Online trading is basically buying and selling securities through an internet-based trading platform. These online trading platforms are normally provided by online trading brokers in South Africa or the internet itself. While some platforms cannot be downloaded, there are now downloadable trading applications that can be used on your mobile device and personal computer.
Through these trading platforms, South Africans also get an opportunity to easily access their accounts and see what’s going on. It also enables you to transfer funds from the app to your South African bank account such as Capitec Bank, FNB, Standard Bank or Nedbank through an integrated online payment gateway. Some platforms come with an option for short-term or long-term investment option, overnight or intra-day. All these options can be found on your online trading platform or via SMS.
Best Online Trading Websites in South Africa for 2020
|BROKERS IN SOUTH AFRICA||REGULATORS||MAX. LEVERAGE||TRADING PLATFORM||MIN. DEPOSIT||ACTION|
|Regulated By |
FSB in South Africa
|Regulated By |
FSB in South Africa
|400:1||Web Trading, MetaTrader4, iPhone App|
|Regulated By ASIC, IFSC, CySEC||500:1||MetaTrader4, MetaTrader5, WebTrader|
Online trading transactions in South Africa
In order for you to manage all your transactions, you need to have the below two types of online trading South Africa accounts.
- Trading account – as a South African resident you need to have a trading account which you will use to direct orders in the stock market. It helps gauge the effectiveness of the trades carried out by showing evidence of the shares sold or purchased and the profit gained.
- Demat account – this is referred to as a ‘bank’. When you buy shares, they go straight into this account. When you sell shares, they are pulled out from it.
How does online trading work in South Africa?
Online trading in South Africa works the same like placing an order on Amazon online. After selecting which product you want to purchase, you will see the price and how much will cost you. All this can be seen in your account. For example, if you want to buy or sell stock, you specify how much you want to sell or buy by clicking the buttons on the trading platform. The amount specified at the beginning will be deducted from or added to your trading account.
As mentioned above, you can trade a wide range of products including futures, bitcoins, CFDs, commodities and equities.
How to Make Profit from Online Trading South Africa
The online trading market is the largest single market. Over $5 trillion dollars moves through the online trading market every single day in the form of currencies moving from bank to bank or from business to business or even from individual to individual.
Many regular stock traders have never heard of the online market. This is because the trading markets have only been open to public trading since 1995. Before 1995, only banks and large corporations traded on the market to obtain the right amount of foreign currency they needed for a specific project.
The online market is now expanding rapidly, as many individuals are taking advantage of the advent of online stock trading, which has resulted in a competitive market between firms offering online trading services. It has also resulted in enormous amounts of competition between firms to increase amounts of leverage and decrease fees. Some companies now charge minimal fees and offer leverage as high as 100:1, which means that you can earn a profit off of $100,000 worth of trading, even if you only have $1000 to trade.
To make things even better, traders can only choose between 16 different currencies, allowing them to keep an eye on every currency for which they are speculating. In addition to this, currencies are far more stable than commodities, which means that traders have a much smaller chance than stock traders of incurring massive losses over a short period of time. In order to lose a lot of money, a trader must continually make ill-informed decisions.
If you are planning to start a career in online stock trading, you may want to consider checking out the online trading market first. With high leverage, stable growth rates, and relative predictability, it will be far easier for you to exploit deviating growth rates to make a profit at the end of every day.
Key features of trading online
Trading comes with the benefits that most traders enjoy. If you are a beginner, after reading this online trading guide, you will be able to get started with online trade. Check the below important features of trading:
- Trade on the move – you can trade online anytime and wherever you are using your mobile
- Instant access – you can access your trading account anytime, for as long as you have internet connection
- Live stream price – you can customise multiple watches according to your preferences
- Integrated trading – the combination of trading, bank and demat accounts allow you to easily transfer funds and shares
- Payment gateway – you can transfer funds from more than one banks through an integrated online payment application
- Multi exchange access – currency futures, trade in equity and commodity
- Market watch – you can create more than one ‘market watch’ lists so that you will be able to see different share prices
- Expert advisory – your relationship manager provides you with an expert who will help you should you need anything related to the account or trading
How to trade online in South Africa
As mentioned above, trading involves buying and selling securities through the internet. Now that we have explained how online trading works, it is time to put into practice what we’ve discussed in our South African online trading guide. Trading is financially rewarding but bear in mind that there are risks involved. You might lose all your money if you make hash decisions or if the price does not move in your favour. In order to trade successfully, you need the following:
Open trading account and Demat
In order to start trading, you need to find an online trading broker and create an account with them. Our trading partners offer reliable trading and Demat accounts services that are easy to maintain and are affordable. It is important to check if the broker is registered and is a member of all the stock exchanges.
