The forex market within Nigeria has seen an increase in participation in global investment. This is due to Nigeria’s expanding middle-class economy and the rapid growth of speedy and reliable internet connectivity.
In this way it can be a lucrative option for investment, and involves currency speculation on the largest market of the world. There are many distinct features of the market for forex that create a distinct investment opportunity for people from Nigeria.
There isn’t any centralized market for foreign exchange. Instead, this type of online (OTC) trade is carried out electronically between traders across the globe.
The market is available all hours of the day, seven days a week in which currencies are traded among the world’s biggest financial centers.
Although trading in currency on this vast and volatile market offers numerous opportunities for profit however, it is crucial to begin your journey into the market of forex with an effective strategy that permits traders to minimize their risk of financial loss as much as they can, according to Louis Schoeman from Forexbroker.ng
In this article you will discover the five best trade strategies for forex that enable Nigerian traders to navigate the foreign exchange markets using an investment strategy that is stable.
1. Momentum trading strategy
The basic idea for the concept of momentum forex trading and utilization of indicators that are based on momentum is a large price shift to one side is considered a good indication that the trend will be sustained in this direction for some time.
A loss of momentum is an indication that an underlying trend is losing momentum and could be heading towards an upswing as well.
Price and volume are frequently considered when using methods of momentum for trading forex in Nigeria which typically makes use of candlestick and oscillators charts as visual aids to analyze.
2. Strategy for trading in forex range
The idea behind trading in range forex is that prices are constant and predictable over an extended period of time. Markets with predictable economies as well as currencies that aren’t often affected by news events that are unexpected are perfect for this type of strategy.
The index of relative strength, the index for commodities and stochastics may all be utilized by range traders to find the best entrance and exit locations.
To make consistently profitable profits, traders in the range should be able to purchase and sell at certain levels of support and resistance regularly.
For a successful use of this strategy to make the most of forex trading in Nigeria It is worthwhile using both fundamental and technical analysis in order to have a more of a long-term look at the market’s developments.
Fundamental analysis involves looking at the news and gathering other market information that can help you understand the direction that the market is heading.
3. Trend trading strategy
Another very popular and well-known method of trading forex involves trend-trading. It’s simple to learn and comprehend for those who are new to the field.
Moving averages, indicators of relative strength volumes measurements indexes that are directional, as well as stochastics are all utilized by trend traders to analyze the direction of trends.
If you notice an positive or negative trend in the prices of currencies You can then decide the most appropriate time to purchase or sell. Alongside the price of the currency within the trend the strength of the overall trend considered when making these predictions.
4. Utilizing the fundamentals of analysis
The economic data of a country contains an abundance of data which can be used to forecast the future patterns of investment and trade. By focusing on a handful of key indicators can simplify the process.
There are a variety of significant elements that could influence a country’s economy as well as its currency, such as retail sales and GDP, industrial production and the CPI inflation and purchasing index data for managers as well as housing data and numerous other.
Fundamental analysis is a method used by traders in the Forex market to determine whether the currency is priced at a low price or overvalued, based on the economic fundamentals of the country. They also utilize information to figure out how the value of the currency will change in the near future relative to a different currency.
5. Strategy for trading forex with breakouts
The forex market is a great option for those who are new to the forex market since it is among the most simple strategies to master.
Any price move that is outside the designated range of resistance or support is termed”breakout. “breakout”. “Bullish” breakout patterns emerge when prices increase above resistance levels. In addition, “bearish” breakout patterns may also be observed when prices drop below support levels.
Because the market’s volatility usually begins with breakouts, trading breakouts is an effective strategy. The market’s volatility can be utilized to the trader’s advantage when he or is patiently waiting for a price to fall before launching into an exciting new trend.
An important tip to follow when placing stop-loss trades using the breakout method is to make sure that you do it not less than just a couple of ticks over or below the candle that is used to create the breakout. This way the bets you place will be connected to the previous levels of resistance or support.
Integrating fundamental analysis in this way can also help you identify if there’s an untrue breakout taking place. Therefore, it is essential to be aware of major announcements of news that could alter the markets in this way.
Breakout strategies are very popular with Forex traders since they provide the most reliable indication of buy or sell points , and consequently can yield substantial returns.
A successful forex trading experience in Nigeria is based on a solid method that allows you to identify the most effective places to enter and exit the market, and will allow you to enter the forex market using a risk-adjusted approach.
In addition, strategies allows you to stay focused and staying clear of the emotional whims which often engulf novice traders. This type of thinking could lead to critical errors and can cause discouragement when trading.
Whatever strategy you decide to use will ultimately be determined by your trading objectives However, it’s essential to select the best strategy for your personal experience and the resources you have available to you, and your own trading style.
It is also essential to test different strategies prior to choosing the one that is most effective for you. With an account with a demo option from an established broker, you can evaluate your strategies against actual market conditions, without taking on any risk with your own cash.