Best Time to Buy Shares in Nigeria

The Best Time to Buy Shares in Nigeria

👉 Investing in the stock market might induce anxiety in certain potential investors. Nobody wants to purchase when prices are at their highest. The principles of when to purchase and sell stocks boil down to the foundations of how the stock market functions.

👉 The goal is to buy cheap and sell high, but the problem with this is that any stock might rise or fall on any given day for a few reasons.

👉 For instance, the stock’s underlying business could be flawed, and the firm will lose money. Alternately, the stock price might be affected by an analyst report, a rumour regarding forthcoming corporate moves, or general economic news.

👉 Because of this volatility, it could be dangerous for individual investors to purchase and sell stocks to generate a profit; hence, many investors choose ETFs, index funds, and mutual funds, which incorporate several equities in a single package.

👉 Nigerian investors and traders must always remember that previous performance is not indicative of future performance.

👉 Even for professionals, determining when to purchase and sell stocks can be difficult. Money managers attempt to outperform the market by actively buying and selling stocks rather than investing in funds, but only a few are successful.

👉 Even though a passively managed index fund may be a better long-term investment, there are still many reasons why people want to trade stocks.

👉 To understand when the right time would be to buy shares in Nigeria, there are several components to consider, including the NGX’s market hours compared to that of other stock exchanges, whether there are specific days that are more suited to purchase stocks and the months that are more ideal to purchase shares.

Nigerian Stock Exchange (NGX) Market Hours vs Other Exchanges

👉 The Nigerian Stock Exchange (NGX) is the second-busiest stock exchange on the African continent, operating daily from 9h30 am to 2h20 pm.

👉 The Nigerian Stock Exchange is only open every day for 4 hours and 20 minutes, which is a noticeably short amount of time when compared to other markets.

👉 Frequently, trading in smaller markets is focused within a shorter time, resulting in increased liquidity, lower spreads, and enhanced market efficiency.

👉 When comparing the operation hours of the Nigerian Stock Exchange to those of important exchanges throughout the globe, the following pattern emerges:

What Time Should I buy shares in Nigeria?

👉 The NGX is only open for a brief time and during this, conditions might be extremely volatile. Day traders like volatility so they may profit from intraday price fluctuations.

👉 Therefore, Nigerian traders can expect that the optimum times to purchase and sell stocks are between 9h45 and 10h45 am and between 1h30 and 2h20 pm. The initial and ending hours of trading are much busier than the hours in the middle of the trading day.

👉 Nigerian traders must understand that day trading and investing are very distinct activities. Investing is the act of purchasing shares in a firm. If the firm outperforms expectations, investors are rewarded with a substantial increase in the value of their shares.

👉 Day trading is the practice of buying and selling stocks without consideration for the fundamentals of the companies they represent. Both can be successful but being a profitable day trader is quite tough, and it is much simpler to become a successful investor.

👉 In addition, day traders in Nigeria can benefit the most from trading for brief periods. Nigerian day traders must keep a careful watch on the market during trading hours, and while this seems like an extremely labour-intensive strategy, it is much better than consistently trading for extended periods, because:

➡️ An inordinate amount of time spent on diagrams and charts may induce mental fatigue and disorientation.

➡️ Typically, volatility lessens after the first 90 minutes of trade.

➡️ There is a potential that after the first 90 minutes of trading, the volume of shares traded would decline.

➡️ You will be competing with seasoned traders whose manoeuvres could easily bewilder you. During this time, skilled traders are attempting to manipulate rates and graphs, and a novice trader should not be dabbling in the market.

👉 When the stock market first opens for business in the morning, during the first 15 minutes of trading, the market is still responding to the news from the previous day, and seasoned traders are ready to make their move currently.

👉 Subsequently, it is strongly recommended that Nigerian traders, especially beginners, avoid the market during the first fifteen minutes.

👉 If traders feel that they need more time to observe the market to allow them to make more informed trading decisions, they could extend their trading time. Most of the time, the calmest and most stable trading period occurs in the middle of the trading day.

👉 People are now holding their breath in anticipation of the dissemination of further information. Because the stock prices have already absorbed most of the day’s news releases, many investors are focusing their attention on the movement of the market for the remainder of the trading session.

👉 Because prices remain stable over this time, it is an ideal time for novice traders to enter the market because activity levels are lower, and the potential profits are easier to anticipate.

👉 The last hours of the trading day will again see an increase in both the market’s volatility and its volume.

👉 However, tendencies in day trading on the stock market show that the last hour of trade could be like the first hour, with sudden price reversals and significant price movement, especially in the final few minutes of trade.

👉 Day traders on the NGX often look to close their positions or join a late-day surge between the hours of 1h30 and 2h30 hoping that the momentum will carry over to the next trading day.

On Which Day Should I buy shares in Nigeria?

👉 There is anecdotal evidence that the stock market falls the greatest on Mondays following a weekend of negative news. It is also possible that individuals dislike returning to work on Mondays, resulting in a gloomy stock market.

👉 In contrast, the Monday Effect or Weekend Effect, as it is called, has disappeared over the previous few decades. The performance of the stock market on Mondays does not vary much from the performance on other days.

👉 Therefore, you should purchase stocks anytime you have the funds, given that you have carried out a thorough fundamental and technical analysis of the stock and the company.

👉 The absence of the Monday Effect implies that there is no optimal day to sell stocks. People used to recommend selling on Friday to escape the probability poor day on Monday, but in today’s market, this approach makes no sense.

During Which Month Should I buy shares in Nigeria?

👉 There are several ideas and adages about the optimal month to purchase or sell equities. There is also the January Effect, which indicates that market categories do poorly at the beginning of the year.

👉 As part of their year-end tax preparation, investors often sell some equities. They want to lock in losses or realize capital gains when it is advantageous from a tax perspective.

👉 This could provide investors with an opportunity towards the end of December or the beginning of January, resulting in the January Effect.

👉 To invest, however, it makes little sense to store capital from May until the end of December. You will lose out on stock market profits if you sit on funds while waiting for a market entry chance.