How Forex Is Helping Democratise Trading in Africa
Forex trading is attractive for a number of reasons. In terms of trading volume, few other markets even come close. With a daily trading volume estimated at between $6.5 and 6.6 trillion, the liquid assets being moved around are immense and they’re happening 24/7. Unbound from the market openings and closes typical in stocks and shares, opportunities for liquidity are constantly there. Often a complement to a wider portfolio, the fast-moving world of forex has proved a popular route for many institutional and retail investors.
In Africa, and Nigeria in particular, internet access has been growing for a number of years. Alongside South Africa, most of African forex trade activity occurs within Nigerian borders, some 1.3 million traders are currently active in the region. And for good reason – forex is well-placed to serve the needs of the Nigerian investors, and here’s why.
Keeping the Game Plan simple
It seems obvious, but many investors overlook the importance of sound investment strategy and an understanding of the type of investor they are. Deciding how long a person wants to invest for, as well as the volume of trading they want to do – be it a few times a day or far less frequently – will have a major effect on how their forex portfolio looks.
Forex, however, thrives because of its flexibility. A 24/7 market means a range of risk profiles, and specific types of trades to target are available to the trader, with varying levels of risk. Day traders, with more time on their hands can afford to spend hours and increase liquidity in positions. A position trader, on the other hand, will make a move over weeks or months, and aim for appreciation on a trade. For the thousands of Nigerians with capital to invest, whatever their time commitment, forex is facilitating those needs.
Picking a Platform
Platforms can differ majorly in the sorts of resources they offer, the accessibility of their services, and their customer support availability. So, considering these factors carefully helps reduce risk. However, there is no shortage of options available online. A new forex trader, as part of understanding their trading profile, has a wealth of choices for finding the right platform.
Many new traders in Africa are crying out for better resources to learn how to invest and would benefit from platforms with such resources to help them learn the basics quickly, or offer practice accounts. Services like INFINOX FX trading can cater quite well to these sorts of newcomers who might need clear and transparent user experiences, along with the guidance of the instruments they want to use.
Speak the Language
Learning the basics of forex is essential, as with any investment practice. Off the bat, becoming acclimated with terms like trading pairs, (the combination of certain currencies) or leverage (using debt instead of equity to purchase your chosen asset) are all typical terms. Knowing these terms will allow a trader to also consume forex trading news more effectively.
Luckily, forex is perhaps one of the simplest in its linguistic complexity, compared to the jargon-filled worlds of stocks and shares and commodities trading. That accessibility is crucial to investors who are looking to start out. For many, it’s the first time they’ve had the chance to invest. With 104.4 million internet users in Nigeria by January 2021, the figure saw a 19 million – a 22% increase – between 2020 and 2021.
Forex has grown in popularity over the past few years, thanks in some part to increasingly simple and easy-to-use trading apps. Gone are the days of institutional investors taking the whole share of trading volume, however it also means many new traders jump into forex without the resources of a professional trader.
As things stand, internet penetration is still only at roughly 50% in Nigeria, so it has quite a ways to go. Therefore, for the thousands gaining this newly-found access, figuring out their trading style and ambitions is increasingly hinging on the simpler forms of trading like forex. Without question, more access is a good thing, but it also comes with it a responsibility to manage risk with intelligence and clarity – and gain greater financial freedom in Nigeria.