Learning the basics – stock market
Gain more knowledge by taking your time to do your research and ask someone to mentor you if necessary. Visit online trading websites and financial news websites to learn more about the stock market and currencies. Google trading terms and make notes so that you don’t make mistakes when trading. You can also enrol in online courses for more knowledge about this market.
Demo account (online stock simulator)
There are hundreds of online stock simulators which will help you understand online trading better. Demo accounts will help you see how trading works and when you lose money, it doesn’t personally affect you since it’s just fake money.
Trading strategy and plan
Come up with a trading strategy and draft a plan. Before you start trading you must know how much you are willing to spend and how much you are not willing to lose. You also need to research about the trading company or the broker you are going to trade with.
Popular Online Trading platforms in South Africa
- Floating Spreads
- Spread Betting
Online Trading 101 SA
Online trading is the easy way to buy and sell shares from the comfort of your home. Finding a company that provides you with an online trading account can be difficult. There are many companies that will offer you excellent services for trading online, but you will want to find one that meets your needs and requirements.
You shouldn’t go with a company just based on their reputation; instead you should see what they can offer you because your needs as a trader will be radically different from someone traders who have different levels of experience and who have different proclivities toward risk and security.
Online trading is no different than offline trading; it requires the same amount of risk plus the same amount of skill. You will need to be well-disciplined and goal orientated, as these are the main skills that separate winners and losers in the trading world. Trading, especially online trading requires you to put limits on what you spend and your number of transactions. Also, research is vital if you want to uncover important tips to greatly improve the quality of your online trading portfolio-and also to avoid getting bogged by purchasing shares from companies in the midst of a lawsuit or poor management.
So if you are looking to trade online, research some companies and see what they can offer you.
Online share trading can be a good way to make a lot of money or to bring a small residual income to supplement your regular income. Of course, you will need money to get started; and even after you get started, it will still be a dangerous game loaded with risks.
There are risks attached to online share trading and you have to research these and see if you are prepared should the worst happen. If you are determined and goal-orientated, then you will need little else to succeed at trading. If you trade emotionally and fail to be patient and analytical, you are almost guaranteed to fail, even if you get lucky a couple of times.
Advantages of online trading
Trading online comes with advantages. We have identified some of the most common benefits that come with trading. Here are the pros below:
Buying and selling stock is very cheap online. Some brokers offer discounts on trades and stock.
Trading stock is more flexible and you have more control over your trading account. With mobile apps and online trading platforms, you can start trading almost immediately and this has benefited a lot of investors, traders and banks.
Ability to avoid brokerage bias
You can avoid brokerage bias when you take trading into your own hands. Sometimes trading advisors can give you advisors which will benefit their brokers. But with this, you have an option whether to take the advice or reject it.
Access to online tools
You can now optimise your trade through online tools. Most brokers in South Africa offer tools to help you trade more successfully. You will be able to access valuable information, view graphs and charts and many more.
Monitoring real time investments
Most online trading websites offer stock quotes and trading information which helps people to see how their investments are performing in real life time. You can now stream live data using some trading apps.
Online trading brokers also allow traders to sell even a single share. There are no odd problems hindering your trading account.
Less paper work
When it comes to making transactions, there is less paper work. There’s no need to sign papers in order to get your money. You only send an invoice to your broker and claim your money and the transferred funds will be in your account in a couple of days.
Disadvantages of online trading
Now that we have discussed the advantages of online trading. It is time we focus on the negative aspects of online trade so that you can develop a strategy that best works for you. Below are the disadvantages of internet trading:
Easy to invest more money too fast
Trading stock is easy since you just select the amount and press the buttons. However, there are risks involved if you over-invest or make investment mistakes. Start small and don’t invest too much to avoid losing money.
