Nigeria is Africa’s largest economy, with more than 200 million people. Crude oil generates 15% of the country’s GDP. Nigeria is also an agricultural economy, with 60% of the workforce working in the Agricultural sector. Forex trading has become popular among the younger generation keen on exploring new opportunities. Currency trading and all other capital markets are regulated by the SEC (Securities & Exchange Commission).
There are many local and international forex brokers operating in Nigeria. Most of them offer currency trading alongside other financial instruments like CFDs, indices, stocks, and cryptocurrencies. To become a forex trader in Nigeria, you need to comply with know-your-client regulatory requirements that include submitting certain identification, financial and location information. According to the SEC, clients should confirm the regulatory status of forex brokers operating in Nigeria via the SEC.
Problems facing forex brokers Nigeria
Forex brokers looking to set up physical offices in Nigeria face some challenges among them being the high cost of conducting business. Nigeria also has serious public safety risks due to terror group Boko Haram and recurrent military coupes. New businesses looking to set up also need to deal with teething problems like access to electricity and property registration challenges. Currently, Nigeria is among the worst countries in Africa in regards to the ease of doing business. This explains why many forex brokers operating in Nigeria have foreign offices. However, there are still reliable brokers locally. Here’s how to choose the best forex brokers in Nigeria amidst all the challenges.
Tips for Choosing the Best Forex Brokers Nigeria
- Make sure they are legitimate
Nigeria is popular with online scammers across many industries and niches. Unfortunately, the forex trading industry hasn’t been spared. As a result, before you select a forex broker, make sure they are legitimate. The first and most important thing is checking if the broker is regulated by the SEC and CBN. It’s also important to use a broker who is regulated by the Central Bank of Nigeria (CBN).
Foreign forex brokers who operate globally are governed by somewhat similar regulation. For instance, traders enjoy security, privacy, access to higher leverage and low margin requirements. 50:1 leverage is accessible for most currency pairs as well as 5% margin requirements.
It’s possible to find a forex broker operating in Nigeria unlicensed. Such brokers are deemed illegitimate and subject to fines or prosecution if they are discovered by regulators in the subject countries.
The local forex market in Nigeria is under the Central Bank of Nigeria. The regulator’s role is guaranteeing transparency as well as an efficient functioning foreign exchange market. The CBN does this by issuing local and foreign brokers licenses after they have adhered to strict requirements. The CBN has a department that has been set up solely to handle consumer complaints. If a forex broker operating in Nigeria is involved in malpractices, the CBN can fine and revoke their licenses.
Even if most online forex brokers today don’t have to be regulated in every single country they offer their services to, the best forex brokers in Nigeria must be subject to national regulators. Otherwise, there is no way of making sure they are legitimate. Furthermore, in case of malpractice like fraud or a scam, investors are assured of getting their money back.
- Choose a broker with the best forex trading platform/software
The best forex brokers in Nigeria will offer the best forex trading software in the world i.e., MetaTrader. Every good global forex broker offers this third party software since it has been tested and proven. It should also be custom to feature a broker’s branding. MetaTrader is incredibly popular for being easy to use. You can execute trades easily. The platform also has many indicators and financial instruments to trade besides currencies. For instance, you can buy/sell indexes and commodities like metals. You can also perform technical and fundamental analysis.
If you have coding or programming skills, you can create custom code and run it through the platform. MetaTrader allows robot trading or automated trading. You can place and execute high-frequency trades using complex algorithms, just like hedge funds. The platform also integrates copying and backtesting functions allowing you to test if your trading strategies work. In a nutshell, MetaTrader is the industry standard for forex trading software. If a broker doesn’t offer the software, you should reconsider choosing them.
What’s more; the best forex brokers will also offer several other platform/software choices. Serious forex brokers have their own proprietary software. They also have many other software versions i.e., web-based software and apps for mobile devices like Smartphones and tablets. The best broker provides the best software variety. You shouldn’t be limited by anything including variety, security, and functionality.
- Low commission and spreads
Forex brokers don’t have direct charges. They make money by charging a spread (the difference between the bid/ask price or buying/selling price of a currency pair). The larger the difference, the higher the cost of trading. Considering a spread is charged on every trade, trading costs can increase drastically if you choose a broker that charges high spreads. For the most popular currency pairs i.e., EUR/USD, the spread should be one pip or less.
It’s worth noting that some brokers increase spreads during market fluctuations to maximize their earnings. For this reason, it’s important to choose a broker who offers both fixed and variable spreads. The best forex brokers Nigeria offer both spread options to allow traders manage costs. In regards to commission, you should trade with brokers that have a clear commission structure. You should know how much money you will be charged in advance for holding onto trades for longer than usual, withdraw funds, deposit funds, etc.
- Variety of account types
The best forex brokers in the world, let alone Nigeria offer two main types of accounts namely; demo/practice and live accounts. You should be able to test your trading strategy with virtual money via a demo or practice account. When you decide to use real money, you should be able to open a micro, mini, standard or VIP account.
Micro accounts are great for beginners who want to take small risks i.e., trade with a small amount $50 or $100. Since losing is inevitable for beginners, micro accounts allow traders to learn without overleveraging. A mini account is perfect for a trader who knows the basics and is ready to take average risk i.e., one dollar for every pip (the smallest currency movement). Mini accounts can be open with $1000 or more. Standard accounts are ideal for traders who want to trade with $10,000 or more taking lot size positions of 100k and above. Standard accounts are for seasoned traders who aren’t afraid to take risks because they have risk management strategies in place. The best brokers also offer VIP accounts if you wish to deposit $100,000 and above and enjoy custom services like managed accounts, dedicated customer support.
- Good customer service
Given Nigeria has a high number of online scammers, it’s important to choose a forex broker who will respond to any enquiries immediately, especially those concerning security and privacy. The broker should have live chat support available within seconds. Support staff should be skilled enough to offer instant solutions to common problems. The support services should also be available in English and native language to cater to Nigerian traders in need of support services in their dialect. It’s common practice for the best forex brokers in the world to offer custom support to each and every country they operate in. Although it’s not always possible for the best forex brokers to set up offices in every country, a physical office is an added advantage.
- Do they offer additional services/resources?
Although forex brokers are businesses, the best ones don’t operate for the sole purpose of making money. You should select a forex broker in Nigeria who offers free but useful educational material such as training videos, audio, and text on forex trading. The broker should also offer tools for technical and fundamental analysis i.e. economic calendars, forex calendars, webinars, podcasts, live news feed, and anything else that can help you become a better trader. Some brokers go as far as offering trading signals. In a nutshell, there should be a genuine effort by the broker you choose to offer added value.
There are many local and foreign forex brokers to use if you are a trader based in Nigeria. However, there are more rogue than legitimate brokers in Nigeria. Before you risk your money and place your personal information in the hands of a broker, make sure they are legitimate. They should have a license or registration number from the CBN or SEC if they are serious. They should also offer the best trading platform/s and service. Last, but not least, they should not exist solely to profit. You can judge this fact accordingly by looking at their commission and spreads as well as if they offer additional services/resources for free.