Unlike the Forex market, the stock market has set hours within which it operates. However, you can still buy and sell stocks even before the official opening hours. Such trades are called premarket trades because you are trading before the market has begun its operations. This type of trading allows traders to react to events and news that might have occurred when the market was closed. Since this not a conventional type of trading, there are limited buyers, and the volatility is also high. This makes it risky for new investors and traders. So, what does premarket trading mean?

How does premarket trading work?
Premarket trading allows traders to buy and sell stocks before official market hours if the brokerage firm offers this option. Some brokerage firms do not offer trading in the premarket at all. The premarket trading benefit is a possibility for traders to react to off-hour news and events.

Just like the NYSE (New York Stock Exchange), U.S. securities markets are also open from 9:30 AM to 4:00 PM (EST) for regular trading. Thanks to electronic trading, it is now possible for traders to buy and sell stocks even the market has officially opened. These electronic communication networks, also known ECNs, can operate in advance as they are not bound to a physical location. In simple terms, traders use a digital network to buy and sell stocks.

An example of ECN would be NYSE Arca. When one of the early ECNs merged with NYSE, NYSE Arca was created. Instinet is yet another ECN that began its operations in the late 1960s. Different operating hours are permitted for premarket trading by ECNs.

When Does Premarket Open?
Premarket trading in stocks usually starts from 4 a.m. to 9:30 a.m. EST. Some brokers allow trading from 4:00 AM (EST), but typical premarket trading hours are from 8:00 AM to 9:30 AM (EST). After-hours trading takes place from 4 p.m. to 8 p.m. However, traders can not trade all assets during the premarket trading period, and some types of orders can be limited.

When does premarket trading end?
Premarket trading ends at 9:30 AM EST. At that time, US stock exchanges start, and traders can trade between 9:30 a.m. and 4:00 p.m. EST regularly.

Pre-market trading hours are similar to after-hours trading hours, the difference being that pre-market hours begin before the market opens, that is, before 9:30 AM (ET).

The pre-market opens at 8:00 AM ET. Approximately one and a half hours before the official market hours. The reason for trading before others is the same as after-hours trading, taking advantage of changing stock prices before others.

The concept of premarket trading is a fairly new one. The NYSE, in 1991, allowed trading beyond regular market hours as a response to around-the-clock trading.

This decision promoted computerized international trading as people worldwide were able to participate due to extended hours. With the opening of the market in the U.S. at 4:00 AM (EST) to its closing at 9:30 AM, trading can occur at any time in this window. You can also trade after the curtain has been drawn on the market. That is known as after-hour trading, from 4:00 PM to 6:30 PM (EST). It must be noted that this type of trading can continue beyond this time window through internal exchanges.

The official operating hours of the US Stock Market run from 9:30 AM to 4:00 PM. For these six and a half hours, Wall Street remains abuzz with investors and traders across the globe. The market sees millions of transactions every day as soon as the opening bell strikes. To avoid such a crowded marketplace, some traders have found a loophole. Trading before the market opens allows you to take advantage of less competition. These trading hours can be extended once the market has closed. This is known as after-hours trading.

Let’s see how you can take advantage of trading during these odd hours.

Trading Outside the Official Hours

Let us first assert that you can trade at any time, and it is completely ethical and legal. The market is more active during conventional hours, so most action takes place during that time. However, if you see a window of opportunity outside those hours, you can take that up.

You can trade well before the market officially opens and after it closes as well. However, if you decide to do so, be aware that the playing field will not be the same.

Factors that Affect Premarket Trading

The majority of people who do premarket trading are generally well-funded institutions, but there is no defined rule that retail traders cannot try their hand at it. Technically, anyone can test the water with premarket trading.

Premarket trading can be used in more ways than one. Some investors use it to keep track of where individual securities and markets might be heading. Changes in security prices and the trading volume can be used to speculate how the rest of the trading day will pan out. Premarket trading is also indicative of the market sentiments to breaking news. Political instability, overseas events, and several factors related to the economics and geopolitical state can affect securities and markets.

For example, a corporation operating in a different or the same time zone may release a report on their earnings after the official trading hours. If the announcement is different from the market expectations, this could influence the respective stock’s price expectations the next day. Depending on what would be beneficial, a premarket trader may buy or sell stocks before the rest of the market reacts to the news.

