The Ins and Outs of financial regulation in Nigeria

When trading Forex markets it is essential to find a well-regulated broker which is also honest and treats clients fairly. Nigeria is a very interesting African country with a modest-sized economy. With 40% of its population below the poverty line trading the financial markets can promise substantial improvement in the quality of life for the average Nigerian citizen. Because of this we will discuss regulations of Forex in Nigeria and will provide guidelines to select the best broker that can be trusted.

Forex regulations in Nigeria - what to know

Forex trading in Nigeria is legal but not regulated, because of this, there are no local brokers that are regulated by any Nigerian authority. Since there are no regulations but trading is legal, the best choice for Nigerians are brokers that are regulated by reputable authorities including FCA, ASIC, CySEC, or FSCA. Being regulated by notable regulators and offering low spreads and commissions are the main signs for the best forex brokers in Nigeria that can be trusted. Many Nigerian traders choose to trade with popular Forex brokers including XM broker which is heavily regulated and offers competitive trading services. Must-have attributes of reliable brokers therefore must include being regulated, having low spreads, zero withdrawal fees, and low trading commissions. Trading with unregulated brokers is risky and it is possible to lose all funds and this is why only regulated and tested brokers must be chosen.

Selecting the right broker for Nigerians

Since it is possible to find reliable brokers, let's consider the steps for finding the most suitable brokers depending on the risk appetite trading style and trading goals. Every trader has their own trading style, risk tolerance, and trading goals that must be considered before jumping on the web to find a proper broker. For scalpers, who are relying on many small intraday profits, the brokers who offer the lowest spreads for little commissions are the first consideration. Many brokers who offer services to Nigerians also accept popular payment methods used in Nigeria. M-pesa is such a method and it is very comfortable to find a broker that supports your everyday payment method. Brokers who operate in Africa are often regulated by the South African Financial Sector Conduct Authority (FSCA). Receiving a license from FSCA means the broker is focused on delivering comfortable trading services to Africans and also offers their favorite payment methods and comes with a multilingual website to make it easier for Nigerian traders to learn and exercise their trading skills.

Before searching for brokers make sure you know what you should be looking for.

Regulations and safety policies

The regulation is a cornerstone of a trader’s safety. It is an essential part of finding a reliable broker. FSCA is a decent overseeing body and brokers under its regulations will have a higher chance of being honest and fair. Make sure the broker offers negative balance protection especially when the leverage offered is high, as it increases the risk of losing more than your balance when you are a starter or something profound happens on the market. Regulated brokers use segregated bank accounts preventing them from using client funds for their own needs. Here you can check if the broker is regulated by FSCA or not.

Know your needs as a trader

If you are seeking education make sure your broker has decent resources for education and provides necessary research tools such as an economic calendar. Make sure the broker has at least 24/5 live support with live chat. You can not afford to spend money on phone calls or wait for hours for the broker to answer your questions. Live chat is a must when selecting a broker. If you need a broker for certain trading strategies you will need to focus more on other terms like trading accounts and spreads, and fees.

Spreads and fees

High spreads can quickly become an issue when your trading strategy relies on quick small profits and commissions can harm your day trading strategies. It all depends on the trading approach the trader is comfortable with. For day traders lower fees and commissions are more important than spreads. But for scalpers who usually close trades on the same day lower spreads have higher priority.

Trading platforms offered

Learning a new trading platform can be a time-consuming process and it is a good idea to check which trading platforms the broker offers after ensuring they are regulated and offer competitive spreads and fees. Since most Forex brokers are offering MetaTrader 4 (MT4) as a main trading platform it is a good idea to familiarize yourself with this advanced trading software.

Payment systems and minimum deposits and withdrawals

It will be costly and time-consuming to use a payment method that is not supported locally in Nigeria. Many FSCA-regulated brokers who also target Nigerian traders offer M-pesa payments which is a very convenient way of depositing and withdrawing money from your trading account. Make sure the broker does not charge commissions for deposits and withdrawals and withdrawals are processed maximum of 1-3 business days. Some brokers also process withdrawals within 24 hours which is the best option.