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In South Africa there are various ways to get involved with the stock stock exchange. The fist thing you will require is to get a broker which allows you to buy and sell shares online. The whole stock exchange system has been made electronic. This allows buyers and sellers to transact from the comfort of their own homes by means of a trading device which could be a phone, tablet or PC. The only catch is that you will require an internet connection.
Types of Stock Exchange Brokers
Direct Share Brokers – You get brokers which allow you to buy and sell physical shares. This allows you to hold onto a share which makes you a shareholder of the company which you purchased. You can sell the shares when you like but there has to be a willing buyer. This type of trading is the traditional way of trading shares and the advantage is that you actually own a part of the company in which you invested.
CFD (Contract for Difference) Brokers – These type of brokers focus on the price of a share rather than the physical share itself. You buy or sell the price not the share / equity. This is also called spread-betting and as you are speculating on the price it could be seen as closer to gambling than trading. The advantages of trading CFDs vs Physical Shares are great though. You do not require a willing buyer to sell a CFD. If the price is right you sell the CFD back to the broker and take your profit. The commissions on CFDs are far less than that of buying physical shares. You can use leverage on CFDs , this allows you to trade a lot more than the initial invested amount by a sort of lending structure called leverage. Lastly and very importantly you can go short with CFDs. This means if you predict the fall of a share / company correctly you can make a profit although the stock falls.
In South Africa we have many stock exchange brokers and stock exchange platforms. You really need to do your research before choosing a broker. These steps may help :
Always select a FSB regulated brokerage.
Start with a small amount.
Do 5 trades and request a withdrawal.
If you were able to follow these steps chances are you will be ok. If you have any issues with a broker it is very important to report them to the FSB so that other people do not go through the same problems as you.
Once you have an account open with a Stock Exchange Broker you will require training. Some training is free with the broker, this often just covers the basics. Use google to find stock exchange courses that are of value, make sure to do proper research before jumping into a course and lastly remember that trading shares will not make you a millionaire over night no matter what anyone says.
So you want to start trading forex and you reside in South Africa? Here are the steps you need to follow.
Choose a Broker
This is your choice of course but there are a few minimum requirements to look at when choosing a broker, you will start by searching for FSPs or Financial Services Providers that are registered and in good standing with the FSB. Once you have found a list you need to look at the platforms / trading software each broker provides. If you are purchasing a product from a developer make sure to ask which platform their software is compatible with. Lastly, give the broker a call and ask a few questions. The questions need not be technical, the way in which the questions are answered will give you a good idea of the company you are dealing with.
Do a course & get trading tools.
With all the crap out there it is difficult to decide which education / software providers are legit and which are not. To get around this ask for a track record in the form of a statement or even better investor login details. If the firm does not want to give you a track record it means they either don’t have one or don’t have a good one. Why would you hide something that proves you are good at what you do. This will very quickly narrow down your options.
Open a demo Trading Account
Open an account with the broker you chose in step 1. Make sure to start with a demo account for you to practice on while learning your trade. Do not get pushed into trading on a live account before you are ready. Remember that the broker does not make any money on a demo account so they will push you to open a live account as soon as possible.
Make a Profit
Make sure you are profitable for at least 3 months running before trading live. Yes this sounds like a long time but remember your hard-earned money is at risk. Stick to the 3 month rule, it will do wonders for you. If you are unable to make profit for 3 months running it means you are not using the correct system, do ore research and use another tool until you pass the 3 months rule.
Open a Live Account
Here it gets interesting. So you have prepared yourself and have become confident in your system. The first thing that happens on a live account is you get a brain shutdown. Why does this happen? Well its simple, you can for the very first time see YOUR money move up and down with the markets. It is very important to stick with the system you used on demo, including relative lot sizing and risk protection.
Trade and Profit
These are the steps … in a nutshell. This process took me well over 5 years before I really understood what I was doing. There are also much better courses and software tools then when I started out. It is very important not to confuse trading and gambling. Make good decisions and stick to your plan and risk management and you will be just fine.
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What is covered?
- MetaTrader 4 Overview
- How to Open A Chart
- How to Open and Close a Trade
- Stop Loss and Take Profit
- How to Load the SAFX Magic Code System
- Rules of the Magic Code System
- Putting It all Together
- Do your first trade.