The increasing availability of the Internet, and the opportunities that the World Wide Web offers, is driving the penetration of online technology into all areas of activity. Investing is no exception. A few decades ago, only large investors with multimillion-dollar funds could have access to financial markets and trading. They usually traded on behalf of various institutions, banks, funds and similar organisations. With the appearance of online trading platforms, it is now possible to perform financial operations without being directly present at the exchange market, and the minimum amount of investment was reduced to an unprecedentedly small amount - now you can get started in trading, having just a few dollars of start-up capital!

Now anyone with access to the Internet and a minimum amount of money can plunge into the big world of trading. All operations are performed through online trading platforms, which provide access to all financial instruments 24/7, wherever you are. The online investment market is not based on physical commodities as the offline market is, but on financial instruments: currencies, stocks, futures contracts for commodities (oil, gold), cryptocurrencies.

A relatively new but interesting financial instrument is ETF.

Let's take a look at what an ETF is, how to invest in an ETF and how to choose an ETF trading platform in Nigeria.

Trading platform
Trading platform

Investing ETF funds

What is an ETF? The answer is simple: an ETF is a mutual fund with shares that can be traded on a stock exchange in the same way as a company's shares.

ETFs are baskets of securities with multiple assets, such as stocks, bonds and gold, making them similar to mutual funds (Mutual Funds), essentially index funds. In fact, ETFs emerged in the evolution of mutual funds and financial markets through the digitalisation of stock trading.

Shares (units) of an ordinary mutual fund cannot be traded on the stock exchange - there is a special procedure for buying and selling them, which is approved by law and by the fund's charter. Shares in an ETF, on the other hand, can be bought directly from any brokerage account.

In effect, an ETF is a pre-formed investment portfolio. A trader can purchase a small share of the fund through the platform, thus buying a portion of the entire portfolio. Its price will change depending on changes in the stock exchange index.

This way of investing shows good returns over long time horizons.

The main reasons for the popularity of ETFs were:

  • Reasonable price. The cost of ETF shares and the amount of fund fees is much less than if you were to buy all the shares individually.
  • Convenience and ease of tracking. Exchange-traded funds track fairly broad indices. They can cover entire economies or a single industry, but either way it's easy to keep track because you don't need to monitor individual companies.
  • A wide range of ETF types. A portfolio can include emerging market equities, government bonds, precious metals, etc. You can choose a fund based on what line of business you are in or simply have experience or knowledge.
  • Transparency. ETFs report the composition of their portfolio every day.

An exchange-traded fund (ETF) and a mutual fund have one thing in common - they invest a lot of capital of many small investors creating a diversified portfolio that each of the small investors cannot afford individually.

Varieties of ETF funds
Varieties of ETF funds

How to invest in ETFs in Nigeria? Choosing an ETF platform

To invest in ETFs in Nigeria, you need an authorised intermediary: a broker who will provide you with a trading platform for online trading. To choose a good broker, consider the following aspects:

  • Whether the broker is authorised by a reputable regulatory body to conduct brokering activities;
  • Whether a professional website with all the necessary information is available;
  • The availability of feedback for consultation;
  • Accessible trading conditions with a wide range of trading instruments;
  • Availability of technical indicators for analysis;
  • Access to free training materials;
  • The speed of consultations;
  • Low service fees;
  • Availability of various methods available for withdrawal of funds.

We found a platform that meets all these requirements, as well as being easy to use and having a pleasant and clear interface. Let's look in detail at the advantages of the platform we have chosen.

Best ETF trading platform in Nigeria
Best ETF trading platform in Nigeria

Easy registration

Registration is quick and easy - it only takes a few minutes. Go to the broker's official website, click on the "register" button, fill in all the details of the registration form, indicating the correct email address. After that, the system will automatically send a registration confirmation link to the specified email. You will need to confirm your email, after which you will be able to start working on the platform.

Registration process
Registration process

Demo account

When you first log in you will be asked to open a free demo account - don't miss out on this. On your demo account, you'll see a fictitious $10,000 in test funds. You can use these pseudo funds as you see fit, trying to see if your trading methods work or not. Obviously, if your trading methods are working, you will find a so-called profit accumulated in the demo account, if not - a loss.

