Economy

How to Begin Stock Market Trading

Published

7 years ago

28/05/2019

By Dipo Olowookere

Many times, I have been asked to explain how the stock market works and the steps needed to begin investment in that critical sector of the economy.

This article is mainly to give those interested in joining the stock market the key things they need to know before jumping on the train.

It is important to state that the stock market is highly volatile and not for those not willing to take ‘calculated risks.’

Before I continue, we need to understand what the stock market is.

The stock or equity market is a place or platform set aside for the exchange of stocks of companies admitted to trade their securities to investors.

Now, before you begin to trade stocks on the exchange, you need to acquaint yourself with the terms used. You can check this article for assistance Understanding Terms Used in Stock Market (Part 1).

To the subject matter, I will try to make things very simple as I can, though I am not a very good teacher, I must admit.

Before you jump on the train, you need to ask yourself these important questions, why do I want to invest in the stock market. Am I investing as a trader, long term investor or medium?

When you find answers to these questions, you can then look for the company that fits into your investment tenor.

Let me quickly explain the terms I just used above; trader, long term and medium-term investors.

Traders at the stock market are mainly those interested in buying stocks when they are cheap and sell immediately they hit their target price, mostly within the shortest possible time say a week or less or slightly more.

For the long-term investors, they buy stocks for the future purpose and are not after any immediate gains. These people have investment plan of 5 years or more, while those in the medium-term category invest for dividend, price appreciation, say within 3 month, 6 months or a year.

So, when you consider which of the three categories you want, you can then study the stocks that can perfectly fit and then invest.

Now on the stock buy, you have to read a lot about the performances of the companies listed on the exchange and study their trends and price movements, checking the 52-week lows and highs so as to know when to buy and sell.

In Nigeria, the banking stocks, most especially the tier-one, are good because they have good price appreciation and dividend payout.

Another thing you must also consider is the amount you’ve earmarked to invest in stocks. This will help you determine the stocks to buy.

The good thing is you don’t have to have millions or hundreds of thousands to begin stock market trading. You can have as low as N10,000 to begin with. What this means is that your amount will determine the number of units of the stock you can acquire at that particular time. If you have like N10,000 and you are interested in buying a stock selling at N50 per unit, you will only be able to get 200 units minus the brokerage fee.

This takes me to the next thing you must consider before joining the stock market; getting a good stockbroker.

You need a stockbroker, who is a professional authorised to help investors or clients buy and sell shares at the stock market.

There are several authorised stockbrokers in Nigeria. Some of them even have trading platforms where you can trade yourself. Some of them offer free trading and investment tips, suggesting which stocks you can buy, sell or hold.

However, before you choose a broker, you need to select those who charge lower brokerage fee. This is the amount they charge clients for executing your order. You pay this fee whenever you are using them to buy or sell your stocks.

Most times, they will require you to register with them and fund your account by paying to a bank account. They will help you with the creation of an account with the Central Securities Clearing System (CSCS), which is like a database of all investors at the stock market.

When you buy shares through a stockbroker, your account will be credited with the volume of shares purchased and when they are sold, the number of stocks offloaded by you would be subtracted from your account. Let me just put it in a simple term, the CSCS is like your bank account.

After all these, it is important to try demo trading before the real thing. This will give you an idea of how the market works. You can use this opportunity to see if you understand stock market trading. In most cases, these demo trading platforms give you a virtual money to trade with. They make it look real, with the brokerage charges deducted.

I must confess to you, investing in stock market is fun and you need to experience it. However, like they say in a stock market group I belong to, be ready to ‘pay school fees’ to the Nigerian Stock Exchange. This simply means you must be prepared to lose some money in the stock market, but this must not discourage you because before a child starts to walk and run, he must first crawl and fall. We all have paid and are sometimes still paying.

Before I stop for now to take your questions, you must understand that there are some factors that tinker with stock prices. So, you need to watch out for these.

Now, I will be ready to take your questions.

Economy

Nigerian Stocks Close 1.13% Higher to Remain in Bulls’ Territory

Published

18 hours ago

20/12/2025

Dipo Olowookere

By Dipo Olowookere

The local stock market firmed up by 1.13 per cent on Friday as appetite for Nigerian stocks remained strong.

Investors reacted well to the 2026 budget presentation of President Bola Tinubu to the National Assembly yesterday, especially because of the more realistic crude oil benchmark of $64 per barrel compared with the ambitious $75 per barrel for 2025. This year, prices have been between $60 and $65 per barrel.

Business Post observed profit-taking in the commodity and energy sectors as they respectively shed 0.14 per cent and 0.03 per cent.

But, bargain-hunting in the others sustained the positive run, with the consumer goods index up by 3.82 per cent.

Further, the industrial goods space appreciated by 1.46 per cent, the banking counter improved by 0.08 per cent, and the insurance industry gained 0.04 per cent.

As a result, the All-Share Index (ASI) increased by 1,694.33 points to 152,057.38 points from 150,363.05 points and the market capitalisation chalked up N1.080 trillion to finish at N96.937 trillion compared with Thursday’s closing value of N95.857 trillion.

A total of 34 shares ended on the advancers’ chart, while 24 were on the laggards’ log, representing a positive market breadth index and bullish investor sentiment.

Austin Laz gained 10.00 per cent to close at N2.42, Union Dicon also jumped 10.00 per cent to N6.60, Tantalizers increased by 9.80 per cent to N2.69, Aluminium Extrusion improved by 9.78 per cent to N12.35, and Champion Breweries grew by 9.71 per cent to N16.95.