Personal relationship with brokers
You don’t have any personal relationship with the brokers. If you lose your money, they won’t pity you or help you get your money back. Experts advise traders to do more research and have knowledge about online investment.
Stock trading is very addictive just like online gambling. You need to be a disciplined person to avoid becoming addicted and spending all your hard earned money on this.
Since online trading is an internet based. Anything can happen. You need to have an uninterrupted network connection because you have slow network, you might lose out on a lucrative trade. As an investor or a trader, you must always have a backup plan or an emergency plan should you internet cut you off.
Buying errors due to computer missteps happen all the time. You can assume that a trade was not completed when your computer froze or had malfunction. This will cost you lots of money because you might feel like you have to complete the trade and end up trading more than twice.
Trading online is more dangerous due to scammers robbing people online. You might think the online trading website is legit and registered but only to find it’s a scam. So check this kind of information before providing your bank information to an online broker.
Different types of online trading
Most people only know stock trading and forex trading. There’s more, there are different types of trading online and investors have a wide range of different types of online trading to choose from. Some investors prefer day trading, while some prefer short-term or long-term trading options. There are three categories of online trading options and they are:
- Short-term trading – this type of trading starts from two days to a week
- Medium-term trading – is between weeks and a few months
- Long-term trading – this involves trading securities and it can last for years
Each category comes with benefits and terms and conditions. Whatever the type you choose, make sure that your trading style suits your lifestyle. You cannot choose a short-term (day trading) and expect to be a successful trader when you have a 9-5 job. Also having an online trading style that suits your trading strategy is a key to becoming a successful trader.
With the rise of technology, traders have an option to choose from a wide selection of trading strategies and online trading products. Trading products we’re referring to swing trading, CFDs, forex, stock, day trading and many more.
Common types of online trading South Africa
Below are the most common types of trading online that most brokers offer their traders and investors.
Day trading is speculation in securities, specifically buying and selling financial instruments within the same trading day. This type of trading is the most common among the traders. People who want to make money in a short space of time tend to opt for this one. They buy and sell stock based on their speculations.
Different types of day trading strategies include some of the following things:
- Price Action Trading
- News Trading
- Rebate Trading
- Market Making
- Pattern Trading
- Momentum Day Trading
Position Trading is the longest-term online trading type and can last for a few months to a couple of years. With position trading, you need to do an intensive research before buying and selling securities. Identify trends and take advantage of them. You can make lots of money with position trading. Traders buy the stock at the beginning of the trend and sell it at the end of the trend or when the trend reached the height.
Online CFD Trading
With CFD (Contract for Difference) Trading, you are able to speculate on the falling or rising prices of fast-moving global financial markets. You can trade instruments such as treasuries, indices shares and commodities. This popular form of derivative trading is popular among the traders and investors. Once you start understanding CFD trading, you will be able to make millions if you stick to your online trading strategy.
Scalping trading is an online trading style that takes advantage of profits when there are gaps in the trend. You can make lots of money with scalping trading. In order to successfully trade in this, you must have a good exiting strategy; know when to exit the position. You can lose a lot of money if you don’t know what you are doing.
Swing Trading is a short-term trading type that is used to trade options and stocks. It usually lasts two to six days but it can also last until two weeks. Traders who trade under this type of online trading utilise technical analysis to keep an eye on stocks with temporary price momentum.
Online trading tips South Africa
Anyone can make lots of money on the stock exchange through online trading. But getting it right is an on-going process and even seasoned traders and investors still make mistakes. All traders should be prepared because anything can happen. Some of these online stock trading tips might work for some people and don’t work for you. It is advisable to also do an intensive reading.
Below are simple online trading tips that one should consider when buying stock online:
Choosing when to trade
As an online trader, you must remember that you can make lots of cash quickly and lose it very quickly if you make mistakes. Firstly, decide if you want to become a day trader or not. A day trader is someone who buys stock in the morning and sells it by the end of the day. Secondly, a speculator trader or investor buys and keeps the stocks from two days to six months. Lastly, a long-term trader is someone who keeps the shares or stock for more than three years.
