Online stock trading in Nigeria
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Are you interested in trading with stocks online? Then there are many different alternatives for the Nigerian investor or trader. In this article we look at the different methods for online stock trading in Nigeria and discuss the pros and cons of each on so you can decide on the best possible solution that fits your trading need and risk level.
Option 1: Buy physical stocks in a company online
This option is preferred by many Nigerian traders as it gives a lot of flexibility to once trade. It is important to understand however that when you trade with a derivative, you actually do not own the underlying stock and simply trade on the price movement of the underlying stock instead. If you are only speculating on the price movements of stock and have no desire to actively take part in the ownership of company and receive small dividend payment, is factor should not be taken in to consideration when choosing how to trade with stocks online.
Option 2: Use a derivate product like CFD to trade with stocks
This option is preferred by many Nigerian traders as it gives a lot of flexibility to once trade. It is important to understand however that when you trade with a derivative, you actually do not own the underlying stock and simply trade on the price movement of the underlying stock instead. If you are only speculating on the price movements of stock and have no desire to actively take part in the ownership of company and receive small dividend payment, is factor should not be taken in to consideration when choosing how to trade with stocks online.
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CFD is a flexible trading instrument that offers many advantages for traders in Nigeria; from one CFD trading account you can trade with stocks from all over the world on all markets anytime and also have access to non-stock asset trading like commodities and currencies – all in one account. Nigerian-based CFD brokers, like AvaTrade for example, also offer leverage trading which means that you can amplify your trade sizes with capital provided from the broker to make your money work harder for you on the markets. Account openings are also quick by just submitting your details, answer a couple of questions on your trading knowledge, deposit instantly using your debit card and you are ready to trade.
CFD brokers also offer a huge selection of market news and analysis in combination with trader education such as training videos and online articles that help you improve your trading ability which you won’t find a huge amount of at MeriTrade or MyTradeBook.
Another key difference with CFD’s contra physical stocks is that you have the ability to make profitable trades even if a stock goes down in value. This is called a short trade and is not possible when you buy the psychical stock. Online CFD brokers do not charge fixed commissions for the trades, instead their fees are included in the difference between the buy and sell price of stock, known as the spread.
Summary
When you chose how you want to trade with stocks online, you should first of all decide why you want to trade with stocks; either you want to take an active interest in a company through ownership or you only want to make profitable trades based on the price movement of the company’s stock. If you are only interested in trading to make a profit on the price increase and decrease of a company, choosing a CFD instrument is almost always easier and cost effective the buying the physical stocks and holding on to them. The choice is of course yours to make though.
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