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The Nigerian Stock Exchange: Best Beginner’s Guide to Investing

The Nigerian Stock Exchange
Finance / Online Investments / Reviews

The Nigerian Stock Exchange: Best Beginner’s Guide to Investing

The Nigerian Stock Exchange (NSE) was founded in 1961 as the Lagos stock exchange.

In November 2019, NSE had 161 listed companies, including eight local companies on the premium board, 141 organizations on the mainboard, and four on the alternative securities market board.

The fixed income market has 21 state bonds, 84 FGN bonds, one supranational bond, 27 corporate bonds, and 53 memorandum listings.

As of September 15, 1960, the Nigerian Stock Exchange had seven individuals in the Exchange’s Memorandum of Association.

R.S.V Scott, representing C.T. Bowring and Co. Nigeria limited; Chief Theophilus Adebayo Doherty; John Holt Ltd; Investment Company of Nigeria Limited (ICON); Odumegwu Ojukwu; Chief Akintola Williams; and Alhaji Shehu Bukar.

The NSE operations started officially on August 25, 1961, with 19 securities available for trading. But, everyday operations began earlier in June 1961.

At first, operations were conducted inside the Central Bank building with four companies as market dealers: C.T. Bowring, Inlaks, ICON, and John Holt.

The Nigerian Stock Exchange

Since April 27, 1999, the Nigerian Stock Exchange has operated on an automated trading system, with dealers trading through a computer network.

The NSE launched its next-generation trading platform X-Gen in 2013, focusing on enabling trading for the institutional and retail sections.

Trading takes place on The Exchange every Monday to Friday from 9:30 a.m. and closes at 2:30 p.m.

Market prices, including NSE 30, All-Share Index, and Sector indices, are published every day in The Stock Exchange Daily Official List, newspapers, the Nigerian Stock Exchange CABINET (an intranet facility), and the stock market page of the Reuters Electronic Contributor System.

Performance data and historical prices are also posted on the NSE website.

To motivate foreign investment into Nigeria, the government prohibited legislation preventing the flow of foreign capital into the country.

By doing this, foreign brokers were allowed to enlist as dealers on the Nigerian Stock Exchange, and investors of any nationality had the freedom to invest.

This also gave Nigerian companies the liberty to multiple cross-border listings on foreign markets.

The NSE reconstituted the Investors’ Protection Fund in 2012 to promote trust and transparency in the capital market.

The Fund is established to compensate investors who suffer financial loss arising from the cancellation or revocation of the registration of a dealing member, bankruptcy or negligence of a dealing member, insolvency, or embezzlement committed by a dealing member or any of its directors, employees, officers or representatives.

The Nigerian Stock Exchange is regulated by the Nigerian Securities and Exchange Commission.

 

How To Invest In The Nigerian Stock Exchange

The stock buying process is not as complicated as it sounds.

But, you will need to do your research and learn the language before making your first purchase.

You will need to create an account with a brokerage company to purchase stocks, which can be done for you in just 15 minutes.

Then, you will need to fund your account. You can follow the steps discussed below to find the best companies to invest in and then select the companies you wish to invest in.

 

1. Pick an Online Stockbroker:

The straightforward approach to buying stocks is to use an online stockbroker.

After you have opened and funded your account, you can purchase stocks and shares online through your broker’s website.

Another option available is to buy shares directly from the company or use an all-inclusive stockbroker.

The online opening of an account process is as simple as opening a bank account.

Complete your application for the account with a photo ID, and then decide if you want to add funds to the account through an electronic fund transfer.

 

2. Perform your research on the stocks you wish to buy:

Once you’ve created and funded your account with a brokerage, you are now prepared to get into the business of picking stocks.

Do not allow live market fluctuations and the flood of information to overwhelm you when you carry out your study.

Be clear on your goal: to find companies that you would like to be a part-owner of the best stock brokers in South Africa.

Once you’ve identified these companies, the broker is ready to carry out an investigation.

He will provide you with an overview of what is happening in the business and some context for the numbers in the document.

Most of the tools and data you will need to evaluate the company can be found through the broker’s website.

