You are reading this article because you have heard of forex trading and you want a genuine answer to the question on “how profitable is forex trading in Nigeria?”.
To answer your question, let’s first look at some forex traders in Nigeria and how much they have made so far. The names below are handpicked because some forex traders in Nigeria keep their net worth to themselves, so we can’t state the exact amount they are worth.
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Some Richest Forex Traders in Nigeria
- Uche Paragon: The richest forex trader in Nigeria is Uche Paragon, he started trading in 2007 and is thought to be worth around $16 million. He trades commodities such as crude oil using binary option forex trading strategy.
- Bade AjidahunAfioluwa: He studied various strategies and settled on one which has proven successful for him. He faced lots of losses but didn’t give up and went on mastering his craft. He was able to retire at age 28 due to his immense success. He is reported to have an estimated net worth of $220,000.
- Blessing Ezeako: Ezeako is a woman who has clearly demonstrated that forex is not only for men. While gaining significant success in the field, she has paved the way for women in forex trading. She started forex as a side hustle till it grew to become her full-time employment. She is reported to have an estimated net worth of $200,000.
I’m sure you can now theoretically answer the question of “how profitable is forex trading in Nigeria”after looking at the names and earnings shown above.
Read: Best Currency Pairs to Trade in Nigeria
How Profitable is Forex Trading in Nigeria?
Forex trading is profitable but not without loss. If you have $100 in your trading account and your trading strategy has at least a 50%-win rate (i.e., in 100 trades you win 50 and lose 50), while your risk to reward is 1:2 (i.e. you risk 1 part to win 2 parts), and you risk only 1% of your account per trade.
Risk per trade = 1% which is $1
Total number or trade= 100
Total Amount Loss = 50%, which is 50 x $1 = $50.
Total Amount Won = 50%, which is 50 x $2 = $100.
Note that because you use 1:2 risk to reward, it means for a losing trade you lose only $1 and for a winning trade, you made $2. That’s why the total amount won is 50 x $2 =$100.
It’s that simple.
The minimum strategy win rate you should aim for is 50%. But the higher your win rate, the more profit you can make. Also, the more money in your trading account, the more profit you can make. Imagine that for every winning trade you make $100 with a 70% win-rate, i.e., 70 x $100 = $7000 profit. Change that to Naira. How much did you get? Now you can mathematically answer “how profitable is forex trading in Nigeria”.
Read:5 Best Forex Trading App in Nigeria
Maximizing Forex trading Profit in a short time
Before you look at maximizing your profit, you need to ensure that you have fully mastered the art of trading with all the ups and downs that come with it. To maximize your profit, you need to increase your funds. There are different ways you can increase your trading funds:
- Investors: Get people to invest with you on the basis of giving them a certain percentage of their total investment each month. For example, if someone invests $100 with you and you know that on a minimum, you will make 10% on that investment in a month, then you can agree to give that investor 5% every month while you take the remaining 5%.
You can convince family and friends to invest with you. You can also get businesses and wealthy individuals to invest with you, but ensure you have your portfolio as proof that you are a profitable trader and have legal support in case things go south because it is really risky to be in charge of people’s money. I personally do not like this method because it is risky, but you can try it for family and friends that you are comfortable with and that won’t come banging on your door.
- Asymmetric Compounding: This is one of my favorite methods because you can do it with just your capital. In this method, when you win a trade, you risk that profit on the next trade, and when you lose a trade, you risk 1% of your capital on the next trade.
