The Nigerian Exchange Group (NGX), formerly known as the Nigerian Stock Exchange, is where companies like GTCO, Zenith Bank, MTN Nigeria, Dangote Cement, and Seplat are listed. People make money here in two main ways: trading and investing.
If you’ve ever wondered what the difference is or how beginners can start, this guide explains it in plain language.
Trading vs. Investing – What’s the Difference?
Even though both involve buying and selling shares, the goal and time frame are different:
Investing
This is a long-term approach.
You buy shares of a company and hold them for years.
Example: Buying MTN Nigeria shares today and keeping them for 10 years, while enjoying dividends and price growth.
Think of it like planting a mango tree, you wait patiently for it to grow and bear fruit.
Trading
This is short-term.
You buy and sell quickly, sometimes within a day or a few weeks.
Example: Buying GTCO shares at ₦40 this week and selling at ₦42 next week.
Think of it like buying yams in the market and reselling them the same week for a profit.
Simply put: Investing is about long-term growth, while trading is about quick gains.
Types of Trading and Investing on the NGX
There are three main styles:
1. Day Trading
You buy and sell within the same day.
Example: Buying Zenith Bank shares in the morning and selling them before the market closes.
Works best with highly traded stocks like banks and telecoms.
Requires close attention and quick decision-making.
2. Swing Trading
You hold shares for several days or weeks.
Example: Buying FBN Holdings after a good earnings report and selling a week later when the price rises.
More relaxed than day trading—you don’t need to sit in front of your screen all day.
3. Long-Term Investing
You hold shares for years.
Example: Buying Dangote Cement and holding for 5–10 years as the company grows.
This strategy is less stressful and is perfect for people who believe in Nigeria’s long-term growth.
Risk Management Basics
Whether you are trading for short-term profit or investing for the long haul, protecting your money is key. Two important tools are:
1. Stop-Loss
A stop-loss is like a safety switch.
Example: If you buy Sterling Financial Holdings at ₦5.00, you can set a stop-loss at ₦4.50. If the price falls that far, the system sells automatically, saving you from bigger losses. This can be achieved by creating a pending sell order.
2. Position Sizing
This means not putting all your money into one trade.
Final Thoughts
Trading and investing on the NGX can be profitable, but the key is to understand your style:
Day traders chase daily price moves.
Swing traders hold for weeks.
Long-term investors grow wealth over years.
No matter the style, always use risk management. A good stop-loss and careful position sizing are what keep you in the game.
If you’re just starting, begin small, learn patiently, and grow with experience.
