How I Started Investing In Nigeria Stocks Market

How to Buy Shares in Nigeria Stock Market & Make Money Online – Learn How I Started Investing In Stocks, Pick & Trade Best Performing Penny & Dividend Shares In Nigeria Stock Exchange Market

You are welcome to my personal finance and stock market blog – a platform I created to share investing tips and how to build dividend income portfolio in the stock market.

Follow me keenly as I reveal my trading techniques and the stocks I started with. After reading this guide, you will have a clearer understanding of how the stock market works and if you had any fears about it, you would see the way forward from here. Come with me!

My Story

My name is Ogechi Ndukwe, a passionate Internet Entrepreneur, and Stock Market Investor. I started my stock market journey in 2003 when I persuaded my Dad to buy into the now-defunct Oceanic Bank shares when they offered millions of shares for public subscriptions at N5 each. Although I didn’t understand the metrics behind stock picks, from my basic knowledge of shares in Financial accounting, I knew it was a good place to invest idle cash and make money.

My dad was reluctant. I persuaded him to buy N10 000 worth of shares but he reduced it to N5000 and asked me to go subscribe at the nearest Oceanic bank in Ajao Estate, Lagos. For you to subscribe to public offers in a company at that time, you’d have to go to the nearest bank and fill a subscription form.

To cut the story short, Oceanic bank shares soared in 3 years to hit an all-time high of N32 (from N5), a level that drove our N5,000 investment to N32,000 representing more than 600% return. I sold the shares and diversified into other banking stocks and since then, I started probing the stock market, the recurring search I typed on Google was, what drives share prices higher? I knew that if I could find the right answers to that critical question, it would help me multiply my money Nigeria stock market.

The journey so far

In my quest to uncover the secret of buying shares that will rise in price, I downloaded books on stock market investing, bought hard copies of investment books. After reading through them, I discovered that these books had one thing in common, they stressed fundamentals and timing: you need to understand the company you are buying their shares in, know what drives their profits or how they make money and lastly, interpret investors sentiment; know when people are buying and when they are selling.

The last point was so important to me because, when you follow a share price, you will discover the daily and unpredictable fluctuations in price, that is the “today price is up, tomorrow price is down, next tomorrow price is down, the day after the price is up” situation. It is always unnerving for the First timer who does not know the factors that influence the prices.

The funniest part is if you had bought shares in a company you do not understand their fundamentals, you will literally have two minds; one saying ‘buy more’, another saying ‘sell now or else, you will lose your money’. When you eventually sell, you will witness the price jump to 2x the previous price. So annoying!

I experienced this in International Breweries stock. I bought shares in this company at N23 and waited for three weeks but nothing happened; there was no price increase instead the price dropped to N16.8 and out of fear of losing, I quickly unloaded all units to get my cash back. Exactly 2 weeks after I sold, the price jumped back to N23, then moved gradually to N38.9. When I checked, I was so pissed with myself and wished I had left it. In this guide, I will also talk about the greatest attitude you need to embrace like a pillow if you want to be a highly successful stock market trader.

Another share that got me in this Price trap was Okomu Oil, a local Palm oil producing and exporting company that first made me lose balance before doubling in price. I bought the stock at N15.75, and in less than 2 weeks I made 24.5%; a very modest gain. The big fall came when investors quickly sold their shares to take profit and it fell to N12.32. I couldn’t hold that loss, I sold the shares and right under my nose, Okomu Oil doubled to N32 in 3-4 months. You can imagine the profit I would have made if I knew what I now know perfectly that makes me buy shares at the right time.  However, Okomu Oil is also part of my portfolio right now.

I can go on and on to share my failure in the stock market. The truth is I didn’t have a solid understanding of shares. I did guessworks, ended up buying shares of a good company but eventually sell off too soon, with no knowledge that the share is about to rise again. I was not patient enough to hold on to my investment for at least 6 months before deciding to let go. Patience is the greatest attitude you should have as a Stock Market Investor.

After reading several books on Stock Marketing Investing, How Successful Investors buy shares plus my years (of experience) following the market in good and bad times. I discovered the secret to multiplying my money in the stock market. This is a sure way of earning passive income.

As I write this report, I have invested in several companies after due diligence and analysis and if you thinking of getting started in the stock market, follow these steps:

  • Consult a registered stockbroker; My recommended brokers are Meristem, MorganCapital or Stanbic IBTC broker. Personally, I have had a great experience with Meristem stockbroker; swift support and client services.
    • Your preferred broker will ask you to submit the following documents: a valid ID (International Passport, National ID or Driver’s License), Utility Bill for address verification, and Passport Photograph
    • Upon approval, a CSCS account will be processed and your unique clearinghouse number (CHN) will be sent to you.
    • Fund your account and start trading shares.
  • Invest in knowledge, buy books and click here to join our stock market group on WhatsApp.
  • Exercise patient and avoid get rich stock market scheme.