Events like changes in regulations and court rulings can also trigger premarket interests. If a stock is upgraded or downgraded by an influential analyst, it may also influence the market.

Premarket Trading Risks

Trading before 8:00 AM (EST) might not be very beneficial, but it still certainly involves a degree of risk. There may be an increased trading volume, but any news or rumor can increase the gap between ask prices and bids for stocks.

The number of trades in premarket trading is limited, making it difficult to find sellers and buyers at the hours of your liking. This makes trade execution and price determination more difficult, especially with fewer traded stocks. Even the stocks that are widely held can be difficult to trade.

Stock prices in premarket trading are more volatile. Since the volume is limited, the prices can fall and rise more rapidly than expected. If you are comfortable with moderate trading, premarket trading can give you significant losses.

In addition to that, the prices that you get in premarket trading may not paint an accurate picture of what you might see when the regular market opens. These prices and trends can be misleading and deceptive.

Premarket prices and trends are to be taken lightly. They can change drastically during regular trading hours. This is why only experienced traders should consider premarket trading as they are not easily deceived.

Premarket Trading vs. Regular Trading

The competition is more intense during the premarket trading hours because of the lack of investors and traders. This makes premarket trading less advantageous for individual investors because professional traders have more knowledge and a better network.

If you are operating on an ECN which is incompatible with the ECN of another investor, you might not get to complete the trade. However, your trade will be slowed down or completely blocked if there is a technical delay from your brokerage’s end.

Both the markets have very different rules, which may also vary among different brokerages and ECNs. Therefore, you should first weigh all your options.

The premarket is time-bound. Suppose your time-limited order may get canceled if it does not get executed during premarket trading hours. If you have entered an order during premarket trading hours that couldn’t get executed, you can still execute it during regular trading hours. Similarly, if you have entered an order during regular trading hours, you can take it forward during premarket trading hours.

Does Fidelity allow premarket trading?
Yes, Fidelity accepts premarket orders from 7:00 – 9:28 a.m. EST and after-hours orders from 4:00 – 8:00 p.m. EST. During premarket trading and aftermarket trading, certain stocks on Fidelity.com of the major U.S. stock exchanges and Nasdaq can not be traded.

Traders can visit the Premarket trading CNN page and check interesting premarket trading stats.

Premarketing risk assessment

Trading and investing in stocks involves a certain degree of risks, to begin with. These risks can magnify when you are operating outside what is deemed traditional. According to the SEC (Securities & Exchange Commission), trading in the pre-market and after-hours session involves the following eight risks:

• 1. Inability to act or get a clear picture

At times, firms only allow you to see the quotes during after-hours but don’t allow you to act upon these quotes. It must also be noted that these quotes might be coming from a firm’s one trading system. Therefore, it is important to cross-check with your broker before acting upon these quotes.

• 2. Lack of Liquidity

Since more traders in the market during traditional trading hours, buying and selling stocks is easy and happens fluently. Since fewer participants during off-the-market hours and trading volume are low, executing some trades becomes more difficult.

• 3. Wider Spreads

A spread is a difference between the asking price and the bid price. A tight spread gives more profit-making opportunities to the traders. Since the trading activities are less, wider spreads are offered to the traders. This ultimately translates into fewer profits.

• 4. Price Volatility

Needless to say that these trading sessions witness higher price volatility. The price fluctuation is especially more prominent with stocks that have limited trading activities.

• 5. Uncertain Prices

Along with price volatility, there is price uncertainty as well. The stock prices you get during pre-market and after-hours trading sessions may not reflect upon the prices you may get during traditional trading hours. Stock prices may rise or fall after or before the regular trading hours and may go back to their starting point once the market opens again. There is a lot of uncertainty around it.

• 6. Biased Towards Limit Orders

A limit order is a great tool that can protect your capital. Some electronic trading systems are biased towards them. You cannot use them in off-hour trading.

• 7. High Competition

It should be noted that most traders who trade during pre-market and after-hours sessions are professional and well-funded traders. Mostly, institutions like mutual funds are a part of this market, creating big competition for individual traders.

• 8. Computer Delays

Computer delays are real issues when you are not trading during the official trading hours. Many traders and investors have reported delays in order execution and cancellation. This can be consequential when it comes to profits and losses.

After Hours Trading

What is After-Hours Trading?

After-hours trading occurs after the market closes, after 16:00 EST for New York Stock Exchange (NYSE) and the Nasdaq, when an investor can buy and sell securities outside of regular trading hours. Each trading platform has a different time range that traders can use for after-hours trading.

