Electronic Trading Platform in South Africa
What is an electronic trading platform?
Online work on the internet in the financial markets or trading is now seen by many users as a promising and highly profitable way of earning income. Yes, here you get independence and real conditions for good earnings on the Internet.
But as in any other sphere of activities, here a potentially successful trader needs certain technical tools, optimal conditions and other factors determining the effectiveness of work. In this case we are talking about the electronic trading platform where the user carries out financial operations and strives to make a profit.
Trading platforms in the exchange world are online brokers that provide you with the ability to manage, secure and execute your trades online from your computer.
What are the functions of this platform? In fact, you may come across different brokerage programmes. Some will only offer you a trading terminal and some will offer much more. You need to choose a broker that will give you the maximum functionality in one place. In the process, you'll be comfortable that everything you need is always at your fingertips on one site.
Managing your account
A brokerage account is a special account for trading securities and currencies at an exchange. The first and perhaps foremost thing to look out for is that the platform gives you the convenience of managing your own brokerage account. In your personal account, you will see all your trading history and can see your profits and expenses. It's easy to withdraw money from your account and deposit it in any way you want.
When choosing an electronic trading platform, traders and investors should consider both the commission and the features available.
Analytics on the platform
Technical and fundamental analysis have one main purpose, which is to predict in which direction prices will move in the future. The difference between these two types of analysis lies in the forecasting tools.
A vital part of a trader's success, especially for those who trade frequently, is the ability to assess patterns in trading data. Technical analysis methods can remove emotion from the trading decision. A technical analysis system can generate buy and sell indicators and help find new trading opportunities. Today, with the help of brokerage platforms, technical analysis tools are available to all online traders. Such tools are charts, indicators, support and resistance levels, etc.
Fundamental analysis (FA) is a method for predicting prices using a company's financial performance and calculating a firm's intrinsic value. When it comes to trading currencies or commodities, this analysis will look at the political, social and economic factors that can affect the asset. On the platform, you will see an updated economic calendar and news feeds to assist you with your analysis.
Useful features for the investor and trader
So, on the platform you can choose an asset, analyse it and buy it with the help of a brokerage account. So what else could a trader or investor need to be successful? Let's look at some of the factors that tell you that you have a great platform in front of you:
- Mobile App. Trading is really moving faster and faster to the mobile version. Today, almost everything is stored on a smartphone, and I don't need to tell you why it's convenient. In the case of the brokerage app, it gives you the best control when you don't have a PC handy, especially as the functionality of the app is very broad and will allow you to work anywhere and anytime.
- Learning on the broker's website. On the platform, you can find up-to-date training videos on trading and investing in different assets. You will also find a lot of useful information on a variety of topics in the FAQ section.
- Live chats with other traders will help you navigate through any unclear situation, you can consult and share your opinions with each other, but remember that all responsibility lies solely with you.
- The hotline will always give you advice on how to handle any situation you might have.
- Preferred orders function. The pending order is a feature which allows the trader's sell or buy request to be automatically executed when the price reaches a certain level. That is, if the price falls or rises and reaches the required level, the pending order will be triggered, and a deal will be opened.
Finally, make sure that the broker is licensed and regulated by the relevant authorities. Cooperation only with licensed companies - a license from the regulator means that your partner is working in the legal field and there are no possibilities for fraud and manipulation on its platform.
Types of assets on an electronic trading platform
The best brokerage platforms can offer you the best assets to trade. Today, everyone wants everything in one place, and traders are no exception. You don't have to go from one broker to another, you have everything at your fingertips. It makes it easier for you to diversify your portfolio.
Diversification - investing funds in different assets in order to reduce risks.
Ideally, this risk reduction should have a minimal impact on the profitability of the portfolio. In order to diversify risks in investments, it is customary to include different classes of financial instruments in a portfolio, such as stocks and commodities, as well as different financial instruments of the same type - shares of several companies.
Electronic platform for stock trading
You can make money from buying stocks in two ways: on the growth of company's capitalization and on dividends. Let's say you buy a stock. If the business expands and profits increase, the company's shares will increase in value - then the investor can sell the shares for more than he bought them. In this case, he is said to have made a profit on the rise in capitalization or on the rise in price.
Dividends are part of the profits that the company divides amongst its shareholders. Often, investors prefer to hold dividend stocks in their portfolios in order to earn passive income on a regular basis. Not every company pays out dividends: this depends on the company's dividend policy, the size of its profits, and also on what shareholders decide at general meetings.
When choosing a stock, consider its liquidity, price and past performance as well as the company's financials.
Electronic platform for forex trading
The term currency pair itself implies the presence of two traded currencies. In other words, it is the ratio of the price of one currency to the price of the other. The most famous currency pair with high liquidity is EUR/USD. This pair shows the ratio of the euro (EUR) to the American dollar (USD).
Nowadays almost all known currencies, which are gathered in pairs, are used for trading on Forex. Historically, currency pairs are divided into 3 subgroups - according to their popularity, liquidity, trading volume and activity and other values:
- Majors. This is the smallest, but the most important group. Major pairs or simply majors have the highest and most significant values for liquidity, frequency of use, total trading volume and turnover on the world currency arena. For example, USD/CHF (US Dollar vs Swiss Franc).
