The Nairobi Securities Exchange (NSE) is the stock exchange in Kenya, providing a platform for investors to buy and sell shares of publicly listed companies.
Investing in stocks offers a great opportunity to grow wealth over time, generate passive income through dividends, and diversify an investment portfolio.
Whether you are a beginner looking to start your investment journey or an experienced trader, this guide will walk you through the process of trading stocks on the NSE and provide key strategies to succeed.
1: Understand the Basics of Stock Trading
Key Terms You Should Know:
Before you start, it’s essential to understand how the stock market works.
- •Shares/Stocks: Units of ownership in a publicly traded company.
- •Stockbroker: A licensed professional who buys and sells shares on your behalf.
- •Dividends: Profits paid to shareholders by a company.
- •Capital Gains: Profit from selling a stock at a higher price than you bought it.
- •NSE Index: A measure of stock market performance (e.g., NSE 20-Share Index)
- •Initial Public Offering (IPO): When a company sells shares to the public for the first time.
2: Open a CDS Account
To trade stocks on the NSE, you must first open a CDS (Central Depository System) account. This is a digital accountthat allows you to buy, hold, and sell shares electronically.
How to Open a CDS Account:
Choose a Licensed Stockbroker – Select a Nairobi Securities Exchange (NSE)-licensed stockbroker. Some of the top brokers include:
- •NCBA Capital
- •Sterling Capital
- •AIB-AXYS Africa
- •Faida Investment Bank
- •Standard Investment Bank (SIB)
Submit Your Documents
Provide the following:
- •Copy of your ID or passport
- •KRA PIN certificate
- •Recent passport-size photo
- •Proof of residence (utility bill or bank statement)
Sign the CDS Account Opening Forms – Your broker will process the application and activate your CDS account within 1-2 days.
Tip: Some brokers allow online account opening, making the process easier.
Step 3: Fund Your Trading Account
Once your CDS account is active, you need to deposit funds into your trading account.
How to Deposit Money into Your Stock Trading Account:
Via Bank Transfer – Most brokers provide their bank details for direct deposits.
Via M-Pesa – Some brokers allow M-Pesa payments through “Lipa na M-Pesa” (Pay Bill numbers).
Via Cheque or Cash Deposits – This option is available in stockbroker offices.
Tip: Start with an amount you can afford to lose as stock prices fluctuate
Step 4: Research and Choose Stocks to Buy
Not all stocks perform the same way. Before buying shares, analyze different companies and consider the following factors:
Key Factors to Consider When Choosing:
- •Company Performance – Check financial reports, profits, and growth trends.
- •Dividend History – Companies with a consistent dividend payout offer passive income.
- •Industry Trends – Invest in industries with growth potential (e.g., banking, telecoms, energy).
- •Stock Price Trends – Use historical price data to identify patterns.
Tip: Check out NSE’s Official Market Data to analyze stocks before investing.
Step 5: Place Your First Stock Order
Once you have identified a stock to buy, place an order through your stockbroker.
How to Buy Shares on the NSE:
- •Decide How Many Shares to Buy – Stocks are sold in multiples of 100 shares (minimum unit).
- •Contact Your Broker – Place an order via phone, email, or online trading platform.
Choose Order Type:
- •Market Order – Buy at the current market price.
- •Limit Order – Buy only if the price reaches a certain level.
Confirm Transaction – The broker executes your order, and the shares are credited to your CDS account.
Step 6: Monitor Your Investments
Stock prices fluctuate daily, so it’s crucial to track your investments and make informed decisions.
How to Monitor Your Stocks:
- •Use NSE’s Mobile App to track stock prices.
- •Read financial news and stock market reports.
- •Diversify your portfolio – Avoid putting all your money in one stock.
- •Review your investments periodically – Sell or buy more shares based on market trends.
- •Tip: Consider long-term investing instead of daily trading for better returns.
