There are three major things you will need to start trading. There are as follows –
- Get a Stock Broker/Brokerage Company
The Brokerage firm or your stock brokers acts as the intermediaries between you and the stock market. They handles the intricate parts of your transactions and get commissions for their efforts.
The Duty of Your Stock Broker: Your Brokers will help you open a CSCS (Central Securities Clearing System) account which in turn would make it possible for you to buy stocks, you may not be able to buy stocks on your own; you have to go through your stock brokering firm.
If you are buying from the primary market, that is the one that the company advertises directly, in filling the forms, you must state the name of your stock broking firm and your CSCS account number. So, you must have a stock broker even if you are buying from the primary market.
For the secondary market, you must inform your stock broker, who will then go to the stock exchange and buy your desired stock on your behalf on a regular basis. - Open Investor’s Account
The moment you decides to trade in the Nigerian Stock Exchange, you are becoming an investor. Therefore, you will need investor’s account. An investor’s account is an account that is unique and tied to your name as an investor. It is normally opened for you along with a CSCS account with which your stocks would be moved in. It is opened for you by the stock brokerage firm or broker whom you have assigned to act on your behalf. All transactions done on your behalf would then be recorded against your name in your investor’s account.
Each time your broker wants to buy stock on your behalf, he buys it into your investor’s account. The account is for both equity and bonds. - Secure Trading Capital
You and I know what that is. There is no technicality involved in explaining that. Depending on the volume you want to trade or what I will call the amount of risks you want to take, you will need enough trading cash that is proportional to your trading options.
More than anything else, knowledge is your power in this business. You must be in the know, constantly updating your knowledge of the market and be in-tune with the latest trends. You must be good at spotting opportunities and possess the ability to predict trends.
“Buy the rumours and sell the news”. That’s a very popular saying among investors. It means – Do not trade on sentiment.
Making Money With The Nigerian Stock Exchange
The game is simple! Spot a good commodity in the market, predict accurately it’s movement, buy, and sell at the right time.
Let’s take for example you bought Ashaka Cement shares worth N200,000 at the price of 1.00 kobo per share, if by next month the price appreciates to 4 kobo per share, you’ve made 4 times your money after selling, which will amount to N200,000 x 4 = N800,000
On that trade, you will pay a total commission of about N,8000 and pocket your profit of N592,000 from that single trade.