How to Trade Stocks and ETF CFDs in Nigeria
A contract for difference (CFD) enables traders to speculate on the future market movement of an instrument or asset without actually owning them. CFD brokers in Nigeria including FXCentrum grant access to the CFD market through their respective trading platforms. Examples of commonly traded CFD instruments include forex currency pairs, stocks, indices, metals, commodity CFDs, and crypto CFDs. By agreeing with a CFD broker, you agree to exchange the difference in the price of an underlying asset from the opening of trade up to its closing.
Introduction to Stock and ETF CFDs
A stock (also known as equity) is a security that you can buy that enables you to own part of a corporation. There is a wide variety of stocks on the FXC platform including the blue-chip stocks such as Apple, Microsoft, Amazon, Google, and Adidas. A “blue-chip” stock has a large market capitalization, a strong reputation, and a long period of business success. Some stock exchanges around the world include the New York Stock Exchange, the Hong Kong Stock Exchange, and the London Stock Exchange.
ETFs which stand for “exchange-traded funds” are baskets of securities that are traded on exchanges and may track an index, a sector, commodity, or another asset. ETFs have features and potential benefits similar to those of stocks. An example of ETFs traded on FXCentrum is Vanguard Total Stock Market ETF which tracks the CRSP U.S. Total Market Index, which in turn includes over 3,700 stocks of mega, large, small, and micro capitalizations.
At FXC, you can trade stock and ETF CFDs in Nigeria by speculating on the future price movement and also receive dividends, just like real stocks without actually owning the assets. The advantage of CFDs is that you can buy and sell them immediately without having to find a buyer for your asset. CFD contracts essentially allow you to “bet” on the future price of the stock or ETF you are interested in. You don’t own the actual stock or ETF on our CFD platform, you either take a long or short position.
For example, if you hold a long (buy) position on a CFD, you will earn money when the price of the underlying stock or ETF goes up in the future. If you hold a short (sell) position, you are predicting it will go down.
Don’t know what long or short positions are? Click here to see our explanations of basic trading terminology.
Understanding the Stock market
In this trader’s guide, we will be assisting you on how you can easily trade stocks with FXCentrum online. The stock market is a big international market where stocks or shares of ownership of a company are traded.
In the past, stock trading was done over the phone, in person, or directly with one’s broker. However, today, the vast majority of stock trading is now done online. People trade stocks across the world with the expectation of making profits from price changes over time. Prices of stocks change constantly during trading hours thereby offering traders and investors many lucrative trading opportunities.
Note that when a trader trades stocks in the conventional sense, they are buying into a company, in very small amounts. It is also important to note that the more stocks you own, the larger your share in the company. Numerous stocks are listed or delisted every day.
Factors Determining the Stock Value
There are a wide variety of factors determining the value of stock including the fundamentals of the company, geopolitical issues, socio-economic issues, inflation, taxation, and unemployment, to mention a few. All of these factors work together at any given time, mostly in opposite directions to influence the price of the company’s stock. However, speculation and perception are possibly the biggest drivers of stock prices because the more people believe a stock price is likely to move up or down, the greater the possibility that they will move the stock price in a particular direction.
The prices of Stock are calculated when a company decides to go public and makes it’s stock an initial public offering. The company is going to pay an investment bank that uses complex valuation techniques to determine the results of how many shares of the company will be offered and the exact price. A company’s total value is referred to as its Market Capitalization and this is represented by its Stock Price, once the company goes public, the stock price will be published on the stock markets.
Market capitalization is the total value of a company’s share of stock. It is calculated as follows
Market cap = actual number of shares × price per share
For example, If a company’s market capitalization value is estimated at $200 million, it may issue 20 million shares at $10 per share.
How to Get Into Stock Market
The fastest and easiest way to access the stock market is by opening a trading account with an online brokerage, such as FXC. To create an account, simply register on the website then deposit a minimum amount of $10 trading capital and start trading. At FXC, you can trade all Stocks & ETFs of your choice through their FXC trader platform or MT5.
Stock trading With FXC involves buying and selling Stocks & ETFs futures CFDs. These are single instruments that, in essence, allow you to trade a large number of stocks in one click. You don’t own the actual shares. What you do when you make a trade on the FXC platform is take either a long or short position on a pair.