Key Principles for Investing in the Nigerian Stock Market – How To Know The Best Nigerian Stocks To Buy Now

They include; Proper timing, Proper Financial Report Analysis, and Patience. These three secrets combined can make anyone, I mean anyone earns a consistent profit in the Stock Market.

See – My top stock market strategies and advise

Let’s read how each of them works.

Financial Report Analysis

This is the most important place to look at before you can decide on a stock – everything about stocks starts and ends in the way a company has performed during the year or on a quarterly basis. Always analyze the sales trend, cost drivers, profit potential, debt level and cash position of a company before buying shares in your selected company. Investors are only attracted to good business generating healthy cash flow and so should You.

When a company reports an impressive profit figure that surpasses the previous year’s record, investors are attracted to such company and as they buy more shares, price increase follows.

Some folks have asked me if one needs to be an Accounting graduate or Financial Analyst to interpret the financial statement. The answer is NO, you only need to employ common sense – Think like a business owner and you will pick the basic data you need and move on.

A great company is expected to grow their sales (operating income – income earned from their core business operation). A company that reports a good number of products outside of their core business is not recommended as such sales are not sustainable – always watch out for the sales number. 

See – How to know which sector stocks to invest in right now

Many Companies release reports of their activities. The most important report to follow when investing in a company’s share is their quarterly report. It reveals a whole lot about the current’s year financial result; an indication that tells whether you should hold on to the stock or sell immediately to cut your loss.

Proper Timing

Every company, even with good financials, has a specific period investors scramble to buy their shares. You need to know the perfect time to buy a company’s share and hold on it without factoring the daily fluctuation of price. There is a war between buyers and sellers, prices don’t go up in a straight line neither does it fall in the same manner. But, as an intelligent trader or investor, you should focus on value (which you can spot from the first principle) and not price because eventually, the future price of a stock will reflect the perceived value of the company. So learn to spot the perfect time to buy stock.

See – Dividend Income Stocks

Don’t make the mistake of buying stock when you are not sure of its time – You may end up buying when the price is about to fall sharply and hence wipe out a percentage of your portfolio value.

See – When is the best time to sell your shares?

The essence of timing is to apply what I call Price Level Analysis, a powerful technical skill that helps you analyze investors’ sentiments. With it, you will definitely know when a share is trending up, down or sideways. In this blog, I will be sharing a practical guide to pick profitable stocks at the right time.

See – How To Know Where Big Stock Investors Are Putting Their Money

Patience

We are still on the 3 key principles to making money in the Nigeria stock market. The third but not the least important principle here is patience. People lack patience when it comes to building a business or waiting for their investment return; the notion of quick money has taken over. A lot of people want to make fast cash – bring N10 000 and take N100 000 after 30 days. What a financial trap!

The easiest way to lose money is to put it in an investment with no solid revenue model – not understanding the principles behind the return but only focusing on the return.

When I talk about the stock market, usually the next thing I hear is ‘How much will I make after 30 days?’, as if I control prices. There is no investment without risk and as such proper education is the key. I don’t advice people to buy shares when they have zero knowledge of the market.

To exercise patience, you need to learn the basics of the stock market, understand the key drivers of shares price, and how to pick great stocks.

You also need to learn how to wait. The biggest reason I missed opportunities in my early years of trading stocks was lack of patience, I hardly waited for weeks to see the result of my investment. I just sold as soon as possible once it falls, after which price would spike.

But now, when I buy, I have a minimum holding period that I have mastered – this period is so vital that it allows the value of the stock eventually moves price to the north or south.

As an investor, you must be ready to exercise patience, allow your investment to grow in the midst of daily price fluctuations or else, fear will make you lose the profit potentials of your perfect trade.

But that doesn’t mean patience is the ultimate key, the two factors mentioned earlier must be in place and it is more profitable when you follow the sequence which is:

I hope you enjoyed my personal trading guide and have learned a lot about what it takes to be successful in the Nigeria stock market? If you have any question(s) or would like me to discuss your personal investment objectives, click here to join our stock market group on WhatsApp

Follow My Blog Updates

Surely, you are interested in gaining more fresh insights on how to buy shares in the Nigeria stock market. I have made some errors that caused me lots of money and I believe you don’t need to lose same to gain the right investing knowledge, here are some key advises and tips to buy shares in the stock market.