Generally, trading done between 4:00 PM and 6:00 PM (EST) is labeled as after-hours trading, but it can go beyond this time frame as well.

After-hours trading times

• Premarket trading for a typical ECN broker is between 4 p.m. and 8 p.m. 
• Schwab allows after-hours trading from 4:05 p.m. to 8 p.m. EST.
• Wells Fargo allows after-hours trading from 4:05 p.m. until 5 p.m. EST.
• TD Ameritrade offers trading 24 hours a day, five days a week.

The next question is, why would you want to trade when the stock market has closed?

The stock price depends a lot on the company reports, which are generally released either before 9:30 AM or after 4:00 PM. Whether the market is in session or not, stock prices move constantly. If the stock value is changing, people would naturally like to take advantage of it before other people. This makes after-hours trading important.

Why is there after-hours trading?
After-hours trading exists because of huge global demands and the presence of new trading platform technologies. Now, trading hours can be extended so more participants can be involved in trading. Most brokers offer standard commissions during regular trading, premarket, and after-market trading.

As the name suggests, after-hours trading refers to the trading done beyond the conventional trading time. In the USA, after-hours trading begins post 4 PM (EST). This is when the exchange of most major stocks comes to a halt in the United States.

When does after-hours trading end? After-hours trading can continue till 8 PM, but traders need to keep in mind that there will be slim trading options as time progresses. Traders can conduct after-hours trading through ECN (electronic communications networks.

After-Hours Trading: Key Points

After-hours trading is done once the official trading hours have ended. Simultaneously, there are fewer traders and investors active once the market has officially closed, but after-hours trading offers several opportunities. These key points will help you to understand how you can capitalize it:

The Spark

One of the best advantages that after-hours trading offers is the possibility to leverage any news break that might take place after the stock exchange has closed. You can buy or sell your stock before others, depending on the nature of the new.

Volume

Most of the commotion takes place in the exchange when the market opens or at the release of the news. As the hour’s progress, the activity fades away. Fewer transactions take place around 6 PM and after that. Since the volume of traders engaged in the market is less, it can make trading after-hours riskier.

Price

Along with the uncertainty around the volume of transactions, the prices are also not competitive. The spreads are generally wider as there are fewer people involved. Since the difference between the asking price and the bid is more, the traders make fewer profits.

Participation

It would help if you kept in mind that institutions and companies cannot trade after hours. They can choose to stay closed till the market opens again. With decreased volume, wider spread, and less participation of investors and brokers, after-hours trading can be quickly deemed riskier than regular trading.

All the above points make a few things very clear:

• The possibility of a stock falling sharply during the after-hours is highly likely. It can rise again when the market opens the next day.
• Various institutional investors behave differently once the market closes. This makes it difficult to predict the price actions when trading in the after-hours.
• Pushing the prices in either direction is relatively simple because of less trade volume and broader spreads. While this can make things riskier, you can also take advantage of it and make an impactful trade even with fewer stocks.

After-Hours Trading Real Example

To understand the benefits of after-hours trading, considering the example of Nvidia Corp., would be a great idea. Also known as NVDA, their earnings for February 2019 can teach aspiring after-hours traders the positives and negatives of operating during these unconventional hours.

On February 14, NVDA announced its quarterly results. The stock price subsequently saw a significant jump. It rose from $154.50 to $169 within 10 minutes of the announcement. The volume of transactions continued to remain steady till 4:30 PM but ultimately dropped quickly. Approximately 700,000 trades were made within the initial 5 minutes. This made the stock jump to nearly 6%. Between 4:25 PM to 4:30 PM, the trades dropped to 350,000, and finally, only 100,000 shares were traded after 5 PM even when the stock price remained at $165.

Things changed the next morning quickly, with more shares traded compared to the previous day. Between 9:30 AM to 9:35 AM, the participants weighed in, and about 2.3 million trades were made. This was approximately three times more than the previous day’s initial high. On this day, the prices dropped to $161. The trades were low for the rest of the day and closed at $157.20. This was just $3 more than the previous day. However, the after-hours trading price from the same stock on the last day was approximately $15 more than this. But, the after-hour gains on the following day vanished completely.

