Investing in the stock market can seem intimidating, especially for beginners. But once you understand the steps involved, it’s like shopping online—you just need to know what to buy and how to sell it later. Let’s break it down in simple terms using a step-by-step guide on how to buy and sell stocks on the Nairobi Securities Exchange (NSE).
1. Log In: The Starting Point
When you first log in to your investment account, you’ll immediately see a summary of your stocks. The platform will show you two important figures:
- Investment Value: How much you have spent on your stocks.
- Current Value: The market value of your stocks right now.
You’ll also see if you’ve made a profit or a loss. For example, if you bought a stock for 1000 KES and it’s now worth 1200 KES, you’ve made a 200 KES profit.
2. Watchlist: Your Stock Shopping List
At the bottom of the homepage, you’ll find the WATCHLIST. This is a list of all the stocks available on the NSE. The stocks are represented by short forms (called tickers), like “KCB” for Kenya Commercial Bank. Clicking on any ticker will show the full name of the stock and more details.
Now, add the stocks you’re interested in to your watchlist, just like adding items to your online shopping cart. This helps you easily track the stocks you want to follow.
3. Market Depth: Understanding Demand and Supply
Once you click on a stock in your watchlist, you’ll see its Market Depth. This is where you get to understand the demand and supply for that particular stock. The two key terms to understand here are:
- Bid Quantity & Price: This represents the number of people willing to buy the stock and the price they’re willing to pay (demand).
- Ask Quantity & Price: This represents the number of stocks available for sale and the price at which sellers want to sell them (supply).
It’s like going to a market—you see how much people are willing to pay for a product and how much the seller is asking for.
4. Buying Stocks: Making Your First Investment
Now, you’re ready to buy. Here’s how:
- Choose the stock you want from your watchlist and click BUY.
- If you’re buying more than 100 stocks, select NORMAL as the instrument type. If you’re buying fewer than 100 stocks, choose ODD. This simply lets the system know how to categorize your purchase.
If you don’t want to manually set a price, the system can automatically select the best price for you based on current market conditions.
5. Selling Stocks: Cashing In
When you’re ready to sell and (hopefully) make a profit, it’s just as simple as buying. Head back to your WATCHLIST, select the stock you want to sell, and instead of clicking BUY, click SELL. Follow the same steps you used when buying, and the sale will go through.
