Posted on July 25, 2021 by Staff Writer
Summary of how to Invest on the Johannesburg Stock Exchange (JSE) shares
- Choose a share trading platform: When choosing a platform, make sure it offers access to the JSE. South Africa does not have too many of such platforms, it is therefore important to make sure your platform of choice trades has the JSE. The most popular platforms at the moment are Easy Equities, FNB and Standard Bank Share Trader .
- Open a share investing account: Once you have selected a platform, you will need to open an investment account. Most platforms have various packages, so make sure to choose an account that suits your investing needs.
- Deposit funds: Before you can begin investing and buying shares on the JSE, you will need to fund your account with a deposit. If you are using FNB or Standard Bank you can transfer from one of your Checking or Savings accounts.
- Buy shares: Most platforms provide research tools that allow you to filter available companies by sector. Once you have found the companies whose shares you would like to purchase, submit your order. The JSE does not trade on weekends and holidays, it only trades between 9am to 4 pm on business days.
- Monitor your investments: Frequently login to your chosen investment platform to monitor your portfolio.
History of Share Trading
The first company to issue stocks to the general public was the Dutch East India Company (VOC) in the 1600s thereby becoming the first publicly-traded company. Stock trading has since become increasingly popular with people now able to place orders using a broker on the internet for a substantial fee amount.
Back in the 20th century, it was hard to trade stocks, it was a preserve for the rich. With the advent of the internet, it has become relatively easier. No more long phone calls to a broker just to place single trade. Today, all this is done by the click of a button.
In South Africa, trading is administered by the Johannesburg Stock Exchange (JSE) which is regulated by the Financial Sector Conduct Authority (FSCA).
What is a stock trader?
A stock trader or equity trader or share trader is a person or company involved in trading equity securities. There are two types of stock traders, speculators and investors.
What is stock trading?
Stock trading is the buying and selling of stocks on a stock exchange. The idea is to buy while it is low in value and sell when it is high. However, some prefer to buy and hold with the hope of earning profits(dividends). Stock trading involves looking for opportunities in the stock market and capitalising on them.
What is a Speculator trader?
A speculator trader is a trader that buys and holds stock for a short period of time. Usually, speculative traders hold stocks for not more than 6 months. This requires a very good strategy and a more active approach to trading stocks.
These traders rely on their sophisticated trading skills to beat the market. The need to analyze the market almost every day has become a lifestyle since their trades are short-term, thus, always looking for the next stock buy.
Traders who take excessive risk tend to lose more by placing too many trades or positions in the stock market and closing trades within a short space of time, some close them within hours.
If you are looking to become a speculative trader you need to use money that you are comfortable losing. The risk is just too high for speculative investors, a few traders last for a long time trading; otherwise many lose their money in a short space of time.
Speculative traders don’t stay too long in the market before taking their profits, they mostly take their profits bit by bit capitalising on the number of trades they have placed. Mostly, emotions are the main reason for failure in this type of investments and therefore you have to manage them quite well when taking this route of investment.
What is a stock market investor?
These are traders who are looking to hold stocks for a longer period that is more than one year. Unlike speculative, investors hold stocks for a long-term and don’t let short-term market movements determine their buy or sell.
Our known stock market investors in South Africa are Pravin Gordon, Patrice Motsepe, Cristo Weiss and others. They have invested in many companies and held their shares over time. As an investor, trader dividends are the best way to recover your investment while the stock price is growing.
The good thing about investing is that in as much as stocks take a downturn they usually come back to their original price. Unless if the company is closing down you can lose all or some of your investment depending on the type of stocks you are holding.
How can you start trading stocks in South Africa?
If you are a first-time stock investor you need to keep things simple. To make it easy for you, find a broker or an investment broker to do this for you and give you advice when necessary.
There are many companies that can help you start building a stock portfolio whether you want to diversify or buy similar stocks it is all up to you. Companies like Allen Gray and Grant Thornton can help you get started. If you are familiar with the stock market or confident enough to start on your own then you can utilize this information below.
Steps to get started trading stocks in South Africa:
Open an account with a JSE registered brokerage
To get started, you need to open an account with a trading Brokerage. This doesn’t require much. You will need to provide the necessary details to open an account of which brokerages use a question and answer method to help you complete the signup process.
There are FICA documents that you will need to send such as a copy of your ID, proof of residence or passport copy. Should you not provide your FICA documents the Brokerage won’t allow you to withdraw money from your account. It’s best to provide this information as early as you open your trading account.
|Broker||RateWeb Rating||Promotion/ Key Selling Point||Minimum Deposit||Learn More|
||R 2 000.00|
||R 9 500.00|
Set a budget
You need to set a budget for your stock trading account. Make sure you use appropriate apportionment measures that will give you favorable results. If you are going to buy stock try splitting your budget into different categories.
Simply put, have a budget for telecommunications stocks such as Vodacom, banking stocks such as Absa group and so on. Furthermore, don’t risk most of your money on one stock like buying RAND Merchant stock with 50% of your budget.
Download a demo account
If you are not very confident trading stocks on your own, you can start by opening a demo account. This account is for free and you can use it to test your predictions before you start trading with your actual money.
Educate yourself with market and limit orders
Market orders buy and sell stock as soon as it is at its available best price. While limit order buys and sells stocks at a specific price that you have set. The ability to utilize these functions before you start trading will make you manage your account even when you are not available.
Have a stock trading strategy and keep it
If you are trading stocks you need to have a strategy. You can’t just start by placing trades and hope for the best. Your strategy is the one that will make you money.
You need to understand your strategy and keep using it if it works. A good trader never changes the winning strategy. If your strategy turns otherwise then you need to formulate a new one.
The best thing when trading is to keep your emotions in check. If you get impulsive trading you will lose and make wrong decisions. Trading stocks is a skill and requires some level of attention especially to detail.
Your strategy should be built on taking accurate measures and not letting anything that you don’t understand slip-up. Follow great investors such as George Soros and Warren Buffet. You will likely pick up some of the greatest strategies in stock trading.
Stock trading has become a trade and you need to be careful of how you go about starting. Make sure that the Brokerage that you are using is registered with FSCA. If your Brokerage is giving you troubles you can report them to the FSCA and the FSCA will deal with the matter accordingly. You can sign up for an account with IQ option or plus500 to get started.