You will of course not be able to withdraw funds from your demo account, as they are fictitious.

Having a demo account is a good feature of the platform. You learn and gain experience in trading, but you do not lose real money.

Select an account
Select an account

Abundant funding options. Low Limits

If you feel you are ready to spend some real money on live trading, you will have to fund your real account on the platform, using any of the payment instruments that can be found on the website. The minimum initial deposit amount is only $10. As you can see, the low deposit limit allows almost anyone with the desire to start trading.

To invest in ETFs, go to the "funds" section of the platform and enter the ticker of the ETF of your choice. You will see a section of the investment platform for working with the specified fund. In addition to the quotation calendar, you can also view the "information" tab, which contains up-to-date information about the ETF, such as the current price, trading calendar, investor sentiment scale and more.

Account replenishment
Account replenishment

Availability of easy-to-use tools for successful ETF trading

The platform offers access to convenient and easy-to-use tools for successful trading. It is possible to set stop orders by selecting price limits. A stop order automatically closes your trade as soon as the value of the specified price limit for the asset has been reached. Stop order, which sets the lowest price limit, is called a stop loss. The stop order that closes your trade when the upper price limit is reached is called a take profit.

With these automated features, you can limit the risks in your trades.

The platform also offers the option of using leverage on your trades. Activating it is easy, just click the "multiplier" option on the panel and select the multiplier you want. 

Do not use leverage unless you have sufficient trading experience!

Availability of Technical Analysis Indicators

Technical analysis is a reliable helper in online trading, which you cannot do without. There are thousands of indicators, on the base of which traders develop their own strategies.

Technical indicators show real market values and help to determine key market trends.

Traders create their own strategies based on them. As a rule used indicators are combined for more exact signals, so a trader may see more complex picture of the market events.

The platform we have chosen allows you to use almost all indicators known in trading. Convenient and easy settings allow you to choose any combination of indicators, or stop at one indicator.

Availability of Technical Analysis Indicators
Availability of Technical Analysis Indicators

Good choice of ETFs to invest in

The platform under review offers a choice of 23 ETFs. The funds are different and track different indices. 

Try to choose an ETF that tracks a sector you are familiar with in your line of business. Or a sector whose activities you are interested in.

This will make it easier for you to understand market trends.

For example, you might choose to invest in a Materials Select Sector SPDR fund (ticker: XLB), which tracks an index of materials. This index includes companies from the chemical, building materials, container and packaging industries. Or you can choose a Technology SPDR (ticker: XLK), which tracks the technology sector. You will also find the pharmaceutical sector, the real estate sector and so on. Some funds track different areas by region. Before selecting a fund, do your research - on the platform you will find a brief overview and analysis separately for each ETF.

The platform offers a wide range of ETF funds
The platform offers a wide range of ETF funds

What determines the success of investing in an ETF?

Investing is a rather complex process. To invest effectively, creating profits rather than reducing them, you need to put in a lot of effort and spend enough time gaining knowledge and experience.

It is worth remembering that the investment market is influenced by a number of external factors that need to be considered when investing, such as the political scenario of the country, international economic relations and the financial laws of the country, the world economy, global political trends, etc. Keep an eye on the news using only trusted sources of information.

Current news on the platform
Current news on the platform

To start investing in ETFs in Nigeria:

  • Find a decent online broker;
  • Register on an online trading platform;
  • Open and practice on a demo account;
  • Familiarise yourself with the training materials provided by the platform;
  • Follow the political and economic news of the country;
  • Follow global news to understand global trends.

The trading platform contains a lot of useful information, provides the opportunity to learn, notifies you of the latest news as well as provides convenient and easy tools for analysis and trading.

With the help of this trading platform you will be able to quickly understand all the intricacies of stock trading and learn the intricacies of trading various financial instruments, including ETFs.

Start learning ETF trading today by opening a demo account - it's free and very easy!

The financial services provided by this website carry a high level of risk and can result in the loss of all your funds. You should never invest money that you cannot afford to lose