This year, Nigerian trading markets are experiencing rapid movements. Earlier this month, the stock market experienced a decline resulting in an N8 billion loss. This is a new development considering that the market saw a positive trend less than a month ago as it rose by N61 billion at the end of a trading session. This high price volatility is reason enough for many swing traders to pivot to day trading instead. After all, day traders have shorter holding periods, so they’re able to minimise risk and maximise daily fluctuations.
That said, as most experienced traders would know, each trading approach comes with its own set of rules. Certain measures and considerations must be made to take advantage of its potential and prevent significant losses. If you’re interested in shifting to day trading safely, here are some tips to remember.
Choose a platform optimised for day trading:
Stock and forex trading have become increasingly popular in Nigeria, but this has also brought in many financial scammers. From October 2020 to August 2021, fake brokers scammed unknowing traders out of N12 billion. Many of these scammers take advantage of the fast-paced environment of day trading by promising significant returns in exchange for holding your money. An optimal online trading platform is transparent about price history and offers reliable market data. They should also provide instant withdrawals 24/7. This isn’t just for convenience; it also guarantees that your capital is safe after a period of day trading. A good indicator to look for is if they have a high trading volume and if they are candid about their client withdrawals. Keep these in mind to choose the right day trading platform that will make your transition smoother and safer.
Watch out for peak day trading times:
Day trading is focused on taking advantage of a volatile market wherein stocks fluctuate heavily within minutes. Nigeria has its own peak day trading times, depending on the season. The best time to trade during summer is from 1 pm to 5 pm WAT, whereas it’s recommended to begin trading starting 2 pm to 6 pm during winter. This is because most African countries, as well as London and New York, are actively trading during this time frame. However, these peak trading times can still be affected by lower prices brought on by economic shifts such as the holidays. It’s best to remember that day trading requires an active approach, and it’s a must to keep an eye out for these peak times.
Use a forex VPS:
In 2022, it was estimated that only 3% of the Nigerian population were investors. However, as of 2023, the Nigerian stock market is valued at N29 trillion. This signifies that many investors are trading with large sums of money. In this case, price volatility trends can move sharply, and especially in day trading, price changes can happen within seconds. The speed at which you open or close a trade matters. Thus, it’s advisable to get a forex virtual private server (VPS) for day trading. This will lower your latency, eliminating delays that can lead to slippage. As such, using a VPS will allow your orders to be processed quicker and be more fit for a fast-moving market like this.
Open a day trading account:
Most swing traders operate with a standard brokerage amount, and the same can be used for trading with stocks, bonds, and commodities. However, day trading tends to require more flexibility. Day trading requires up-to-date software that reflects real-time market data and developments. You’ll also need the help of automation, such as with stop-loss orders, to cut losses early on before trade prices plummet. The type of broker also matters with day trading. Though most major banks offer day trading services, their high commissions aren’t fit for the approach. Instead, day traders can benefit from brokers offering zero-commission trading.
In 2023, Nigeria is regarded as one of the best-performing trading markets worldwide. Follow the tips above to help you safely transition into day trading. For more how-to articles, politics, and news, we have you covered at Leadership.
