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onomewrites

UNDERSTANDING FOREX MARKET - 2

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Forex Regulations in Nigeria 


Some countries regulate the Forex trading market carefully restricting and limiting the brokers’ activity. This allows for a safer trading for the customers, but it also closes out the market for other brokers damaging the competition, making it so that the remaining Forex brokers offer quite a low level of services.
 

In Nigeria, Forex isn’t overregulated; according to the foreign exchange manual issued by the Central Bank of Nigeria in November 2006 everyone can participate in the foreign currency exchange activities as long as they are conducted via the banks or brokers registered with such banks (authorized dealers).

Spot Forex market (the one that is use for on-line leveraged trading where actual currencies are not delivered) faces even less restrictions and regulations from the Nigerian government. Unlike U. S. there is no a regulating body for such Forex brokers, so any legal company with a registration in Nigeria or some other country can accept traders from Nigeria.

This makes the Nigeria Forex brokerage industry a free and open market allowing the residents of Nigeria to choose from very many on-line Forex brokers. Unfortunately such variety brings in certain dangers, there are many scam brokers that seek to steal traders’ money and there are also brokers that claim to be offering excellent services but in reality offer nothing more than high spreads and some poor trading platform. So, a great care should be applied in choosing a Forex broker,  it is a good idea to select only those brokers that were checked by the experienced traders and are known for their quality. A good list of honest Forex brokers was compiled by Forex Nigeria, so you could easily start trading without having to do your own due diligence on any broker.

It is possible, that in the near future, Nigerian government will change the way of Forex market regulation. If more problems will be encountered by the Nigerian citizen, government can introduce some institute to register and regulate all Forex brokers. If this happens, the brokerage market will be very limited for a period of time. But until this happens, residents of Nigeria can enjoy the completely free Forex trading.


Possible Problems with Forex
Though on-line, Forex trading is a popular activity, here are many potential problems waiting for the newbie traders. Even more experienced traders can get a strong hit from something they’ve never encountered.

Here is the list, compiled by ForexNigeria.org, of the possible problems you can encounter in your Forex trading endeavor.
1. Scam Forex brokers: -a number one problem for a starting trader and some experienced traders that want to move from one broker to another. Be advised that there are many on-line brokers that will just steal your money, or will hunt your stop-losses to bankrupt your account, or will provide no support at all. Just stay with the brokers that are reputable and trustworthy until you learn to detect Forex scams yourself.
2. Overtrading: - sometimes you will start to lose money on trading just because you stay in the market for too long. Don’t overtrade, set daily goals for profit, limit for loss and don’t trade past them. Overtrading is one of the major psychological barriers in Forex trading.
3. Wide spreads on high volatility: -some Forex brokers increase their spreads for all currency pairs during the hours of high volatility (i.e. news releases). That can damage the whole trading strategy, so you must be aware if your broker uses such tactics and avoid losing money because of it.
4. Following wrong Forex signals: -sometimes you may find yourself losing; because you follow someone else’s Forex trading signals. Actually it is a good idea not to follow any signals at all (except for the ones, generated by your trading system), especially the paid ones. Trading your own Forex strategy brings in your sole responsibility for all your trades. If someone’s providing paid Forex signals, chances are they are not very accurate. Why would one sell them if he could earn money with just trading?
5. Lack of knowledge : - the lack of required knowledge to trade Forex will dump your trading account very fast. Educate yourself; don’t let your emotions control yourself and trade only when you are sure about its success. There are plenty of free educational materials available on-line, don’t be lazy and learn whenever you have a time for it.



MYTHS ABOUT FOREX 

As on-line Forex trading becomes more popular, it is getting cloaked in a wrap of some myths. Some of these myths are harmless, but some can be extremely dangerous to the beginning traders. To recognize such myths from reality is the basic condition of successful Forex trading. More than that, maybe after you learn about some Forex myths that they are really just myths you will dramatically change your opinion about Forex market.

Here is the list of the most dangerous Forex myths:

 

Forex trading is easy: - Actually it’s not easy at all, it’s pretty hard. It’s easy to start trading, but succeeding takes time and practice. Of course, there are talented traders that learn very fast, but generally starting traders should dedicate part of their time to educating themselves. 
Forex is a scam. : - Forex is a real currency market and anyone can trade there themselves and be responsible for their own decisions, so it’s hardly a scam. Forex can be compared to a stock market, but it is more volatile and the leverage is usually higher. The only scams you should be afraid of as a Forex trader are scamming brokers or scamming marketers that sell Forex e-books and sure-fire strategies. A good way to avoid scam Forex brokers is to use only well-known and tested brokers (you can choose one from the list compiled by Forex Nigeria.)
 

Only rich can trade on Forex: - This could be true like 20 years ago, but with the fast development of the informational technologies and particularly the Internet, Forex is now open to everyone. You can start trading with just $1. And you don’t need big amounts of money to "move" the market, it’s almost impossible with the current daily volume ($3.2 trillion). All you need is practice and a trading strategy.


Stop-losses are not necessary: - trading without a stop-loss is a suicide. With high leverage and no stop-loss your Forex trading account will wiped clean in no time. Learn to set your stop-losses to some point not too far from order’s entry price. Keeping losses low and profits high has always been a good move.



 

 

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