Go into any brokers website and you’ll likely see a disclaimer that goes sort of:
- Up to 95% of retail forex traders lose money or
- Your capital is at risk or
- Your losses may exceed your capital
But why do people still get into online forex trading? Why the sudden explosion in interest here in Nigeria?
The truth is. forex trading is as profitable as it is risky. If you get into it with the right mentality, you’ll make some good money. However, if you approach with the mentality of so many other loser, well…
- The Forex market is a truly global market and is open 24 hours a day, 5.5 days a week. You can choose to trade part-time or full-time and at your convenience. You only need a computer with internet access (what you already have), a Forex account and a real time chart.
- Since the FX market is extremely liquid ($6.6 Trillion changing hands DAILY) you’re never “stuck” in a trade. With a click of a mouse you can instantaneously buy and sell at will. It is a purely electronic marketplace where you deal directly with the market makers.
- There is an equal potential to profit in rising or falling market and there are no restrictions on short selling.
- Currency trading offers incomparable leverage up to 200:1.
$50 deposit controls a $10,000 “lot”, $300 deposit controls a $60,000 “lot” (mini account 200:1)
- You can learn to trade with a demo account, and you can open a live “mini account” with as little as $300 deposit.
- No brokerage fees, commissions or exchange fees! The only cost is a small bid/ask spread.
Developing a Profitable Trading Strategy
Developing а profitable forex trading strategy requires passion, persistence, аnd discipline, but mоѕt оf аll іt requires thаt уоu obtain а genuine аnd effective forex trading education.
Thеrе аrе mаnу forex strategies floating аrоund thе internet thаt уоu саn learn from. Sоmе оf thеѕе аrе effective, mаnу оf thеm аrе mоrе distress thаn thеу аrе worth.
Thіѕ website wаѕ made аnd designed tо hеlр уоu learn mоrе аbоut hоw tо develop а successful forex trading strategy thаt wіll асtuаllу give уоu аn edge іn thе market.
Is Forex Trading Still Profitable in Nigeria?
Thе forex market рrоvіdеѕ ѕоmе оf thе most profitable opportunities fоr financial market speculation fоr retail traders today. It іѕ thе mоѕt widely traded market іn thе world, соntаіnѕ thе deepest liquidity (this means уоu саn gеt іn аnd оut оf trades vеrу easily), аnd іѕ open 24 hours а day frоm Sunday afternoon untіl Friday evening.
Thе combination оf thеѕе factors means thаt forex traders hаvе mоrе opportunities, greater flexibility, аnd lоwеr transaction costs thаn traders іn аnу оthеr financial market.
However, thе above facts аlоnе wіll nоt mаkе уоu а profitable forex trader. Yоu nееd tо study аnd learn аbоut whісh forex strategies work аnd whісh оnеѕ аrе рrоbаblу nоt worth уоur time (there аrе mаnу оf thе latter, аnd fеw оf thе former).
Developing a Profitable Forex Trading Strategy
Unfоrtunаtеlу thеrе іѕ nо “magic bullet” whеn іt соmеѕ tо а forex strategy, whеthеr оr nоt а раrtісulаr forex trading strategy іѕ profitable depends оn nоt оnlу thе strategy іtѕеlf but аlѕо оn thе trader trading thаt раrtісulаr strategy.
If а trader hаѕ vеrу poor self-discipline аnd poor control оf thеіr emotions, thеу аrе рrоbаblу gоіng tо lose money оn еvеn thе mоѕt accurate оf forex trading strategies.
Thе intersection оf self-discipline / emotional control аnd а trulу effective forex trading strategy іѕ whеrе forex trading success іѕ found. Untіl оr unlеѕѕ уоu learn tо master уоur оwn emotions уоu wіll simply nеvеr bесоmе а profitable аnd consistent forex trader in Nigeria.
Mаnу traders gеt lucky іn thе markets аnd hit ѕоmе huge winners оnlу tо give thеm аll bасk ѕооn after, fаr fеwеr traders find thе discipline аnd ѕеlf control thаt іt takes tо profit оn а consistent basis іn thе forex market.
Sоmе truths аbоut forex trading strategies thаt уоu mіght nоt read оn оthеr websites:
• Yоu won’t gеt rich overnight іn thе forex market, іt takes time, effort, аnd discipline tо bесоmе а consistently profitable trader. Thеrе іѕ nо “simple” wау out.
• Thе раrtісulаr forex trading strategy уоu uѕе tо navigate thе market еасh day саn hаvе а profound affect оn hоw уоu thіnk аbоut аnd view thе market, іn оthеr words, оn уоur trading psychology.
