trading Reply by AKANBI OLAWALE on Thursday June 7, 2012 at 12:7:1:

Which site can i open a demo account?

Re: Online Forex Trading Reply by Felix Okoli on Thursday June 7, 2012 at 12:7:1:

From what you said, it means you already have a demo account with AGEA (formerly Markektiva). You probably don't know how to use it yet.
Here is how to do the demo/virtual trading. Once you are logged into the platform, go to the currency you want to buy or sell, click on the button and it pops up the order window, under desk select "Virtual Trade" and you will be able to do the demo/virtual trading you are entitled to with $10,000.

Open a free AGEA trading account today

Re: Online Forex Trading Reply by Kayode on Friday July 13, 2012 at 14:54:22:

Good day,
thanks for d insight, but please i want to know if someone wants to invest in forex, but does not have d time bcos of work, do u trade for d person?

Re: Online Forex Trading Reply by Felix Okoli on Friday July 13, 2012 at 14:54:22:

No I don't

Re: Online Forex Trading Reply by Popoola Bolaji on Monday July 23, 2012 at 6:6:40:

I would like to know if this forex online is safe to do and make more money ?

Re: Online Forex Trading Reply by oluwaseyi on Tuesday August 14, 2012 at 19:39:41:

Gud day,pls can i still make money from forex trading.am xpectg ur reply.oluwaseyi.

Re: Online Forex Trading Reply by Felix on Tuesday August 14, 2012 at 19:39:41:

Ofcourse you can still make money as an online fx trader. Just create an account first and start trading

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