Conclusion

After-hours and pre-market trading offers you an edge over the others in the stock market, but you have to be cautious at all times. Fewer transactions and fewer participants can make this an elite and risker trading turf. Always keep yourself updated when you are doing something unconventional, especially when it comes to trading and investing.

If you are an experienced trader who has a deep understanding of numerous factors that can influence stock prices, you can benefit from premarket trading. It will definitely give you an edge over other traders but is also riskier than trading at conventional hours. This is why despite the advantages, most investors prefer to observe it from afar. 

If you are trading before the official trading hours, you will stand in direct competition with professional traders and investors. It is better to become an expert at conventional trading and then try your hands at premarket trading.

Picking up a stock depends on your experience level, available capital, trading style, etc. You may have different preferences for trading altogether like position trading, swing trading, short or long-term trading, or may have the intention of investment. Thus, to choose the best share, the best you can do is add this into your trading plan and risk management in place. It would help if you made your trading plan to change, transform it on the way as you learn and grow.

The first thing you have to do is to know your risk appetite. You can use the risk to reward ratio for it. It is the rate that states how much risk you are willing to take to get the desired outcome. For example, the risk to reward ratio of 1:2 means, for each $2, you are willing to risk $1.

Also, regardless of your trading personality, you need to plan a strategy for selecting stocks for future trading or picking swing trade stocks; it can be anything!

What Time of the Day is Best to Buy Stocks?

The best time of the day to buy stocks is from 30 minutes to 1 hour after the stock exchange opening. In this period, the opening price range is formed, and it is the period of the biggest liquidity and volatility for trading assets. Usually, the best time to buy stocks is Tuesday after the opening range (one hour after markets open).

Below is the presented S&P 500 percentage change per weekday in 2020 and 2019. Here we can see that the best weekday for stock buying is Tuesday. On Monday prices very often correct from the Friday trend and during Tuesday price usually starts the weekly trend.

Tuesday was the best day to buy stocks and catch a trend in 2019 and 2020

Let us see one example of stocks opening range:

In the first hour in the stock market, the price oscillates between the green and red areas. A trader can sell a stock when the price breaks opening range support (red area).

Usually, the best time to enter into a trade is when several triggers occur, such as technical price level reach previous support or resistance, fundamental news, company news, etc.

Choose Stock Based on Your Personality Type

Choosing stocks based on your personality or age works the best, i.e., if you are 20-22 years of age, you might be knowing about a new game or advanced technological tools. Your mind would be sharp and observant of things that others can’t notice. You can take the risk as you are young and have different priorities at the moment. On the contrary, if you are a 60 years old individual, you have different goals. You may prefer having stocks that have stable returns and are less volatile.

Thus, the decision you take should be deeply analyzed. You need to know the stability and overall volatility of the stock and the market. You can use the available level I or II information or learn to use tools to have a more precise decision.

Best time to buy stocks and Risk Management

As stated above, you need to have a risk management strategy if you want to be in this game for the long term. You must preserve your money while having the risk under control while choosing the best share.

There are so many stocks in the market, having diverse price sensitivity, volatility, price, etc. Thus, first, choose the risk you are willing to take according to your skills, knowledge, and experience. With time, you can increase your risk appetite.

The most common mistake that novice traders make is to go with the flow and see how the trading goes! That is the worst thing you can do to yourself as a trader. Take systematic and calculated steps and risks, as, without that, trading is nothing but gambling! Make a plan and stick to it.

Simplicity is the Best Policy

Yes, be simple, trade simple. Do not ride on all the horses at once. If you want to invest for the long term, pick one stock, study the stock, and analyze it. The stock has its own individuality, which you need to learn before investing in it.

It would help if you analyzed the charts on different time frames like hourly, daily, weekly, monthly, etc. With time, add stocks one by one in your learning pattern, and when you are sure of moving ahead, start to build your portfolio. This will help you learn the stock behaviors closely.

In the end, pick stocks aligning with your trading strategy and overall expectations.

Stick to your trading strategy for the day; if you feel like changing or modifying it, at least wait till the day closes. Make rules for yourself and be loyal to them. Following are a few examples of the rules that you can stick to for the day of trading after choosing the stock!

Stock markets have become one of the most lucrative options to build wealth. A lot of us have already invested or are planning to invest in stock markets. But how many of us know where the money goes when we invest or buy stocks of a company? Let’s find out!

