Tuesday, May 30, 2023

Stock Trading Basics (Nigerian Perspective)

Dear friend,

In this article I am going to give you important lessons on stock trading, but I must warn you, this is for serious minded people who want to make their fortunes in the stock market. If you are at all inexperienced with this sort of thing, you will probably find this article to be a most refreshing and rewarding, enjoyable read.

Stock trading is one aspect of stock investing that I believe is vastly overlooked, underestimated and misunderstood. The reasons are not far off; I’ll get to that in a moment but first let’s try to shed some light on this “golden well”.

I want to show you what you can lose by not being actively involved in stock trading with statistics that can stagger your ignorance. Do you know?

– That the value of the Nigerian capital market is over N12 trillion.

– That the current (2008) budget of the Federal Republic of Nigeria is less than N3 trillion.

– By implication, the Nigerian Capital Market (NSE) is four times the annual size of Nigeria.

– That the Nigerian Stock Market is ranked as the highest stock market with the highest return on investment in the world.

– that only 10% of active investors make up 90% of the N12 trillion (N9.18 trillion) that exchange hands daily.

– That the Nigeria Stock Market holds the greatest opportunity to create wealth for every Nigerian living in the country and in the Diaspora.

– These 10% active investors are stock traders.

If you want to get on the stock trading train, there are a few basics you need to keep in mind in order to excel.

secondary market

There are two markets where investors trade in the capital market, namely the primary and the secondary market. Most of the stock investors (90%) do their business in primary market, why? Basically because it is an all commerce market there are no restrictions as you can trade without necessarily having to go through renowned stockbrokers. In primary market you can easily buy shares over the counter, you just need to take a form, fill in your data in it and you are done, in other words, with some degree of ignorance of how the system works can be lenient, but this is not the case with the secondary market, it is highly regulated by capital market stakeholders which include the Nigerian Stock Exchange, the Security and Exchange Commission and the Central Security Clearing System Limited.

trading account

For starters, you need a stock trading account with CSCS Ltd so that you can trade on the floor of the exchange; This can be easily facilitated by a registered stock broking firm Currently, trading in the secondary market is done through stock brokers. You are charged a commission for every purchase and sale made on their behalf.

A current account with any bank

A current account to facilitate your trading When sales are made in your favor, you need a current account where you can easily pay your crossed cheques, unlike a savings account which Not designed to accommodate.

A Domestic Account for Nigerians in the Diaspora

For Nigerians living abroad who are interested in trading in the capital market can also actively participate. A domicile account may be processed for them where sales credit facility may be available to them; Furthermore, this account enables them to easily transfer funds to Nigeria for business purposes. My organization Winning Attitude Wealth Ideas ENT handles stock portfolios for Nigerian investors living abroad as part of our investment services.

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