The country of Nigeria is located in the Gulf of Guinea in Africa, and in recent years has gained publicity for the wrong reasons. We are certain that some of you are aware of the Ponzi schemes and scams that some of its citizens have used to cheat a fair amount of people out of their savings. It is fair to point out, however, that these scams are not unique to Nigeria. There are other countries that have gained infamy from the few unscrupulous citizens who decided to use their smarts to do harm, instead of contributing to the welfare of society.
To make your life easier, we have compiled a list of trusted Forex brokers in Nigeria. Select one from the list below to keep your mind safe.
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Nigeria Forex brokers scams
Now, while painful, the publicity of these fraudulent events allowed certain measures to be put in place, both locally in Nigeria and internationally to the targeted countries. This made it harder for these scams to continue and it also made people more vigilant of certain strange emails or phone calls they would receive because fraudsters were now known for specific types of messages they would leave.
You may be wondering, well, what does that have to do with the Forex market? Or more importantly, what does that have to do with Nigerian Forex Brokers? Well, up until recently, the prevalence of fraud in Nigeria did not just affect the people from other countries who were being tricked into sending their savings to fraudsters as ‘processing fees’ for promised lottery winnings. This also applied to the foreign exchange market within the country. Because of the boom in online trading and the highly unregulated market at the time, literally, thousands of Nigerian people were scammed out of their funds online by unregulated brokers who took their funds. And these did not apply to just Nigerian Forex brokers, but others who sought to take advantage of the growing demand for online trading services.
Trusted Nigerian Forex brokers
While this undoubtedly cost many people their funds, it also allowed the birth of organizations like the Association of Online Forex Trading Agents. Like the name suggests, this is a group of foreign currency trading brokers within the country that came together to restore the lost confidence in the online trading market due to the damage was done by these scams and Ponzi schemes. They have been making efforts in trying to get the attention of the relevant Nigerian institutions that would be able to make the needed changes in the system.
Regulated Nigerian Forex brokers
The main organization that has the power to make the regulatory framework is the Securities and Exchange Commission (S.E.C.). Unfortunately, while they have been making efforts to change the way the Nigerian trading market is set up (with no real regulations), the red tape that they face in getting this done is enormous. In fact, it is estimated that it would take about two years to pass any regulations put forth by the Securities and Exchange Commission into law.
So what is a trader to do in the meanwhile? Surely, we are not suggesting that traders avoid any Nigerian Forex Broker altogether? No, of course not.
While there are certain precautions that you would have to be vigilant about with Nigeria FX Brokers (because of the nature of the financial regulations), it is more than possible to find the right broker and build the right frameworks to become a successful forex trader.
Best Nigeria Forex Brokers – What to Look for:
There are some areas of choosing Forex Brokers Nigeria which overlap with the normal methods of selecting brokers. For the Nigerian market, some of these factors are more important than others. One of the main ones is choosing a broker who is regulated.
Since there isn’t a local regulation structure in Nigeria that fits the bill, we need to look elsewhere. The Top Nigerian Fx Brokers that we should be considering are those that are regulated by international institutions. This includes regulators like the Cyprus Securities and Exchange Commission (CySec), the Australian Securities and Investments Commission (ASIC), or even the United Kingdom’s Financial Services Authority. We are certain that some of you may be more familiar to the USA equivalents which include the U.S. National Futures Association (NFA) and the Commodity Futures Trading Commission (CFTC), but it is rare to see international brokers based outside of the United States to be regulated by these two organizations, as the US regulatory framework is a bit different from the international standard common among the other regulatory organizations.
What about Nigeria’s own regulatory body, you may ask? Well, the CBN or the Central Bank of Nigeria monitors interbank regulations, so they are not involved with forex broker transactions.
2. Currency Diversity
It is no secret that human beings love having a wide choice range when buying things. This ranges from the very food that we eat, to the clothes and household products that we buy for ourselves. It would be difficult for us trying to live in a limited world. Try to imagine, having only the choice between mashed potatoes, and fried eggs for every single meal that you could ever have: breakfast, lunch, and dinner. It doesn’t sound very appetizing, does it?
The same applies to Forex trading. As traders, we like to have diversity in the currency pairs that we can use in our transactions. This very diversity allows us to offset drastic movements in the market due to market noise, observe patterns across currencies and take advantage of unique price patterns that may affect multiple currencies at once. In trading, foreign exchange diversity is your friend. The best nigerian Forex brokers will be the ones who offer a wide range of currency pairs on their platforms. This makes them competitive among other international brokers, and is especially good for Nigerians, as it allows them to take advantage of trading and earning a profit in currencies that are stronger than their own local currency.
Generally speaking, a good forex broker will be one that offers all the major and minor currency pairs.
Trade execution is a factor that not many people remember when considering business with a new Forex Broker. Proper trade execution is critical for a forex trader to have success in trading the currency market. The difference that a few seconds can make in execution can be the difference between good profits and a failed trade.
There are two ways of trade execution, and a proper trader should be aware of both of them so that he may choose the right broker to suit his unique trading needs.
The first type of execution is the Dealing Desk. Forex brokers who use dealing desk operations are those that operate as a direct counterparty to any trade that you make. This means that they create a micro-forex market where you trade directly with them, instead of with the wider currency market. Whenever you place a trade with a dealing desk, the broker is taking a trade opposite you. For example, if you were to Buy the USD/CHF, this means that the Forex broker would Sell the USD/CHF in order to process your trade.
Many traders prefer dealing desks as they tend to offer fixed spreads, as they are the ones controlling the rates that they offer to their clients.
The second type of forex trade execution is the STP/ECN. With this type of execution, the forex broker simply acts as an intermediary between the trader and the main financial institutions. They simply process their traders’ orders straight through to the liquidity providers in the currency market. These liquidity providers are usually mutual funds, hedge funds and banks to which the forex brokers patch the traders’ orders straight through. This means that the traders are trading directly with the currency market.
Some traders choose STP/ECN brokers because the straight-through processing that they offer gives a more accurate picture of the state of the currency market. Brokers do not have control of the quotes that they offer and as such the rates are not fixed, but instead, they offer floating spreads.
The point is, that for each trader, the type of trading execution that he needs for his objectives may be different. Some swear by STP/ECN brokers, and others are quite comfortable with the fixed spreads that Dealing Desks offer. Each trader must know what his own goals are, and what type of environment he would be comfortable in. This remains the same with Forex Broker Nigeria market as well.
Vision and Truth – What All of Fx Brokers Nigeria Need
It may seem that all a trader needs is a checklist of all the attributes that he should look for to determine his success; one of the items on this checklist being how to choose a good Forex broker. In reality the success of a trader is in fact determined by something much simpler. It is determined by his ability to know the objectives that he wants to achieve, the ability to truthfully assess himself and the patience to plan and work towards the future that he wants. The future may simply be the next successful trade, or it could be attaining a broker that suits the type of trading that he wants to do.
The point is that a trader must know what he is looking for so that he will know the best choice when he has found it. For finding a good Nigerian Forex Broker, a trader should be aware of the type of unregulated market environment that the country operates in, and ensure that whichever broker he chooses is regulated by an outside institution. He should ensure that the type of currencies that the broker is offering meet his trading needs, and that the type of trading execution, spreads and commissions will not hinder his own trading objectives. And in order to do this, he must know what those objectives are. If a trader does this, he has begun to lay the proper foundations towards success.