There are over 160 companies listed for trading on the Nigerian Stock Exchange market (NSE). Are you interested in how to invest in the Nigerian Stock Exchange? This is a complete beginner’s guide on how you can trade stocks in Nigeria.
What is a Stock Exchange?
A stock exchange is a regulated and organized financial market where stocks, bonds, shares, and notes are bought and sold at varying prices depending on the economy and other factors. The stock exchange market in Nigeria is known as the Nigerian Stock Exchange (NSE).
Nigerian Stock Exchange which was established in 1960 has over 160 listed companies on its platform that allows buying and shares and stocks. Some of those companies like Zenith Bank, Unilever, UAC foods, Oando, Julius Berger, Dangote, and others offer the public part of their stocks and shares in exchange for certain prices.
Thus, if you are interested in making profits while trading stocks in Nigeria, the Nigerian Stock Exchange is the perfect platform. All you need to do is to buy and sell when you have made enough profits.
With the Nigerian Stock market, you can buy and sell shares from different listed public companies. However, this doesn’t require too much money unlike the wide assumption, you can buy a share as low as N1000 depending on your capacity.
Find below how to invest in the Nigerian Stock Exchange market.
How To Invest in Nigerian Stock Exchange
How do I trade Stocks in Nigeria? Investing and trading stocks in Nigeria are almost the same thing just that, trading is a short-term buying of Stocks for the sole aim of profit. While investing means accumulating those stocks for a longer period.
Before you can start investing in the Nigerian Stock market, you will need to do the following;
1. Stock Brokerage Account
A Stock Brokerage Account is an online account that is opened with a particular stock broking agent to sell and buy shares. This means you have to register with any approved stockbroker firm in Nigeria before you can invest in the Nigerian Stock Exchange market.
All you need to do is to choose one out of the registered stockbroker and register with your details. Most of these stockbroker firms have online platforms which make registration easy. You may need to provide some personal documents and information like E-mail address, Identification Card, Bank account details including your BVN, Account name and bank, etc.
2. Create Central Security Cleaning System (CSCS) account
When you want to register for Stock trading in Nigeria, it is important to create a Central Security Clearing System (CSCS) account to help prevent fraudulent activities in your account.
The CSCS is like an independent portal used by all stockbrokers in Nigeria which helps to protect and maintain all accounts.
Once you’re able to create the account, you will be provided a Cleaning House Number (CHN) that is unique to your account. Then you can start trading and investing in the Nigerian Stock market. Apart from stock trading.
3. Start Trading Stocks or Invest
After opening an account with a registered broker firm, you can proceed to start trading or investing in the Nigerian Stock market.
Most stockbroker firm has an online platform that makes it easy to buy and sell stocks without any physical meeting. All you need to do is to deposit money into your brokerage account and trade with it by yourself.
Better still, you can send an email to your broker firm on the type of stocks you wish to buy or sell and it will be done on your behalf. When trading or investing in the Nigerian Stock Exchange market, you should take note of the following.
The Nigerian Stock Exchange market always opens by 10 am and closes at 2.30 pm. During this period, you can buy and sells any shares you wish. Also, the Nigerian Stock Exchange pre-market always opens at 9.30 am and closes at 10 am before the trading started.
The pre-market is always available to monitor stocks and shares prices before trading begins. You can also place your bids or offer during the pre-market period.
The transaction fee charged will be determined by the stock brokerage firm that you chose. When you make a bid or offer in a stock market, you will incur transaction fees; the statutory fee which is fixed, and the ones charged by your broker fee. Most stockbroker firms in Nigeria charge between 1.5% to 1.8% on every transaction.
Cleaning of Funds
After investing in the Nigerian Stock Exchange market, NSE cleaning of funds always takes 4 days to be cleaned. That is the entire transaction will take 4 days to be concluded.
4. Withdraw Your Funds
Depending on your investment plan, whether you are trading or investing in the Nigerian Stock Exchange market, you can sell your equities and withdraw your funds anytime.
All you need to do is to request a withdrawal and your money will be credited to your bank account. Withdrawal on most brokerage firm accounts takes 24 hours.
Final Thoughts on Investing in Nigerian Stock Exchange
As much as there is a lot of profit in stock trading and investing in the Nigerian Stock Exchange, it has its risk also. Therefore, it is a must to know about risk management and other financial knowledge before you start.
It is also important to note that to make a profit in the Nigerian Stock Exchange, you need to focus on the long term. Stock trading and investing may not be for you if you are looking for quick money except you are an expert.