Why I Sold Some of My Nigerian Stocks and Bought More American Stocks

Trade American Stocks Online – Learn How I Buy & Sell Foreign Stocks With an International US Stock Brokers for Non-US Residents or Foreign Investors

Trading the stock market has always been my favourite way to make and multiply money easily and during my trading journey, I have come to understand that the stock market isn’t partial; it rewards those who, through diligence and well-planned strategy, understand the perfect time to open positions and exit their trade but burns gamblers seeking a quick return.

I had a discussion with one of my blog visitors on the way forward after he read my guide on the 3 low risk fixed deposit options that will likely outperform stocks in the next 6 months. His portfolio is down by close to 20%, no thanks to Dangote Cement stock and Zenith Bank, these are stocks he anticipated would deliver impressive results this year but aren’t so.

As of this writing, all eyes are currently on Ekiti State governorship election, a lot of local and foreign investors are following the recent happenings to understand and gauge the effect of the upcoming election in 2019. For me, I am cutting down my exposure to the Nigerian stock market, the possible risk of further fall is very imminent. Let’s analyse the chart using some of my favourite indicators, this will help us understand what the next 6 months would be:

Trade American Stocks Online

Using price action analysis on a weekly chart, the NSE all-share index broke the 50-day moving average which also doubled as a key support  and an old resistance level, the index pulled back for 2 weeks and kissed it goodbye: we have seen how the market had performed in the last 30 days with YTD performance now at -4.9%. This is a perfect reflection of the bearish sentiments which, fundamentally, isn’t unconnected to the factors earlier shared on this blog

Why are we bothered about the general market and not individual stocks, after all, there are some stocks with YTD return above 50%, you may ask? My dear, the truth is no matter how strong the fundamentals of a stock is, a larger percentage of share price move is still not disconnected to the investor’s sentiment on the economy. Take a look at Zenith bank, UBA stocks, despite their strong earnings and balance sheet size, they have barely delivered up to 10% return this year, why? the growth of bank stocks is tied to yield on fixed income securities as loan portfolio expansion is expected to be minimal.

I can go on to explain and give reasons I am not bullish on the NSE all-share index, at most 6 months from now but why did I opt for US stocks? To answer this question, I would like to share the chart of Dow 30, an index that tracks the performance of the top 30 most capitalised stocks in the US stock market.

While the NSE all share is set for another weekly fall, the Dow 30 index has just bounced from a key support level to the upside and as the 20-day sits above 50-day and 200-day moving averages, we can confidently say that the index is clearly bullish for stocks. As a smart stock market trader, I would rather be active in a market that is bullish, then allow my portfolio to lose value in a bearish market.

Another reason I would hold more US stocks to our local bourse is “availability of technical tools and data“, the US stock market is very open to international traders; you can access real-time market data on several financial platforms like Google Finance, Bloomberg, and MarketWatch from your personal PC while data on the Nigeria stock market trading is delayed, you can’t access the NSE trading terminal unless you are a premium subscriber or a registered stockbroker.

Lastly, the US stock market provides a larger pool of stocks to pick from. You have access to over 5,000 stocks, ETFs, mutual funds to invest in but I am only trading these selected stocks which are: Groupon, Apple, Cisco, Google, Amazon, Intel, Facebook, Microsoft, Tesla, Netflix, AT & T, Berkshire Hathaway, Bank of America, Boeing, Caterpillar, Chevron, Citigroup, Coca-Cola, Walt Disney, Exxon Mobil, General Electric, General Motors, Goldman Sach Group, Johnson & Johnson, JP Morgan Chase, McDonald, Pfizer, Procter & Gamble, Twitter, Alibaba, Visa, MasterCard, and SnapChat. These are the few stocks available on my broker’s platform for now but I still find these companies liquid, attractive and highly capitalized for new traders.

You don’t have to buy all the companies in the US stock market before you make money, just focus on few stocks with potential, master a trading strategy and trade your plan consistently, that is what successful stock market traders do, they trade like a sniper.

That’s all you should know about my decision to be more active in the US stocks.

Since I shared this content, I have received a lot of response from my blog subscribers on how they can get started trading US stocks and strategies to profit from short-term price moves in stocks like Facebook, Apple, Visa, MasterCard, Amazon, Groupon, Microsoft, etc. 

You can follow my latest weekly analysis of US stocks and see some of my trade setups here.