For instance, transcripts of SEC filings of quarterly earnings reports from last News and conference calls.

Many online brokers provide basic training on choosing stocks and instructions on how to use their tools.

 

3. Decide how many shares you will buy:

It would be best if you were not under any pressure to buy your entire portfolio or a certain number of shares simultaneously.

Start little by buying stock to feel the experience of owning individual stocks.

And whenever you’re prepared to weather tough times with the minimal loss of sleep, you can gradually increase your stake when you have mastered shareholders’ confidence.

Stock investors who are just starting may be interested in fractional stocks. This is a new feature from online brokers that enables buyers to purchase a small share instead of the entire stock.

This means that you can invest in expensive stocks like Amazon and Google (which are famous for their four-figure stocks) with less money.

Among the brokers offering fractional shares is Robinhood, Charles Schwab, along with SoFi Active Investing.

Lots of brokerages also provide tools that can convert dollars into stocks. This is valuable if you have money that you would like to contribute, like $500, and you want to know how many shares that amount is worth.

 

4. Choose your favorite stocks:

Don’t be afraid of all the word associations and odd numbers on your broker’s website. There are several refined trading techniques and orders.

It’s not worth the effort right now or perhaps ever. Investors who have had successful careers buying stocks only maybe did it with two types of orders: market orders or limit orders.

 

5. Market orders:

Once you place a market order, you show that you will buy or sell the shares at the highest market price at the time of purchase.

Because a market purchase does not impose price limitations on the transaction, the order will be filled entirely and immediately should in case you are trying to purchase a million shares and then try to be in charge.

Don’t be shocked if the price you pay or the amount you collect when you sell your item is not the exact price you offered a few minutes earlier.

The bid and ask prices constantly vary throughout the day.

 

6. Limit orders:

Limit orders are an excellent choice for investors who buy and sell smaller trade stocks, probably based more on spreads, depending on investor activity.

Limit orders are also a good investment when the price is more important than order fulfillment or short-term volatility in the stock market.

You can place other terms on the limit order to reduce how long it stays open.

  • An “all or none” (AON) order: This can only be filled if all the stocks you’ve decided to trade are within the price you’ve set.
  • A “good for the day” (GFD) order: This expires at the end of trading for the day, paying no attention to whether the order has not been fully accomplished.
  • A “good until canceled” (GTC) order stays in effect until the order is canceled or the buyer decides to cancel the order. This could be 60 – 120 or even more.

 

Frequently Asked Questions

 

1. Can I buy Nigerian stocks online?

Online alternatives are opened for you by a stockbroker or stock brokerage firm.

By using an online stockbroker, one can trade securities or any other investment tools online.

Your broker will purchase stocks in your investor’s account whenever he wants to buy for you. You can as well buy bonds through the account.

 

2. What is the role of the Nigerian Stock Exchange?

It gives a portal for buying and selling securities and stocks. It provides the chance to raise new capital and facilitate dealings in government securities.

 

3. Which country has the largest stock exchange in Africa?

The home to the largest stock exchange in Africa is South Africa and is also the 20th in the world by market capitalization.

 

4. How do beginners buy stocks?

  • Choose an online stockbroker.
  • Research the stocks you wish to buy
  • Decide how many shares to buy.
  • Select your stock order type
  • Optimize your stock portfolio

 

5. What should I invest in in Nigeria?

  • Mutual Funds
  • Bonds
  • Fixed/Term Deposit Bank Accounts
  • Real Estate Investing
  • Investing in Dividend Stocks

 

Final Word

With the knowledge you’ve gained from this article, we hope that your first stock purchase is the start of a long-term journey to a successful investment.

In the long run, the secret to getting ahead is to remain focused and only pay attention to things you can control.

After mastering the stock buying process, take some time to analyze various aspects of the financial world.

How can mutual funds play a significant role in your investment technique? In addition to creating a brokerage account, have you opened a retirement account, such as an IRA?

Building a brokerage account and investing in stocks is an excellent first step, but it is only a first step on your journey to investing.

Originally posted 2022-02-25 23:01:20.

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