In this article, we will discuss all stocks such as what they are, why should you own them, where does your money go when you invest in stocks, what happens to your money when the value of your stock drops, what does owning a stock involve, and all about buying and holding stocks that rise and fall. So let’s start:

What is a stock?

Stocks are the general term representing a slice of ownership of one or more companies. Investors buy stock to earn a return on their investment.

Undoubtedly, stocks are how ordinary people can invest in some of the world’s biggest and most successful companies. A lot of people and investors choose this way to build wealth. The chance to earn a good return on investment is one of the main reasons why so many investors choose to invest in stocks.

The investor gets to essentially own a little piece of the company whenever they own a stock. The money goes indirectly to a company, through an investment bank, when the investor purchases that stock as a part of the company’s IPO (Initial Public Offer)

When it comes to the company’s part, stocks are an excellent way to raise capital to fund many new initiatives such as products, innovations, etc.

In layman’s language, stocks can be called mediums through which common people invest in various companies worldwide. It is one of the good ways to create wealth. People invest in stocks in search of getting a good return on their money in the long term.

Owning stock gives you the privilege to own a little part of the company. If you are buying stocks through the IPO (Initial Public Offering), in that case, your money is directly transferred to the company; of course, here, too, there is an intermediary called Investment Bank. Launching an IPO works well for the company to raise capital and fulfill its expansion goals, innovation, new products or services, etc.

What is the difference between a stock and a share?
The difference between a stock and a share is that “stocks” are the general term representing a slice of ownership of one or more companies, and “share” has a specific meaning and represents ownership of a particular company.

Why should one own stocks?

Basically, buying a company’s stock means purchase ownership in a company, as told before. Stocks generally provide a good return on investment, especially in the long run. An investor can expect a return of about 10% on his investment, which, considering inflation, can drop to 8%.

Building a diversified portfolio that involves buying stocks in companies across different countries and industries seems to be a wise decision rather than investing in just one company, considering that not every stock has the same kind of return and fluidity.

Returns on stocks come in many different ways irrespective of the type of company the person decides to invest in. Some of them are: 

When you sell the stock for more than what you paid for, it fetches you a profit because the stock value goes up, i.e., it appreciates over time. 

Stocks can also pay you a dividend, which is basically payments made to shareholders out of its profit. Stocks usually pay monthly, quarterly, semi-annual or annual dividends, but you have to keep in mind that not all stocks pay dividends.

Importance of Buying Stocks

As stated, when you buy a stock, it makes you one of the company’s owners. In the long run, stocks provide great returns on the investment. On average, the annual return stands at 10 percent, but adding inflation, it becomes around 8 percent.

Even in buying stocks, diversification is essential. So, never invest all your money in just one company. You can buy stocks of any company around the world and from diverse industries. So, could you take advantage of it? Each market, company, and stock have its own volatility and return scenario. So, use your skills and diversify your portfolio.

When you invest in a company of any industry, nation, etc., you earn a stock return, as stated below.

• The stock price hikes and increases the value of your holding. When you sell the stock at a high price, you earn a profit.
• A lot of companies pay dividends on the stocks, not all, though. Generally, companies pay dividends for various time frames, varying monthly, quarterly, bi-annually, and yearly. A dividend can be defined as sharing a part of the profit to shareholders for that particular time period.

What happens when you buy a stock?

Where does the money go when you buy a stock?
When traders buy stocks, the money from the trading account goes to the broker’s pool account. Then the money from the broker’s pool account goes to the clearing corporation. Finally, the money will reach the seller of the stock at the price the trader bought.

So now that we have a basic idea of what stocks are and why one should own them, it’s time that we take a deeper look at where one’s money goes when one invests in a stock. 

Typically, a company decides to sell shares when they need money for their business. They can invest in various enterprises or initiatives such as funding new products or portfolios, expanding production, or spending on other things such as marketing or research.

The company first issues shares via an IPO (initial public offering), which the investors can buy or sell once they’re available on the market. 

The shares can be exchanged between buyers and sellers after they’ve been issued on the market. This is known as a secondary market where the money goes to another investor selling their shares. 
The investor receives money from a buyer via an intermediary, generally known as a broker when they want to sell their shares. 

We buy and sell financial assets from various platforms to gain wealth or make a short-term profit, but have you ever thought about where the money goes? It is obvious to have a lot of questions if you are a novice. It also comes in handy to understand this realm well if you raise questions and find their answers. Well, here is your answer to this question.