This group is strictly for traders who wish to trade local and US stocks. Click here to join the group now 

Warning: We will ban you from the group if you post an update that is not connected to the group.

Best Online StockBroker For Non-US Residents or Foreigners

Best Stockbroker for non-US residents, foreigners or international investors you can open a global stock trading account, pick profitable top gaining stocks on Nasdaq, AMEX and NYSE

If you are a non-US resident looking for tips on opening a low-cost stock brokerage account in the US so you can easily trade shares of listed companies from the comfort of your home, or office, this investing guide contains my experience and how I gained access to the world’s largest and most liquid stock exchange platform.

Yes! the US stock market remains the most attractive financial trading platform in the world; not only is it because it has the highest number of listed companies of any market size from different countries but also offers you the easiest route to tap into the numerous wealth creation opportunities in the US market; technology, healthcare, real estate, finance, construction, etc

When you gain access to the US stock market, you have an unlimited opportunity to trade the finest, fast-growing and most valuable companies in different stock exchanges like NYSE, AMEX, Nasdaq & OTCs.

During my search, I realised that the real challenge typical non-US residents or international investors face wasn’t the availability of US brokers but finding the regulated and trusted stockbrokers that accept retail investors with little capital. Some even, accept and reject applications from selected regions due to international regulatory policies.

My first encounter with a US stockbroker wasn’t even appealing: I met all their minimum account opening requirements but couldn’t move ahead because their initial deposit as t then was $500 ( at an exchange rate of N360, you need N180,000), by the time you factor additional commission on trade, miscellaneous fees, e-tax statement, and so on, I guess you properly would re-direct your search.

Update:  Sogotrade broker no longer accepts Nigerians.

Best Stockbroker for non-US residents, foreigners or international investors & basic requirements:

To summarize this guide, here are the basic requirements you need to make available before opening a US stock brokerage account as a non-US resident or international investor.

  • Government issues ID ( National ID, International Passport, Drivers’ License) for personal identification.
  • Utility bill (PHCN for almost 3 months ) or bank statement showing your physical address. The address on your document must correspond with the address to fill online.
  • Go to ChoiceTrade.com, my preferred and recommended regulated low-cost stockbroker for non-US retail investors.

ChoiceTrade is the leading stockbroking firm in the US, the platform offers the cheapest transactions fee compared to other US Stockbrokers like ETrade, TDAmeritrFidelityleity, and Schwab.

While other Stockbrokers require a minimum initial account funding of $2,000, $5,000 and $10,000, ChoiceTrade is pegged at $100.

Best stockbroker for non-US residents

Before you register on this platform, you need to cross-check your documents and make sure the information you provide during registration (personal profile, investment records, etc) corresponds with the details on the documents submitted. Any discrepancy may lead to termination of your account.

After filling the forms you will be required to scan and send your government ID and utility bill for review.  For registrations submitted during business days, you will receive a response on the status of your applications and if approved, a welcome email will be sent to you with your ChoiceTrade account number and login details.

How to fund your ChoiceTrade account:

ChoiceTrade offers various funding options but I recommend “bank wiring” via international transfers from your local bank: it’s faster and safer except that the rising cost of international transfers from certain countries.

The last time I wired fund from my local bank in Nigeria to ChoiceTrade, the total fund sent was $50 + the amount funded.

Here is a recent update on ChoiceTrade website:

IMPORTANT NOTE: In order to fund your account with a wire transfer, you must have a bank statement on file with ChoiceTrade from the bank and account where the wire transfer will originate. Your name and address on the bank statement must match the name and address on your Choicetrade account. Please do not initiate a wire transfer unless you have provided us with a correct bank statement. If the bank information does not match the wire transfer when it is received, your wire will be returned. No exceptions will be made to this requirement. 

To fund your account, submit these details to your bank:

WIRE INSTRUCTIONS:
Bank Name: BMO Harris Bank, N.A.
Bank Address: 111 West Monroe St., Chicago, IL, 60603
ABA # of Bank: 071-000-288
SWIFT (foreign only): HATRUS44
Beneficiary Name: Electronic Transaction Clearing, Inc. Settlement Account
Beneficiary Address: 660 Figueroa Street, Suite 1450, Los Angeles, CA, 90017
Beneficiary Account: 2459865
For Further Credit To: Your Name / Your ChoiceTrade Account Number (Beginning with “01”)
NOTE: You must include your ChoiceTrade Account Number on the wire document, or your wire will be returned.

That’s all for now!

Update, ChoiceTrade no longer accepts Nigerians, Click here for a guide on how I still trade US stocks for profit.