Forex market is a popular place for currency trading as it has the lowest capital requirement. If you are thinking of starting forex trading in Nigeria and want to know how much forex traders make a day then this article is for you.
Forex is a financial market that involves the buying or selling of one currency against another. A forex trader is not limited by geography, which means they can trade any currency pair at anytime from anywhere. The forex market is open 24 hours a day, 5 days a week, and has a high potential for making profit.
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Keep reading to find out how much forex traders make a day in Nigeria.
How Much Forex Traders Make a Day in Nigeria
A novice trader who engages in forex trading in Nigeria runs the risk of suffering significant losses. This type of trader might not even make any profit, but instead, incur losses. To be a successful forex trader requires knowledge, patience, consistency, practice, practice, and practice for you to start making consistent money daily.
Now, let’s calculate how much a profitable forex trader that already understands the market can make a day.
The scenarios below of winning 2 trades per day do not happen constantly in the market. On some days, the trader might have more than 2 winning trades, just one winning trade, or no winning trade at all for that day. Basically, the scenarios below are just examples:
Scenario 1 – Trader A with low trading account
If trader A has an account of $100 and trades only 1% per trade (i.e., $1 per trade) and the risk/reward ratio is 1:2 (i.e., risk 1 part to make 2 parts, in this case, risk $1 to make $2). That means for every winning trade, the trader makes $2. If that trader has 2 winning trades per day, that is a total profit of $4 for that day.
Scenario 2- Trader B with large trading account
If trader B has an account of $1000 and trades only 1% per trade (i.e., $10 per trade) and the risk/reward ratio is 1:2 (i.e., risk 1 part to make 2 parts, in this case, risk $10 to make $20). That means for every winning trade, the trader makes $20. If that trader has 2 winning trades per day, that is a total profit of $40 for that day.
In the 2 scenarios above, you will notice that traders A and B both risk 1%, and both have a risk/ reward ratio of 1:2. However, trader B still makes more than trader A. This is because, Trader A makes only $2 per winning trade because he has just $100 and is staking $1 on every trade, while Trader B makes $20 per trade because he has $1000 and is staking $10 per trade.
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In a nutshell, the amount a trader makes depends on the total amount they have in their trading account. So, you can’t put a max on the amount of profit a trader can make per day.
Every trader should know that losses are inevitable in the forex market. Hence, traders are advised not to risk more than 2% of their account per trade. Securing your capital is more important than making a profit. If you focus on just making a profit without securing your capital, then you run the risk of losing all the money in your account.
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An important thing to note is the strategy win rate. A good trader needs to ensure that the strategy they use has a win rate of at least 50% e.g. for a total of 100 trades, a trader must win 50 trades and loss a maximum of 50 trades. If this trader has a risk to reward of 1:2 as explained earlier in this article then that trader will be making more profit compared to how much they will lose in the market.
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You should also know that a professional forex trader can make up to 10% profit per month, but 10% is not the max, a trader can make as much as 100% or even 200% profit on their trading account every month. There are certain factors that can affect how much forex traders make a day in Nigeria. The way traders handle these factors is what makes them successful forex traders.
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Factors That Affect How Much Forex Traders Make a Day in Nigeria
- Market Conditions: Some forex traders lose money because they believe that one tested trading strategy would be sufficient to generate unlimited winning trades. You need to know that the market constantly changes and that if it were stagnant, no one would be able to make trades. A trader must learn to watch for these changes and be able to adjust to any circumstance. When the market changes, it brings in fresh trading possibilities as well as new risks. Make sure the strategy you use in any market condition has a win rate of at least 50%, the higher the better.
- Poor Risk Management: Risk management is essential to be a successful forex trader. Even if you are a really experienced trader, inadequate risk management might still wipe out your capital. The most important thing you need to do is safeguard your capital and not entirely focus on earning money. Your capacity to enter a trade decreases when your capital is exhausted. Use stop-loss and practice proper risk management. Use sensible lot sizes and your risk/ reward ratio should be at least 1:2. Most importantly, exit a trade if it is no longer logical to stay in it.
- Trading Plan: Forex trading is a business, and every business needs a business plan to be successful. A successful trader must devote time and energy to creating a comprehensive trading strategy. Your trading plan should at the very least include ideal entry and exit points, risk/reward ratios, and money management guidelines.
- Unrealistic Expectations: First-time traders should keep in mind that Forex is not a quick way to get money. There will be good and bad times, as well as profit and losses, just as in any business or professional job. A trader may rest easy knowing that their long-term success won’t be harmed by one losing trade. This can be controlled by limiting your market exposure on each trade, so if that trade does not go your way, your capital will still be secured. Always remember that your biggest allies are patience and consistency.
- Greed: Some traders believe that they must make money from every single pip of a market move. But keep in mind that chasing every pip before a currency pair turns in the opposite direction can lead you to hold positions for too long and put you in a position to lose the profitable trade you are chasing. Being less greedy is the way out of this. Aim for a reasonable profit while keeping in mind that the market is ever-changing and always offers new profitable opportunities.
In conclusion, forex trading in Nigeria is very profitable and for you to know how much forex traders make a day in Nigeria, you need to consider the total amount in that trader’s account (the more money in their account, the more you can make a day), If they use a strategy that has at least a 50%-win rate, and userisk/reward of at least 1:2 while also paying attention to all the factors that can affect their success rate then they can make at least 10% monthly.
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If you are a forex trader in Nigeria, let us know in the comments the highest and lowest amount you have made in a day trading forex.