Shares, ETFs, Commodities, CFDs and Cryptocurrency have all shown great returns when traded in the correct way and at the right time. And with many of these trading assets being available to trade online, it is becoming more accessible and cheaper for South Africans to do online trading South Africa.
But with so many options, this can raise some questions. How to do online trading in South Africa? What is Online Trading? And so many more. We are going to try and give you as much information as possible in this article.
What is Online Trading?
Back in the good old days, traders and investors would have to trade in person or via the telephone. This meant more man hours and much higher costs. It was also a much slower process.
In the new age, there are many easier options available thanks to the age of technology and the internet. Online Trading is one of those features. This allows traders to trade online in South Africa using trading platforms in web and app form. These platforms need to be registered FSPs and work with registered brokers.
This does mean that trading happens faster and is more cost efficient.
Standard bank lists these as two advantages for Electronic Stock Exchanges:
- It reduces the risk of investing by providing a transparent pricing mechanism for trades.
- The listed companies are policed. A stock exchange operates in a strict regulatory environment and businesses have to comply with a strict list of requirements.
Other advantages can include:
- Lower Costs and commissions
- Easier to use
- Faster to use
- Access to leverage
How to check if the platform is legit
With so many scams around this is a valid and necessary question that needs to be answered. Luckily, South Africa has very strict financial laws protecting you as the consumer from fraudsters and scam artists. These platforms are regulated by a number of organisations in South Africa, FSCA being the main regulator.
This body ensures financial institutions are registered and regulated and clamps down on those who are not legit. Check here to see if a broker or service provider is registered.
How to trade successfully online
Trading online is a skill and takes lots of practice. Some traders take years to master the art of trading. Make sure you take the time to learn and practice using courses and demo accounts to do this. Many of the registered platforms for online trading in South Africa offer free demo accounts to assist you in getting started.
A few tips given by Investopedia:
- Start Small – There is no need to rush into things. Start small and learn. Then you can add more money to you investments.
- Know your risk – Risk is a crucial part of trading. Too much and you can lose everything, too little and you won’t be profitable. Work with a trading professional or advisor to manage your risk adequately and efficiently.
- Cut your losses – You win some, you lose some. There is no need to hang onto a losing trade, if it is not working then it is time to cut your losses.
- Stay cool – Emotion can often get the better of us. But in trading, you need to stay cool and focused to ensure you trade effectively using facts and data.
Trading is a complicated skill and takes time to master. While there may be many people and platforms claiming it is an easy way to make money, it is vital to speak to a registered financial advisor or financial professional to ensure that trading meets you risk profile. Online trading South Africa can be a good investment and source of income depending on your circumstances.
Make smart decisions and consult your financial advisor!