Forex trading is surprisingly expanding in Nigeria and surpassing several African countries. The largest decentralized market in the world is conducted online and 24 hours a day from Monday to Friday with the help of internet-based brokers. Positions are opened or closed by using the necessary trading software.
The number of Nigerians involved in forex trading was around 85.49 million in January 2020 and the penetration rate was 42 percent. This means about half of its population is online.
Forex trading in Nigeria started in the 1970s and initially through traditional methods. With invent and penetration of the internet, the government allowed accessing the market online by using a computing device equipped with a stable internet connection. This resulted in a flourish in the sector as investment became easy and flexible.
The middle-class income group is increasing and this has lately recognized the country as the fastest growing economy equipped with the growth of the export industry as well as improved local infrastructure. Individuals now have greater opportunities to increase their incomes and forex is one of the ways to earn additional money.
Another reason for the popularity of forex in Nigeria is the easy accessibility of the market to seasoned professionals as well as newcomers. It is open to everyone and learning about currency trading is free. Industry experts and brokerage houses have wealth of information to offer interested people. They educate through YouTube channels, books and articles. Free demo accounts offer is seen as an added advantage in the growth of the segment.
Apart from all these, the COVID-19 pandemic and restrictions impacted the global economy including that of Nigeria. A large swathe of the country's population is now looking for additional income or alternative sources of earnings. Forex is being considered an easy and lucrative option.
Forex is an abbreviation of foreign exchange and is sometimes referred to simply as FX. It is a currency market and the largest financial market in the world with a daily turnover of more than $6 trillion. Currencies are traded in pairs and 24 hours a day from Monday to Friday, based on various time zones. The main participants are the larger international banks.
It is the most liquid market and is traded over-the-counter without having any central clearing house or exchange. The biggest trading center is London, UK and accounted for about 43 percent of global trading.
Forex trading gained significant momentum following the global financial crisis in 2008.