So you want to learn how to trade shares but you are not sure where to start? First of all you need to decide which share you want to trade. You get such a large number of stock exchanges that you will need to narrow down what exactly it is you want to trade. If you want to trade local south african shares you would be looking at the JSE , Johannesburg Stock Exchange. If however you feel that the rand will carry on weakening then it would be wiser to trade another stock exchange such as the New York Stock Exchange or the Australian Stock Exchange.
Let us say that you would like to trade the New York Stock Exchange, where would you begin? If you take into account that you probably do not know too many of the companies listed on the NYSE it would be wise to trade the whole stock exchange as an index. Trading an index allows you to take part in a stock exchange without having to do research on each company that you trade.
Two well known indices (indexes) are the S&P 500 which is the top 500 companies by Standard and Poors and the JSE Top 40 which is the Top 40 companies on the Johannesburg stock exchange. You can buy these as a unit where they are already combined spreading all the risk out over these companies as a whole.
How effective is it to trade indices?
Well it is very simple to trade indices, you just buy and wait. As to how effective, well the answer is simple, most large Fund Managers and Asset Management Companies only trades indices and ETFs (Exchange Traded Funds) for their clients and very rarely buy or sell shares in single companies. So the answer is that it is probably the safest and most effective way to start trading the market.
How do I start?
Find a FSB Regulated Broker
Make sure they offer indices.
Deposit a Small Amount to Start
Buy an Index and Sell when you have Made a Profit
Request a withdrawal from your broker.