Understand foreign exchange transactions in Nigeria.
What is forex trading?
Forex trading, also known as “FOREX” or “FX”. In a foreign exchange transaction, a trader buys another currency at the same time as buying one currency, that is, a currency bought in exchange for the sold currency. Forex trading market is an OTC market.
Forex trading takes the form of currency pairs, such as EUR / USD or USD / JPY. Unlike stocks or futures, Forex trading does not exist in trading centers. All foreign exchange transactions by phone or electronic network.
How Forex Trading Works?
To exchange one currency for another on the foreign exchange market. The most important aspect in the foreign exchange market is the exchange rate between the two currencies (currency pairs). You may have seen in the news:
CURRENCY PAIR EXCHANGE RATE
EUR / USD 1.4515
GBP / USD 1.6430
Foreign exchange rates will change instantly, and sometimes there will be a few changes within a second, a week, 5 days, 24 hours a day there are many operations in the busy. Under normal circumstances, the exchange rate of the currency reflects the state of the economy’s health. If the European economy is better than the United States, the euro rises against the dollar (EUR / USD ↑) and vice versa.
How do you make money in the forex market?
Here is an example of Forex trading. If you decide to buy 1000 euros in US dollars. The currency pair EUR / USD has an exchange rate of 1.4500 at the moment of purchase, so you have to pay $ 1,450.
Subsequently, the EUR / USD exchange rate you are prepared to sell in exchange for the U.S. dollar is 1.5500. At this point, you will be able to get your $ 1550 by selling your € 1,000. Your starting capital is $ 1,450 and you now have $ 1,550, so you earn $ 100.
Alternatively, the exchange rate at which you can sell the euro to buy the U.S. dollar is 1.3500 and you can sell it for 1,000 Euro to get the U.S. $ 1,350. The original price of 1,450 US dollars and the current price of 1,350 US dollars, then the loss of 100 US dollars in this case.
This example shows how to make or lose money in the foreign exchange market.
Seven Habits of Successful Traders
Seven events that traders cannot forget
Prepare the trading plan in advance and follow-up – Successful traders will always be ready to enter and exit the trading. This protects you from making a sudden impulse without taking all the factors into account.
Write a diary – Write down when and when you did the exchange so you can review your decision.
Keep track of related news and ignore distractions – things have always happened in the 7×24 hours of global diversified media. At least this is what news channels and journalists want you to believe. Filter out noise, focusing on events that affect your position.
Do not trade after a huge loss – everyone has a huge loss position. In any case, good traders know that what they should really avoid is the consequence of the position – trading in anger and frustration. This is even a more serious mistake. It is best to take a step back and calm down.
Learn from consistently consistent winners – well-structured, rich knowledge of markets and transactions available at your fingertips. The risk is who introduced you to you – why do they share an anti-risk system, there is no mystery? The fact is that anyone can make a profit on the market, but seldom maintain long-term trading profitability. We should all learn from them.
Commitment to effective decision – making – rather than its constant search for “the next big thing” is not as good as you have to find an effective decision to adhere to it. Many successful traders use only one or two technologies, nothing else. Multiple flirtations obscure the photos and do not allow you to focus on the best decision for you.
Maintaining Heart and Brain Health – The market is a vain competition and not just a brain challenge. Good traders know that you need to take good care of your health, which affects your decision-making, attention, and patience while trading. Staying up all night trading will only result in fatigue and more mistakes.
Do you agree with us one? Let us know some other habits that bring you success.
If your forex broker gives you 1: 100 leverage, you can trade 100 times the amount of money you deposit. This means that if you want to buy 100 000 EUR / USD, you only need to have 1000 Euro. You can get the rest of your loan as a loan from your broker at the time of this transaction. By leverage ratio, you can establish a position of 100 times the value, so profit and loss also magnified 100 times. It is quite cautious to do business for this reason.
Make your first Forex transaction
To get started, you can find best Forex Brokers from Nigeria. Register your account and log in. Then choose a currency pair (eg EUR / Nigerian Naira (NGN)). After selecting the quantity, press the “Buy” button and you have become one of the traders in the world with millions of people participating in the market. If the price of EUR / Nigerian Naira (NGN) goes up, you will make money and vice versa will lose money. View your current earnings/losses in Open Positions window. You can hold the position as you wish. If you want to close your position, just close the deal by pressing the X button in the Open Positions window.
Long and short trading
In the example above, we expect EUR to rise relative to USD, so we buy EUR / USD and hope to sell at higher price. This is the so-called long position. However, if we expect the EUR to fall against the USD, what should we do? If that is the case, you do the opposite: sell EUR / USD and expect to buy it later at a lower price. Short trade allows you to profit when the exchange rate falls.
Enter online Nigeria forex trading
It is because of the advent of the Internet that you can trade on the foreign exchange markets in the same way as traders from the largest banks and investment funds.
You only need a computer connected to the internet and a trading account opened with a forex broker to get involved in the transaction. Read more about forex trading in Nigeria.
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