- Crosses. This group includes all possible combinations of the major currencies, but the US dollar is not included. This group is called secondary (minor) currency pairs. In the trader's environment they are called cross rates, cross pairs or simply crosses. For example, GBP/CHF (British pound vs Swiss franc).
- Exotic currency pairs. It contains all currencies, which were not included into the previous groups. These are currencies of countries with weak and emerging economies, currencies of small countries, etc. The base currency in such pairs is, as a rule, the currency of a major group. Very few if any exotic variants are found, where both currencies are not major. For example, EUR vs DKK.
Electronic platform for options trading
An option is a contract by which the buyer of an option acquires the right to buy/sell an asset (good, security, currency, etc.) at a specific point in time and at a predetermined price.
By acquiring an option, the buyer pays the writer a premium - a cash consideration for the right to buy (sell) the underlying asset under the option contract. It incorporates into its value the risk of an unfavourable change in the price of the underlying asset.
Generally, an option is used by buyers to hedge (reduce) risks or to make speculative profits. The sellers of this financial instrument have one goal - to make money on its realization.
Electronic platform for commodities trading
Commodities are the oldest form of financial instruments. The commodity market is almost as old as human civilization itself. Today, commodity trading is the backbone of the global trading ecosystem. With the advent of online commodity trading, private traders have gained access to global commodity markets with a relatively modest amount of capital.
Commodities have become a popular hedge against inflation and portfolio diversification. For many traders and investors, commodity trading is the preferred way to protect funds and reduce the overall risk to their portfolios.
The most popular commodities that you will find with any broker are gold, silver and oil. They are usually traded in futures or CFD contracts.
Electronic platform for ETF trading
An ETF (Exchange Traded Fund) is a stock exchange-traded fund. Simply put, it is an index fund whose units (similar to shares) are traded on the stock exchange.
An ETF is based on a set of assets. These assets may be stocks, bonds, futures contracts on currencies or commodities, chosen according to a certain principle. As asset values change, so do index values and, accordingly, the price of the ETF.
An ETF is the most convenient way to form a broad, diversified asset portfolio by purchasing shares of one particular fund. In this case, an ordinary investor avoids the necessity of opening a number of different accounts, on different electronic trading platforms, with different kinds of expenses.
Electronic platform for cryptocurrency trading
Trading in digital currencies is becoming more and more popular amongst professional and beginner traders.
A cryptocurrency is an encrypted, unregulated digital asset used as a counterpart to a currency in exchange transactions. Cryptocurrency has no physical form; it exists only on an electronic network in the form of data.
Cryptocurrencies are investable because their prices are not fixed. Consequently, it is possible to profit by making investments in anticipation of the price of a virtual currency rising or falling, which is seen as promising in the future. In addition, some cryptocurrency exchanges provide cryptocurrency derivatives trading services, and investors can make money on falling cryptocurrency prices. Care must be taken when investing and trading in cryptocurrencies because there is a risk of loss on trades.
Electronic platform for indices trading
A stock (stock exchange) index is an indicator of the overall market condition or of a certain asset class. By its nature, an index is a relative value, a generalized indicator of changes in the quotations of a group of securities for a certain period of time.
A stock index is not an asset: it cannot be invested in directly. However, we do have the option of investing in mutual funds and exchange-traded ETFs that build their portfolios around the stocks of companies in the index calculation base.
So, you can choose any or several assets to choose from, and you are sure to find the best option that suits you best.
How to start using an electronic trading platform in South Africa?
It is very important that you know how to use an electronic trading platform in South Africa if you plan to develop your business in the stock market industry. It can make your job as a trader or investor many times easier. The internet has made financial transactions and business easier, so it is advisable that people who want to get involved in the financial markets know how to take full advantage of it.
The first thing you need to do to use a brokerage website is to create a personal account. It's a simple registration, it will not commit you to anything. Fill in a short form and wait for an e-mail. After that, complete your registration.
After your successful registration, you will have the possibility to practice your trading using a virtual account. Play money will be automatically credited, which is enough to enable you to afford to buy various assets and to find your trading style and strategy.
You will have access to the tools available on the platform, so you can get a feel for the real trading environment.
The best choice for a beginner is to register a demo account on some broker's website, to get an idea of how the system works.
How to open a brokerage account
We have already talked about what a brokerage account is and what it is for. Without it, it is not possible to make a transaction to buy any asset. On a platform, you will usually need a small amount of money to open one, which is available to every player.
If you are new to the stock market, it is highly advised that you start by using micro sums. This can be an investing portfolio in which only a small proportion of your total capital is worth investing. This will allow you to learn the ins and outs of the stock market without having to risk an excessive amount of money. As you get used to the system, you can increase your investment and become more confident.
By having a brokerage account, you can make transactions with leverage. The ratio of equity to leverage on an exchange is referred to as 'leverage'.
Leveraged trading is the conduct of trades using leverage, allowing the trader to execute trades using borrowed funds which are given against a small deposit or margin.
So, exchange trading gives a great opportunity to multiply your capital. Do not stop to study and constantly practice and success will be on your side, good luck!