Forex, also known as Foreign Exchange or FX trading, is the conversion of one currency into another. It is one of the most actively traded markets in the world, with an average daily trading volume of $5 trillion.
A recent report released by Dailyfx (a forex research firm) in 2020, revealed that Nigeria’s forex traders trade currency positions worth as much as $1.25 million on average, daily.
According to the founder, TechAnalysis, Chukwuemeka Nwafor, forex trading involves the process of trading a certain aspect of the financial market with the purpose of making profit.
“Forex trading is open 24 hours, five days in a week. One can trade anytime of the day, with any currency pair like US dollar against the Japanese Yen (USD/JPY) and the US Dollar against the United Kingdom Pound (USD/GBP), to name a few.
To be a forex trader, the Tech analyst said one needs proper education and knowledge of the financial market and the art of proper chart analysis which basically are not taught in universities.
“Forex Trader doesn’t require a University Degree, this is a skill or career path an individual can venture into with proper education and an excellent mindset,” he adds.
Most brokerage firms permit a minimum of $5 or more to trade, says Nwafor, adding, “In my candid opinion, an individual can start trading the foreign exchange market with a minimum of $500, as it requires sufficient capital.”
The Challenges are vast with a few of them ranging from poor or insufficient knowledge towards trading forex, poor mindset towards trading, poor risk management and money management to non use or no respect of a trading plan, Nwafor says.
“Meanwhile, one can overcome all these challenges by simply gaining good knowledge on trading either by mentorship or an institution that teaches how to trade. An excellent psychology and proper mindset towards trading, developing and respecting an excellent trading plan, would go a long way,” he reveals.
He notes that FX is very lucrative industry world-wide and not just in Nigeria, how much one makes from it will depend on one’s risk appetite and trading plan. “There are no limits to how much you can make,” he adds.
The tech analyst however urged inspiring Forex traders to seek the right knowledge, have a good mindset towards trading.
“It takes time to learn and master the skill, but patience and discipline should be their guide when going through the process of learning the skill and developing the mindset involved in trading as well,” he adds.