As an investor you need to be patient and know that you won’t become rich in just one day. Don’t overtrade and don’t react to the market ‘noise’. Share-price fluctuates; don’t get to emotional because you will end up buying and selling stock too quickly. You will lose a lot of money.
Invest in several stocks
There is a saying that says “don’t put all your eggs into one basket”, this is very important. Do not invest all your money with one online trading company or a broker. Invest in several stocks and in different companies.
Quality over quantity
Only purchase quality shares. Don’t buy shares for the sake of buying. Make sure that the company has been around for years and they are legit. Get your hands on the ‘Profile’s Stock Exchange Handbook’, the book is published four times a year.
Buy shares and stock after doing homework
Only buy stock after conducting your research. Do some background checks about each share. Look at the Price-earnings ratio. Some professional traders say they buy stock when the price-earnings ratio is between 10 and 20. Below 5 means it is too risky, so is above 30.
Carefully watch the price movement of shares
It is always important to watch the price movement of shares very carefully. Develop a spreadsheet where you record daily rate.
Monitor global trends
You can keep an eye on global trends such as the Chicago Board Options Exchange Market Volatility Index.
Start small before investing big
You need to start online trading with small amounts before you increase your investments. Investing big money comes with confidence. As for beginners, take your time and learn about advantages and disadvantages of investing too much money and too quickly.
Get a mentor
As a beginner, you need to get a mentor who will help you understand stock trading better, but don’t rely on him or her for everything. Also, you must have a basic knowledge about online trading before you could approach someone to help you. Bear in mind that nothing comes for free, you will need to pay the mentor for coaching you.
Choose your trading style carefully
Conduct a research on different types of trading styles and choose which one works best for you. First, you need to know what kind of stock trading online you want to do. As mentioned above, we have “a day trader, a speculator and a long-term investor. ”
Your trading style should match your lifestyle
If you choose to become a day trader, it means you will be required to be on your computer during the day. Choosing a day trader while you have a nine to six job won’t work for you. Make sure whatever the style you choose, matches your lifestyle.
Choose a broker that matches your trading style
If you choose a day trading, know that the fees are very expensive. Therefore, it is advisable to also choose a broker that has reasonable fees.
Associate yourself with successful traders
Identify who are the best online stock traders out there. Become friends with them so that they will teach you more information about trading. They will give you more online trading tips.
Trading Online FAQs
What are the risks of trading online in South Africa?
There are a couple of risks that come with online trading. One of them is online hackers. Hackers are here to steal your username and password. Once they stole your username and password, they can easily access your account where they can sell and buy whatever they want. They will sell all your shares and with the money, they will use it on micro-caps.
Where can I get more information?
It is important to do your own research or go to our “online trading for beginners” page to learn more about online trade. You can also find yourself a mentor, someone who will coach you and give you advices about trading. But you must already have a basic knowledge about trading online.
What kinds of securities can I buy online?
In South Africa you can trade commodities, shares, futures, stock and many more. Check with your broker what kind of securities they offer.
Is online trading safe?
As mentioned above, online trading is safe but there are risks involved. You just have to be cautious of them.
Can I lose all my money trading online?
Yes, you can lose all your money especially if you are greedy. Remember you cannot become a millionaire in just a day. You need to start small. South African brokers tell traders don’t invest too much and too quickly. If the price does not move in your favour, you might find yourself losing a lot of money. Also, you can lose all your money if your account was hacked or make mistakes.
Yes, you can become rich but the trick is, develop your own trading strategy that will best work for you. If a strategy doesn’t work for you, come up with another one and have a goal in mind.
What are the best online trading platforms?
There are a couple of online trading platforms that are recommended by experts. We cannot say exactly which one is the best. However, different brokers offer a wide range of trading platforms to choose from.
What is the best stock trading site for a beginner?
Any stock trading site can claim to be the best website for beginners. Don’t fall into this trap. Some websites are doing this for SEO (search Engine Optimization) purposes. It is advisable to always read beginners guide in order to learn about different types of stock trading requirements.
How do online trading platforms work?
You download an online trading platform on your personal computer or your mobile device. Most online brokers offer downloadable platforms. Once you have downloaded the platform, you will sign in using your username and password.