Presently, forex trading is a popular way to earn wealth for Nigerian investors with an estimated trading value of ₦300- ₦450 million daily. However, forex trading is legal in the country only if you use a broker that is licensed to do so, and you simply trade for yourself.
Forex market transactions and based on the purchase of one currency for the sale of another currency, that is trading or exchanging 2 currencies simultaneously, hence known as currency pairs. This includes EUR/USD (Euro & US Dollar ), NIG/USD (Naira & US Dollar), GBP/USD (Pound & US Dollar) and more.
There are hundred of currency pairs which are classified as major, minor and exotic pairs.
The major pairs are the four most heavily traded currency pairs in the forex market. Also, it includes USD as one currency in the pair. They are EUR/USD (Euro/US Dollar), USD/JPY (US Dollar/Japanese Yen), GBP/USD (Pound/US Dollar), USD/CHF (US Dollar/Swiss Franc), AUD/USD (Australian Dollar/US Dollar), NZD/USAD (New Zealand Dollar/US Dollar) and USD/CAD (US Dollar/Canadian Dollar).
Trading done in major are highly liquid, accessible with higher opportunities to make profits.
Minor Currency Pairs
Minor currency pairs contains all currencies in the major pairs except US dollar. They are EUR (Euro), GBP (Pounds), JPY (Japanese Yen) and more. For exapmple: EUR/GBP, EUR/JPY, GBP/JPY.
The liquidity and volume are lower than majors, with lower trading opportunities too.
Exotic Currency Pairs
These pairs are made from one currency from the major piers and other one from emerging economies like Russia, Mexico, Brazil, South Africa. The pairs include USD/BRL (US Dollar/Brazilian Real), USD/HKD (US Dollar/Hong Kong Dollar), USD/ZAR (US Dollar/South African Rand), USD/RUB (US Dollar/Russian Rebel).
The global trading market is currently worh $1.93 quadrillion with more 85% of forx market transactions happening in Nigeria involving the following forex pairs: EUR/USD, USD/JPY, GBP/USD, AUD/USD, NZD/USD, USD/CAD and USD/CHF.
The US Dollars is the most traded currency, forming 90% of global trades. Therefore as a beginner forex trader in Nigeria, it would be wise to stick to these major pairs only as it offers high liquidity and predictable market movements.