When you purchase a stock, the money goes to the individual selling you the stock, but there is an intermediary that looks after this settlement, and in most cases, it is the broker. The seller here can be the company of whom you are buying the stock (in case of initial public offering), or it can be another investor or trader as well.

If you don’t know where the money goes when you buy a stock, it’s alright and common. And we are here to guide you to that path as smoothly as possible. Consider this as your basic guide for stocks.

What happens when you sell a stock?

When traders sell stocks, the money from the trading account goes to the broker’s pool account. Then the money from the broker’s pool account goes to the clearing corporation. There is an actual buyer who will purchase these stocks, and the trading house absorbs the sale and reimburses you at the current market price.

So when traders buy stocks, they are not buying them from the company; they buy them from other existing shareholders. When traders sell their stocks, they do not sell them back to the company because they sell them to some other investor.

What happens to the money when the value of a stock drops?

Let’s take a simple example to support the statement.

So two people want to trade stocks: x and y 

Let’s say that x bought a share from y for 20 rupees. After a certain amount of time, the share’s value started to drop, and x sold it back to y for 10 rupees. So in this transaction, x lost 5 rupees, but y made 10 rupees. 

Unlike this example, the stock market is much more complicated. There are a lot of stocks and a lot of participants.  Different people have different cost bases.

The stock market, like derivatives, isn’t a ‘zero-sum game.’ A lot of people buy stocks keeping in mind that someday another party will pay more for it. And this thought process works as there is no expiration date for the stock market. 

The interesting part is that people are always either winning or losing trade to a certain degree. So the answer to this simple question is that the money is with the person who sold you the stock. 

What involves owning a stock?

A majority of people invest their money in common stock, which also comes with voting rights and includes dividends. 

Other types of stock work differently, such as preferred stock. One should remember that owning a stock and owning a share in its profits or losses are two sides of the same coin. That means that the owner doesn’t have a say in the company’s managerial decisions, and they also won’t be provided a desk at the company’s headquarters.

Stocks have a good history of providing excellent returns to investors, but they come with a risk. An investor owns stock with a goal that the company’s value (also, the stock) should go up as long they own such a stock. However, the investor should also keep in mind that the value can again go down in value due to the market being very volatile or specific conditions or mishaps in the company. This is one of the main reasons why the investor needs to pay a good amount of attention to the market and its activities. Even the most minor issues such as a crisis or wrong communication can affect its stock value. 

Generally, a lot of investors prefer to go long-term for the stocks they invest in. The result is that the overall value of that portfolio would go up over time. Many long-term investors also prefer going for Mutual Funds, through which they can indirectly own stocks. The benefit? Mutual Funds tend to offer pool investment funds that ensure diversification to a certain level. 

What about buying stocks that rise and fall?

With all the following information, you must’ve come to know that the stock market is not as simple as one thinks. One should always be on their toes to be successful in trading stocks and should always be aware of the market conditions and the strategies of the companies they invest in. This helps the investors to make better decisions, resulting in a higher return on investments.

Now that you have an idea about the stock market, it’s time to go out there and start investing!!

Situated in the southern part of Africa, Namibia or the Republic of Namibia is a country that gained its independence in the year 1990. Its capital is Windhoek. The country is an active member of the African Union(AU), Commonwealth of Nations, the South African Development Community, and the United Nations (UN). The economy of Namibia has been stable since its independence in 1990. The country is famous for its tourism, agriculture, and animal herding. It is one of the richest countries in terms of minerals such as gold, silver, diamond, uranium, and basic metals, making mining one of the important activities here, bringing in more than 50% of its GDP. Namibia’s political stability, remarkable tourism, richness in precious stones and minerals, and economic stability make it desirable for trading.

Namibia’s Economy and Financial Market

Namibian economy has been quite stable since its independence from South Africa in 1990. The country has much-skilled labor, which provides for an adequate workforce to the country. Although the income is relatively unstable throughout the country, Namibia’s annual GDP per capita stands at $5,828, making it a higher middle-income country. Namibia has been able to reach here because its Foreign Investment Act 1990 provided liberty to foreign investment. The economy is mostly dependent on the export of minerals extracted here, but the foreign investments and the government’s promotion of trading also help the country grow.

Namibia has only one stock exchange: the Namibian Stock Exchange (NSX), which is located in its capital, Windhoek. It was first introduced in the 1900s when the country experienced a gold rush but was later shut down only to be reopened in 1990 to provide a trading platform and the stock market in the newly independent country. 