• Inflexible trading “systems” thаt provide fоr nо flexibility оr human discretion аrе inherently flawed аnd wіll break dоwn оvеr time аѕ market conditions change.
• Forex strategies thаt teach traders hоw tо “fish fоr themselves” аrе thе genuine оnеѕ thаt hаvе а higher probability оf returning positive results іn thе long run.
• Evеn thе bеѕt forex trading strategy оn earth wіll nоt mаkе money іf уоu don’t practice proper restraint аnd money management.
There is a potential source of income that many people in Nigeria do not even know exist. And those that do know about this are somehow confused by the mythology and confusion surrounding this. This can be one of the most lucrative investments you make both with your time, and your money. With just a few hours a week, you can make a few hundred dollars, and slowly grow those hundred dollars into a sizeable nest egg that you can use for whatever you want.
Of course, with anything that promises taking a few hundred dollars and turning it into a few thousand, or even a few hundred thousand, there are certain risks. But once those risks are understood, and strategies are taken to protect against them, turning that few hundred into a few thousand is a lot easier than most people realize.
I’m talking, of course, about the forex markets. Forex, short for foreign exchange, is the global currency markets. Dollars for Euros, Euros for Yen, Yen for Francs, the flow of money is astounding. And with the explosion of the Internet, and all the information it can provide, there has never been a time like now to study new ways to powerfully increase your wealth.
Despite all the hype you’ll read on the internet about turning thirty five cents into twenty seven billion dollars by using trading “robot” while you are watching episodes of “Money Heist” if you go in with only a desire to make money quickly and easily, you’ll likely get burned. Trust me, I know. When I first tried my hand at futures, I had big dreams of striking it rich, and telling my boss what’s what.
As I watched my ten thousand dollars quickly evaporate, I knew I might have bitten off a bit more than I could chew.
Luckily, after learning from my mistakes, and reading up on the subject, I later figured out a strategy to make a profit on a consistent basis. Because everybody has different temperaments and comfortable levels of stress, there is no “one size fits all,” trading strategy.
The key is to understand the markets, how they work, and develop a consistent stop loss and take profits strategy. I personally use an eight percent stop loss, meaning that any time I’m down more than eight percent on any position, for any reason, I get out, and get out quick. This, of course, can lead to a string of small losses, but if you stick with this, and choose your positions wisely, you’ll eventually make a big profit that will more than make up for your string of small losses.
On the flip side, it pays to develop a profit taking strategy. I’ve heard of several investors to take profits automatically, without question, when they reach a thirty or forty percent profit. Others hold out for fifty or even a hundred percent. Realize that the higher profit you are shooting for on each trade, the longer string of small losses you can tolerate.
When you choose a solid trading strategy, coupled with the right forex trading platform, it becomes very difficult not to make a consistent profit over time. And when you get into forex trading with a long term, specific financial goal in mind, your likelihood of success increases even more.
Taking the first step is sometimes the hardest for some. Because you can imagine what it will be like when you become successful, you can take advantage of this opportunity.
I made a list of key mistakes that 95% of traders make.
- Most traders do not have a trading plan.
- Most traders do not practice money and risk management
- Most traders do not have discipline to follow their plan (if they even have one)
- Most traders do not have a strategy
- Most traders do not use stop losses or have profit targets
- Most traders do use a good risk to reward ratio ( keep losers small and winners big)
That list tells you why 95% of Nigeria forex traders lose. If you just take this list and do these things that most traders do not and you will be on the right track.
Using right time frames and studying support and resistance levels is useful in your trading but if you don’t have this list down you are not going to do well as a trader.
Top Reasons Why Forex Traders in Nigeria Are Not Profitable
1. Using Shorter Timeframes
Forex traders will use a wide variety of different price charts when trading the various currency pairs. Some will prefer taking a long-term view, some will trade the 1 hour or 4 hour charts, whilst others will trade the short-term charts such as the 1 and 5 minute charts, and it’s these I want to focus on in this article.
The major appeal of these time frames is that trades don’t last very long. If you’re lucky you can bank plenty of quick profits, whilst cutting your losses early if trades go against you. On paper it sounds relatively easy, but the reality is that it’s extremely difficult to make money trading this way.
The obstacle you have to overcome straight away is of course the spread. The spread on some of the major currency pairs can easily be 3 or 4 points, so this means that a position has to move this amount of points in your favour before you even break-even. Furthermore if you have a bad feeling about a trade and want to close out at break-even, you will still lose around 3 or 4 points each time.
