Trading foreign currencies on the forex market often entails dealing with different currency pairings. Most forex trading gurus and guides in Nigeria frequently advise beginning traders to concentrate on the well-known pairs (also known as the majors) rather than the other dozens of pairs at their disposal.
While trading on majors undoubtedly and generally has more potential for profits, for obvious reasons, trading uncommon pairs such as minors can also bring in great profits with the right trading strategy. On the forex market, there are a handful of currency pairs that are far more volatile than most majors, giving you a ton of opportunity to benefit from price swings.
We’ll look at the benefits of trading minor pairs in Nigeria in this post. Let’s first examine what minors are before moving on to the benefits we stand to gain by trading them in Nigeria.
WHAT EXACTLY ARE THE MINORS?
When two currency pairings don’t include the US dollar but do include other commonly traded currencies like the euro, yen, or British pound, they are referred to as Munro currency pairs or just minor currencies.
Minor pair examples include:
◦ EUR/GBP — Euro/British pound
◦ GBP/JPY — British pound/Japanese yen
◦ EUR/AUD — Euro/Australian dollar
◦ NZD/JPY— New Zealand dollar/Japanese yen
◦ CHF/JPY— Swiss franc/Japanese yen
◦ EUR/CHF — Euro/Swiss franc
◦ GBP/CAD — British pound/ Canadian dollar
When compared to the well-recognized major currency pairings like EURUSD, USDJPY, GBPUSD, and USDCHF, minor currency pairs in Nigeria hold a lesser market share. As a result, this category of pairs exhibits low market liquidity and offers extensive or wider trading forex spreads than the majors.
WHY YOU SHOULD TRADE MINORITIES
Most Nigerian traders frequently stick to trading only the big currency pairings. Only a small percentage of traders pay attention to and add the minor pairs to their watch lists. Most educational content found online and offline is mostly centered on the major forex pairs. It makes perfect sense for those traders to follow what they have been exposed to and are aware of. Well, here is your chance to learn a bit about the advantages offered by minor currency pair trading.
◦ ADDITIONAL TRADING INSTRUMENTS AND PAIR
Trading minor currency pairings has several apparent benefits, one of which is that it opens up new market prospects for traders in Nigeria. Eight major currencies may be crossed to create a total of 27 different currencies. Anyone who just concentrates on trading the big currency pairings will undoubtedly miss out on any trading opportunities with the other 20 currencies. If the right method is applied, trading minors may help you expand your trading prospects, which might result in more revenue and profit.
◦ MORE LONG-LASTING TRENDS
Minor currency pairings often have significant volatility, which gives traders in Nigeria greater trading possibilities and chances. Long-lasting trades result from this trait, which translates to high-caliber trading possibilities. The likelihood of making a big profit is increased, even though they may have more liquidity than the main pairs. In the end, minor pairings may not be appropriate for scalpers but give great payoff over the medium to long term. Therefore, there is a chance to make some good profits if you can identify one of these movements in the minor pair and enter.
◦ MORE PRICE MOVEMENTS
A trader in Nigeria would do well to base his or her trading strategy on the fact that many small pairs exhibit greater price swings or movement than their major equivalents.
This is mostly a result of the high volatility of the market: the more a currency pair moves during trading sessions, the more volatile it is. These changes result in additional market trends and an increase in the number of trading possibilities.
This in no way implies that these price changes and other market trends will ensure a profitable trading result. It is still going to require hard work, and you should thoroughly monitor these pairs to spot good market trends to trade.
◦ UNAFFECTED BY FUNDAMENTAL FACTORS.
Minor pairs, in contrast to their major counterparts, are not tied to the US dollar, as was previously indicated. Remember that because the US is the world’s most powerful and influential nation, anything that significantly impacts the US will also have an impact on any linked currencies.
For currency pairings linked to the US dollar, this may be terrible news. Minor pairings are mostly shielded from the repercussions of major global events since they are not linked to the currency. For Nigeria’s small-time currency traders, this is an extra benefit because it allows them to trade without concern for fundamental developments.
FEW TIPS FOR TRADING THE MINOR
• To maximize your chances of success while trading small currency pairings, I advise you to start by trading just a few currency pairs and to stay with them. As a result, you can effortlessly handle transactions and increase your earnings.
• Find out all you can about the chosen currency pair by gathering as much information as you can about it. Discover the basic aspects of dependence, if any, and learn how to get around them.
• The trading session of the selected currency pair should be clearly defined, and your working time should be planned accordingly. The foreign exchange market is open throughout the day, but it only trades during three primary sessions: the US session, the London session, and the Tokyo session.
SUMMARY
You should now have a good understanding of how minor currency pairings operate in Nigeria and how beneficial they can be.
This is not in any way meant to imply that minor currency pairs are better than major currency pairs. However, I think combining the two will result in greater advantages. Ultimately, the more currency pairs you have, the more opportunities you have to trade, and in turn, the greater the potential for profit.