So, if for example, you hold a long position on a CFD, you are betting the price of the underlying stock will go up in the future. If it does go up, you make money! If you hold a short position, you are betting it goes down. Brokerages typically take a commission on every trade you place or they will charge by the spread. FXC charges by spread only by taking a percentage of the spread instead of charging a flat commission on every trade. The spread is the difference between the BUY and SELL price of an asset. It is also important to note that if you make a profit on your trades, you may be required to pay a capital gains tax
Trading Stocks and ETFs with FXCentrum
Trading CFDs from the stock markets allows you to trade price movements of shares from some of the largest and most well-known companies in the world. Major Company’s shares and trademarks displayed on the platform belong to their respective owners and constitute neither an endorsement nor a recommendation of those organizations. Any such use of trademarks is not intended to imply directly or indirectly that those organizations endorse or have any affiliation with FXCentrum.
FXC platform does not only charge 0 commissions on stock and ETF CFDs only, you can buy and sell forex, commodities, metals, indices, and cryptocurrency CFDs with 0 commissions from anywhere as long as you have access to the internet or a phone.
The advantage of buying CFDs over the actual stocks or ETFs is that leverage is provided, and you can make a lot more profit with a lot less money.
FXC provides leverage of up to 1:1000 for clients wishing to trade using their platform. So, for every $1 you invest, FXC can lend you $1000. This means you could buy $100,000 worth of stock and ETF CFDs with just a $100 deposit, depending on the margin requirements of the particular instrument. However, leverage can be risky, which is why you can choose the amount of leverage you want, or even none at all.
The trading platform offers very low spreads from 0.3 pips. Other brokers may offer even lower spreads but may charge commissions on top, which could make it even more expensive in the end.
They also offer a 0% deposit and withdrawal fee (every first withdrawal in a month is free). FXC is connected to all the payment providers you need, including Visa, Mastercard, OnlineNaira, and Wire Transfer. If you don’t see your favorite provider, please contact email@example.com.
For your risk management needs, it is recommended you contact the FXC support team to help you book a consultation with their investment specialist manager.
Apart from our FXC trader, for the more advanced traders amongst you, the popular MT5 trading platform is also accessible and it gives you all kinds of tools, charts, indicators, scripts, and more, to inform your decisions.
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Advantages of Trading Stock and ETF CFDs with FXC
- Benefit from both rising and falling prices: When you trade stocks and ETF CFD such as Amazon, Apple, Google, Barclays, Coca Cola on FXCentrum, you’re not buying shares in the company; you are agreeing to a contract (CFD) with the broker such as FXC to settle the difference in value between the entry/exit prices of that particular stock. With CFD, you can go short on stock and ETFs and take advantage of falling stock prices, not just rising ones. Stock prices are always moving up and down and CFD traders can always capitalize on these price fluctuations, even in a bearish market.
- Spreads and commissions are to your advantage: FXC charges 0 commission on every CFD trade on both FXC trader and MT5 platforms. Spreads are also as low as 0.1 on each trade.
- CFD Leverage trading enhances the initial capital of a trader: Unlike direct stock trading, with stock and ETF CFDs, a trader can use leverage to increase their potential for profits
- Stock and ETF CFD trading increases your exposure to the markets in a particular position
- It allows you to fully capitalize on market investments
- Effectively using leverage can be pivotal as part of a well-managed and balanced trade portfolio.
Disadvantages of Trading Stocks & ETF CFDs
Trading with leverage is risky: While Stock and ETF CFD trading with leverage helps in magnifying profits, it can also magnify losses if the market movement is unfavorable
Trading Platform for Stocks and ETFs CFDs
You must use the most powerful, innovative, and robust trading platforms for your stock and ETF CFD trading. One of the most important aspects of trading stocks is the trading platform that you use. With FXC brokerage, you will be able to access the stock market through the FXC trader app and the popular MT5 trading platform. With these trading platforms, you’ll be able to access multiple trading graphs, trading tools, and other features that will enhance your overall trading experience. In addition to that, you’ll be able to track the performance of your stock and ETF portfolio, forex, indices, and commodities trading deals in real-time.
- FXC Trader: this trading platform is designed to get the best results from trading. It has intuitive controls, reports, data, and analysis and it is very fast at executing orders. It contains all the trading tools a trader needs to trade comfortably on their brokerage platform from any device. With the FXC Trader app, you can have access to global online markets, and CFD markets, including Forex, Stock Indices, Commodities, Stocks, and ETFs from around the world. The FXC platform is designed by traders for traders. It was created for beginners or even a professional who has all the necessary functions and tools.
- MetaTrader 5: This is a next-generation of well-known and most successful forex trading platform. With FXC trading service, Nigerian customers can get complete access to the MT5 multi-asset trading platform with much more opportunities and functions. This flexible trading system with market depth and support for all order types enables traders to execute any trading strategy on any financial market. In addition to the outstanding trading functions, you can offer professional technical and fundamental analysis tools to your traders. The platform ecosystem includes an impressive set of tools and services.