The stock trading scene has recently been doing well. Several stock markets in Africa are bound to reach record highs as the trading scene picks up. For one, the Johannesburg Stock Exchange hit an all-time high in January due to increased interest from foreign investors. For example, the all-share JALSH index went up to 78,450 points and remained at an elevated level since.
Meanwhile, the Nigerian Exchange Group (NGX) was labelled the 4th best-performing stock worldwide on the MSCI All-Country World Index, which tracks around 3,000 stocks from different countries. This is due to its 19.99% investment return resulting from strong rebounds in oil and gas prices. More recently, the NGX All-Share index reached over 57,437 points—around 500 points from its 2008 all-time high.
Given these events, stock trading in Africa looks promising in the long term. It may even have experienced traders like yourself wondering: can you make a career out of stock trading? The answer is yes—here’s how:
How much can you earn from stock trading?
To turn stock trading into your career, you must ensure it will provide you with a livable wage. Of course, your income will vary depending on the outcome of your trading decisions.
In South Africa, for example, a trader makes an average of R45,001 monthly. This is higher than the average salary of employees at R25,304. If you compare it to other types of traders—like commodities traders who earn R35,000 monthly—your potential salary will be slightly higher.
Apart from average stock traders, there are also popular investors making millions. For instance, billionaire businessman and industrialist Abdul Samad Rabiu was revealed to be the richest investor on the NGX’s latest ranking. His holdings are valued at an impressive ₦4.68 trillion (R110 billion), making him the only investor with a portfolio worth more than ₦4 trillion (R9.6 billion). Certainly, Rabiu had an advantage since he’s a businessman who’s well-informed about finance and trading. However, this shows how you can earn as much with the right trading decisions and knowledge.
What a stock trading career will look like
- Conducting market research
Stock trading involves heavy market research to help you make informed decisions. Since you’ll have more time to do so, you must thus conduct thorough research as your income will depend solely on your trading actions.
Such research should involve looking at a company’s business model and financial situation to determine if its stocks will perform well. One way to do this is to read companies’ annual reports and observe patterns in their stocks’ price movements. For example, keeping a close eye on the SMCI stock price can give you insights into how tech companies in the hardware sector are responding to market trends. Additionally, you need to consider what industry the company falls under. Even if a company currently has good financial performance, its industry may suddenly falter due to factors like inflation, political changes, and recent innovations. It’ll be easier to make educated guesses about how this will affect stock performance if you read industry-specific news.
Using trading tools and software
Despite the importance of market research, your trading decisions shouldn’t rely on it alone. That’s why full-time traders utilise trading tools and software that analyse the market, providing vital information like price changes and technical signals that alert one to open positions for the stocks you follow.
The stock market is also currently trying to introduce artificial intelligence (AI) through various software to help analyse market data and create reports for traders. In the future, AI may be developed to make limited predictions, such as where a bond price is headed. When building a career in stock trading, researching more advanced tools like these will give you more opportunities to make informed decisions.
Staying updated on current events
Stock market conditions can shift instantly. Company financial announcements, for example, can make stock prices move up or down—depending on how positive or negative the news is. To stay updated on these events, full-time traders constantly consult economic calendars containing scheduled release dates or events that may potentially affect stock prices or movements.
On the other hand, unpredictable events like natural disasters will also influence the stock market. This can lead to stock index decreases as a consequence, as economies will need time to recover. If you’re going to trade full-time, it’ll be crucial to read or watch national and international news to keep on top of current events.
How to start a career in stock trading
- Carefully choose your platform for full-time trading
As you begin your full-time stock trading career, you will need a reliable program to conduct your trades. One thing to consider when choosing a platform for stock trading is the diversity of the stocks available. You want to have a large selection to choose from so you can build and diversify your portfolio beyond what you had when trading occasionally, introduce yourself to various industries, and capitalise on different trading opportunities.
It’s also best to choose a platform that allows instant withdrawals since your income depends solely on trading. Finally, prioritise platforms offering swap-free trading. These will allow you to hold positions overnight without being charged additional fees, making them vital for maximising your returns when trading full-time.
- Learn how to pick stocks
Picking the right stocks is more important now than ever as you turn stock trading into your full-time job. Making uninformed decisions is not an option because this will severely affect your returns.
One way to master how to pick stocks efficiently is by looking at a company’s competition and how it fares against them. List the pros and cons of investing in its stocks, and ensure the benefits outweigh the disadvantages. You should also consider its expansion of earnings. A company doing well in terms of finances will attract traders, which may influence you to do the same. Still, observe how the company grew its earnings over time. If it has multiple stagnant periods, reconsider your decision, as its current success may be short-lived, or a competitor might take away its demand.
- Create and follow a trading strategy
Besides researching and mastering picking stocks, full-time traders need to familiarise themselves with a number of trading strategies. That way, they can respond to various market conditions without too much difficulty.
A common strategy every full-time trader has in their arsenal is swing trading. It involves buying and holding stocks for a short period—spanning days or months—to profit from short-term price movements. With this strategy, you will buy when prices are low and sell when it’s high. A downside is that it requires lots of time commitment because you need to constantly monitor trends and positions. Other strategies you can consider are active trading and position trading. No matter what strategy you choose, evaluate how its advantages and disadvantages will work for you during a specific time.
Turning stock trading into a full-time career can be difficult but potentially rewarding. By trying the above tips to make more informed trading decisions, pulling off this career move can be less challenging.
For more articles, visit OD Blog.