Let’s do a little calculation…
Example – You have a capital of $100 and your win rate is 70% with a 1:2 risk to reward.
|1st Trade||$1||Won||$2||Risk your profit in the next trade.|
|2nd Trade||Your previous profit, i.e., $2||Won||$4||Risk your profit in the next trade.|
|3rd Trade||Your previous profit, i.e., $4||Loss||-$4||Your capital is still secured, as you have only lost your previous profit and you still have $2 profit from your 1st trade.|
|4th trade||You go back to risking $1.||Won||$2||Risk your profit in the next trade.|
|5th Trade||Your previous profit, i.e., $2||Won||$4||Risk your profit in the next trade.|
|6th Trade||Your previous profit, i.e., $4||Won||$8||Risk your profit in the next trade.|
|7th Trade||Your previous profit, i.e., $8||Won||$16||Risk your profit in the next trade.|
|8th Trade||Your previous profit, i.e., $16||Loss||-$16||Your capital is still secured, as you have only lost your previous profit and you still have $16 profit from your 1st, 4th, 5th, and 6th trades.|
|9th Trade||You go back to risking $1.||Won||$2||Risk your profit in the next trade.|
|10th Trade||Your previous profit, i.e., $2||Loss||$2||Your capital is still secured, as you have only lost your previous profit and you still have $16 profit from your 1st, 4th, 5th, and 6th trades.|
Study the table again… until you understand it.
There are different ways people apply asymmetric compounding, but the method in the above table is a conservative way of calculating it to maximize profit and still protect your capital. The important part of this method is that you need to have a high win rate with consecutive winning trades.
- Proprietary Firms: Popularly known as “Prop Firms”, this is another one of my favorite methods. With this method, you need a 3rd party, which is called a prop firm. These are companies that provide traders with capital to trade and split the profit with them after a certain period of time. With prop firms, you can get up to $200,000 in trading capital, although for some prop firms, you have to pay for challenges (evaluation). This evaluation is to determine if you are capable of meeting their profit target. Below is a comparison table of some recommended prop firms. There are many reputable prop firms out there, we just picked 3 for this article:
|S/N||Prop Firm||Challenge Cost||Capital||Duration||Profit Target||Split Ratio|
|1||FTMO||$184||$10,000||30 days||10% profit, i.e., $1,000||70:30
You get paid 70% ($700) of the profit you made, and they take 30%.
|2||My Forex Funds||$84||$10,000||30 days||8$ Profit||75:25|
|3||E8 funding||$228||$25,000||Withdraw your 1st split after 14 days.||No profit target||80:20|
- The challenge fee is a one-time fee, and it is refundable. They pay it during your first payout.
- You can get as much as $200,000 in trading capital. It depends on the plan you pick. The more the capital, the more the challenge fee.
- The challenge fee is not refundable if you don’t pass the challenge.
- Each prop firm have their rules, ensure you read them and understand before joining. You can be disqualified if you break them.
I’m about to make a serious point here… Please pay attention carefully.
Copy trading allows you duplicate trades, i.e., if you place trade on one account, it can automatically duplicate it to other account(s) using the lot size you have initially specified. The main account you are trading with is called the master account and the other account(s) that is duplicating the trades is called slave account(s). So, you can basically have accounts with all these prop firms and connect them through a copy trading platform, so you don’t need to keep going from one account to the other to place your trades. One of the copy trading platforms we recommend is Trade-Copier. They have different plans; choose the one that works for you.
Now imagine this…
If you become a FTMO trader, the maximum amount you are allowed to manage currently is $400,000. For My Forex Fund, it is up to $500,000 and E8 funding traders can manage over $300,000. That’s a total of $1,200,000. If you make a profit of 10% on it every month, that’s $120,000 and you are paid your share of 70%, that’s a whopping $84,000 for you every month. Convert that to Naira, how much is it?
The calculation above is for just 3 prop firms. What if you manage funds for up to 5 prop firms? These prop firms also have scaling plans which allow them to gradually increase your trading capital and your split percentage.
Read: Best Forex Broker in Nigeria
In conclusion, forex trading is not a get-rich-quick scheme, and people even lose their money in it. However, it is very profitable once you have mastered your strategy, and learnt to strictly stick to your trading rules. It can take months or even years for you to be a professional forex trader in Nigeria.
With everything discussed in this article, I hope have been able to convince you that forex trading in Nigeria is very profitable and it’s a long-term plan, so you need to start learning it now.
I’m certain that this article has thoroughly answered your question on “how profitable is forex trading in Nigeria?” as it is packed with so much information.
Let us know in the comments how informative you find this article.