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 Forex Trading Brokers in South Africa
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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?
Online trading 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.
Key features of online trading
Trading online 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 SA
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
- Floating Spreads
- Spread Betting
Online Trading 101
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 online trading, 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 do online trading, research some companies and see what they can offer you.
Online 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 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 online 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
Online trading comes with advantages. We have identified some of the most common benefits that come with trading online. Here are the pros below:
Buying and selling stock is very cheap online. Some online 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 South African online trading brokers 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 online 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 overinvest 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.
Online trading 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.
Frequently Asked Questions about Online Trading
What are the risks of online trading?
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?
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. 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.
Can I become rich with online trading?
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 online brokers offer a wide range of online trading platforms to choose from.
What is the best online stock trading site for a beginner?
Any online 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.