Conversely, Sovereign Trust Insurance dipped by 7.42 per cent to N3.87, Royal Exchange lost 6.84 per cent to trade at N1.77, Omatek slipped by 6.84 per cent to N1.09, Eunisell depreciated by 5.88 per cent to N80.00, and Eterna dropped 5.63 per cent to close at N28.50.

Yesterday, traders transacted 1.5 billion units worth N21.8 billion in 25,667 deals compared with the 839.8 million units sold for N32.8 billion in 23,211 deals in the preceding session, showing a surge in the trading volume by 76.61 per cent, an uptick in the number of deals by 10.58 per cent, and a shrink in the trading value by 33.54 per cent.

Economy

FrieslandCampina, Two Others Erase N26bn from NASD OTC Bourse

Published

20 hours ago

20/12/2025

Adedapo Adesanya

By Adedapo Adesanya

Three stocks stretched the bearish run of the NASD Over-the-Counter (OTC) Securities Exchange by 1.21 per cent on Friday, December 19, with the market capitalisation giving up N26.01 billion to close at N2.121 billion compared with the N2.147 trillion it ended a day earlier, and the NASD Unlisted Security Index (NSI) dropping 43.47 points to 3,546.41 points from 3,589.88 points.

The trio of FrieslandCampina Wamco Nigeria Plc, Central Securities Clearing System (CSCS) Plc, and NASD Plc overpowered the gains printed by four other securities.

FrieslandCampina Wamco Nigeria Plc lost N6.00 to sell at N54.00 per unit versus N60.00 per unit, NASD Plc shrank by N3.50 to N58.50 per share from N55.00 per share, and CSCS Plc depleted by N2.91 to N33.87 per unit from N36.78 per unit.

On the flip side, Air Liquide Plc gained N1.01 to close at N13.00 per share versus N11.99 per share, Golden Capital Plc appreciated by 70 Kobo to N7.68 per unit from N6.98 per unit, Geo-Fluids Plc added 39 Kobo to sell at N5.50 per share versus N5.11 per share, and IPWA Plc rose by 8 Kobo to 85 Kobo per unit from 77 Kobo per unit.

During the trading day, market participants traded 1.9 million securities versus the previous day’s 30.5 million securities showing a decline of 49.3 per cent. The value of trades went down by 64.3 per cent to N80.3 million from N225.1 million, but the number of deals jumped by 32.1 per cent to 37 deals from 28 deals.

Infrastructure Credit Guarantee Company (InfraCredit) Plc finished the session as the most active stock by value on a year-to-date basis with 5.8 billion units valued at N16.4 billion, followed by Okitipupa Plc with 178.9 million units transacted for N9.5 billion, and MRS Oil Plc with 36.1 million units traded for N4.9 billion.

The most active stock by volume on a year-to-date basis was still InfraCredit Plc with 5.8 billion units worth N16.4 billion, trailed by Industrial and General Insurance (IGI) Plc with 1.2 billion units sold for N420.7 million, and Impresit Bakolori Plc with 536.9 million units traded for N524.9 million.

Economy

Naira Crashes to N1,464/$1 at Official Market, N1,485/$1 at Black Market

Published

23 hours ago

20/12/2025

Adedapo Adesanya

By Adedapo Adesanya

It was not a good day for the Nigerian Naira at the two major foreign exchange (FX) market on Friday as it suffered a heavy loss against the United States Dollar at the close of transactions.

In the black market segment, the Naira weakened against its American counterpart yesterday by N10 to quote at N1,485/$1, in contrast to the N1,475/$1 it was traded a day earlier, and at the GTBank forex counter, it depreciated by N2 to settle at N1,467/$1 versus Thursday’s closing price of N1,465/$1.

In the Nigerian Autonomous Foreign Exchange Market (NAFEX) window, which is also the official market, the nation’s legal tender crashed against the greenback by N6.65 or 0.46 per cent to close at N1,464.49/$1 compared with the preceding session’s rate of N1,457.84/$1.

In the same vein, the local currency tumbled against the Euro in the spot market by N2.25 to sell for N1,714.63/€1 compared with the previous day’s N1,712.38/€1, but appreciated against the Pound Sterling by 73 Kobo to finish at N1,957.30/£1 compared with the N1,958.03/£1 it was traded in the preceding session.

The market continues to face seasonal pressure even as the Central Bank of Nigeria (CBN) is still conducting FX intervention sales, which have significantly reduced but not remove pressure from the Naira. Also, there seems to be reduced supply from exporters, foreign portfolio investors and non-bank corporate inflows.

President Bola Tinubu on Friday presented the government’s N58.47 trillion budget plan aimed at consolidating economic reforms and boosting growth.

The budget is based on a projected crude oil price of $64.85 a barrel and includes a target oil output of 1.84 million barrels a day. It also projects an exchange rate of N1,400 to the Dollar.

President Tinubu said inflation had plunged to an annual rate of 14.45 per cent in November from 24.23 per cent in March, while foreign reserves had surged to a seven-year high of $47 billion.

Meanwhile, the cryptocurrency market was dominated by the bulls but it continues to face increased pressure after million in liquidations in previous session over accelerating declines, with Dogecoin (DOGE) recovering 4.2 per cent to trade at $0.1309.

Further, Ripple (XRP) appreciated by 3.9 per cent to $1.90, Cardano (ADA) rose by 3.5 per cent to $0.3728, Solana (SOL) jumped by 3.4 per cent to $126.23, Ethereum (ETH) climbed by 2.9 per cent to $2,982.42, Binance Coin (BNB) gained 2.0 per cent to sell for $853.06, Bitcoin (BTC) improved by 1.7 per cent to $88,281.21, and Litecoin (LTC) soared by 1.2 per cent to $76.50, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) traded flat at $1.00 each.