Stocks brokers in Namibia

Simonis Storm stockbroker in Namibia

One of the most famous stock brokers in Namibia is Simonis Storm. Since 1996 SS has grown assets under management from N$ 600m to circa N$ 3 billion, including money market assets and equity portfolios of private clients.

IJG Securities stocks broker in Namibia

IJG Securities is the leading Namibian stockbroker and is supported in its sponsoring, equity, and fixed income trading services with cutting-edge market research and analyses.

Namibian Financial Market and Trading

The Namibian government has taken and is planning to take many more measures to promote its financial markets. The government has prepared many policies for free and liberal trading for local as well as international traders. It is very actively participating in the financial markets of other countries like South Africa. Namibia’s financial market has many security options for traders such as cryptocurrencies, CFDs, Commodities, Forex, etc. 

Since the country gained its independence in 1990, its financial market is considerably new. The government is still exploring future growth and available options to promote trading in the country. Let’s look at some of the available options for trading in Namibia.

• Cryptocurrency:  From a regulatory standpoint, cryptocurrency or digital currency trading (national or international)  is currently illegal in Namibia. The Bank of Namibia (BoN) strictly stands on the ground that they do not support or encourage any activities related to trading in cryptocurrency. The bank has expressed to the citizens that they should not indulge in any activity related to cryptocurrency. If, however, the citizens neglect the warning and do participate in cryptocurrency trading, they will not be protected by the government in any way.
• Forex Trading: Foreign Exchange or Forex Trading is legal in Namibia but not available to everyone. The Bank of Namibia has issued Forex Trading guidelines that only authorized dealers, or commercial banks can trade in forex. The bank sets these rules to protect the economy as they have experienced capital outflow in the past, and this decision was best in the interest of the economy. But for income, investment is also required, so forex trading is not completely illegal.

• Commodity Trading: Namibia’s richness in commodities like minerals, agriculture, and cattle keeps it on the positive side of commodity trading. The country’s maximum GDP is derived from commodities like silver, diamond, gold, livestock, etc. Namibia also imports medicinal commodities from other countries. Due to such a big market of import-export, Namibia provides a good platform for commodity trading.

Namibia Financial Market Benefits and Concerns

It is evident from the growing economy that Namibia has good potential to attract more international traders. The country’s exports provide good support to the economy. Also, the government, along with other institutions, is continuously providing people with opportunities. This is why the country has a large number of skilled people.

However, restrictions laid on the trading market and regulations set by the financial authorities can cause strictness in foreign traders’ entry. Therefore, it is advisable to look for an experienced and authorized Namibia Broker to keep you updated with the government regulations and help you grow with your investment in Namibia.

Brokers’ Checklist

There is an ultimate checklist that you can use while selecting a broker for trading in Namibia or any country. This checklist states all the factors that need to be considered while selecting a broker to help you know the best choice for your portfolio.

1. Is your Namibia Broker regulated? A regulated broker is a must, not only when you are investing internationally but also domestically. A regulated broker is bound by the law to keep his work legalized and cannot misuse the trader’s investment. He/she may also be able to help the trader out of any dispute that may arise while trading.
2. Is your Namibia Broker good with customers? Your broker’s customer reviews tell a lot about his work ethics and experience. One can always contact the broker’s customer and get to know more about the broker.
3. How long has the Namibia Broker been working in the market? The broker’s time spent in the market can help determine the broker’s knowledge of the market. The more time he has spent, the more accurately he can predict the market trends, and more efficiently he can help you invest your money. This will definitely help the trader in the long run. Generally, a broker with experience equal to or more than 2 years are considered good.
4. What is the position of the Namibia Broker in the international market? Where does the broker stand in the international market? Is the broker domestic or internationally recognized? These factors can help you know if the broker knows other country’s market as well. Brokers may also have resources in the international market that may also help in communication issues, understanding the laws and regulations. This is important when you are trading internationally.
5. How efficient is your Namibia Broker with the transactions? Efficiency in terms of transactions is much needed while trading. Delays in withdrawals and deposits can cause delays in investment plans. It is important to know if the broker can get the transactions completed within 2 or 3 days.

Conclusion

Trading in Namibia is as safe as trading elsewhere. All you need to do is make sure that your broker passes the checklist that we have curated for you.