Another problem you have is that the trends on these shorter time frames are not very clear cut. Sure you may find a few short-term trends that are good for 20-50 points, but there will also be lots of occasions when a trend is over after about 5-10 points. Furthermore there will also be times when there is no distinct trend at all, and the market just seems to be moving sideways.
This makes trading extremely difficult, and is the primary reason why I recommend using the longer time frames such as the 1 hour, 4 hour or daily charts. Nevertheless you can still make money on the 1 minute or 5 minute charts if you’re clever.
The key to success is to look at the trends on the longer term charts, such as the ones I’ve just mentioned, and then use the 1 or 5 minute chart to get a good entry point. For example if a currency pair is trending upwards on the 15 minute and 1 hour chart, then it might be a good idea to enter a long position when the price is oversold on the 5 minute chart.
The point is that it is exceptionally difficult to generate consistent profits trading the shorter time frames. However it’s a lot easier if you make sure that you are always trading in the same direction as the long-term trend.
2. Not Having a Solid Trading Plan
The old saying if you don’t have a plan then you are planning to fail is true. This is necessary for success in any goal you have in life not just trading. Make the decision today to be successful and make a plan. If you are trading without a plan stop, get a plan then continue.
Trading is a business that an individual must plan and prepare for. Trading is not gambling unless you are just entering blindly without a plan. Every time you enter a trade you should already know what your target price is, what the risk level is, and what strategy you are using.
These three keys will ultimately be the difference in being successful or being a complete failure.
Before you put an order to buy or sell a currency pair you should know what your target price level is. The reason this is important is because you need to know where you are going if you want to be able to get there.
What I mean is that if you have a target you are more likely to stay in a trade until you reach that target. Most beginner forex traders in Nigeria get in then the price moves in their favor and they close the trade for small gains.
To be profitable long term in the Forex market you should have your winning trades as large as possible and having targets keeps you in your trades.
One other trick that successful forex traders use is to open more than one lot at a time. This will enable the trader to reach the profit target with one lot and let the other lot ride for greater profits. Letting your winners ride is a skill that will enable traders to be profitable long term.
The next key to being a profitable trader is to use risk management. What I mean by that is that before you ever make a trade you should know how much risk is involved with that trade.
For example lets say your account size is $1,000 then you should know how much of that total amount you are willing to risk on that trade.
The best way to achieve success is to limit risk to 2 to 5 percent of your total account balance. So in this case $1,000 you should risk no more than 20 to 50 dollars per trade. That will help your profitability and stop you from blowing your account.
3. Lack of Trading Discipline
Once you have a plan, a successful forex trader must hav the discipline to stick with the plan. Why make a plan if you don’t plan to follow it through?
It is useless unless you use what you planned to use. So many forex traders in Nigeria lose money because they don’t follow the plan.
Emotions involved in trading with money is one reason so many traders have a hard time following the plan. Don’t let your emotions rule. Control them and you can be successful.
One tip for building discipline is by creating habits. Human beings don’t have that much strong will power. However we are very much accustomed to following habits and routine.
Make it your routine to follow the rules go over your plan every day and plan your trades in advance. Take baby steps, find a way to improve your trading habits every day and you will find that you have built up a much stronger discipline
4. No Proven Forex Trading Strategy
Find a strategy that you can use that is profitable. Make sure you test it by following the rules and trading on a demo platform until is has been profitable for you and you know that the strategy works.
If you don’t have a strategy your could try a charting service to help you make the trading calls. There is one called Pro Act Charts that is excellent at teaching you to make good trading decisions.
If you have a strategy that is proven and that you can use over and over again that will help you achieve successful trading results. The best way to develop a strategy is to read and learn about different strategies and then test the results for yourself. Make sure when you are testing the strategies that you are following all the rules to each strategy.
5. Poor Mind Set
These things get said so many times it sounds boring, but it is true what you believe in your mind and heart that is what you will become.
If you say to yourself, I will follow my plan and I will succeed and you actually believe it then you will. When you have this mindset you will know going into something that it is not going to be easy it is going to be hard work and when you run into difficult problems you will not give up.
When you give up you guarantee failure, but traders don’t give up they just get up brush the dust off and say of I am going to be a profitable Forex trader but I might have to adjust a little or be more disciplined.
6. Not Setting Forex Trading Goals
If you are going somewhere you must have goals or how else will you know whether you will make it or not. Remember to take small steps and small goals that will enable you to reach your final destination. If you make the goals to difficult at first you won’t see any progress and that can be discouraging and you might be tempted to give up.