How to Start Trading.

Hello everyone! A friend of mine was speaking to me about stocks recently (if it was really anything else, it wouldn't be here. haha). He mentioned I should blog about "How to start trading." Strangely that topic never hit my thoughts once, but here it is then!

Starting a trading account really isn't that difficult! In most cases, even free!

First, before you start trading, allow me to recommend a series of videos from SGX website(in case you're still caught in a blur with acronyms, it's Singapore Stock Exchange). I actually found the SGX Investor Guide a little useful if you're completely new. Trust me, it's a little boring at first, but just swallow it. Bad tasting medicine doesn't mean it doesn't help.

Well you must be convinced to invest if you have read my blog to date. Now you need a broker to manage your buyings and sellings. There are many brokers you may use. Do check out the list of brokers from the SGX website. Alternatively, you may simply click the link Directories of Securities Members in Singapore.

I am currently a member of ONE of the securities firm listed. I think I should not mention the name to not advertise or be bias against any other firms.

Photo courtesy of http://www.flickr.com/photos/jmoffat/3809167123/ 

What's Brokerage Charge?

Simply, the sum of money that brokers charge you when you buy/sell stocks. Currently I'm paying $25 or 0.28% whichever is higher for trade (For SGX only). This price is correct as of this date. Well, do your sums and predictions well. If you trade $2k once, it's $25. If you trade $2k on two separate dates (i.e. $1k on Monday, $1 on Tuesday), you'll be paying $50 of brokerage charges! This will probably eat into your dividends or you probably have to wait for your share price to go even higher to make a profit. Plan well before you click "buy!"

Am I only allowed to trade SGX by using the securities firm given on the SGX web site?

Depending on the firm, most firms allow you to trade foreign shares like US as well.

So what is the minimum number of shares do I have to buy?
If you are planning to trade in SGX, the minimum require to buy is 1 lot. This equates to 1,000 shares. Therefore, if the stock cost $1SGD, you have to purchase $1,000SGD worth of stocks.

Oh talking about US shares, they're so expensive! and they're in USD! How does a small investor like me buy?
No worries! The US market do not require you to buy shares in lots. You can buy 5 to 10 of its shares. Well then again, it doesn't make any sense to buy $50 worth of US shares and pay brokerage charge of $40USD just to buy it (Firms may charge differently for US market). Again, planning. Know what stocks are of potential VALUE. Expensive doesn't mean it's the best. (Typical Singaporean mind set.. paying more means better!)

So how to buy and sell?
Depending on the firm, some firms require to call them up directly and some have an online system whereby you may do your trading online. For example Phillips Securities.

Must I pay to start an account?
Again, depending on the firm, some firms require an initial deposit of maybe $1,000. This is to prevent people from randomly opening accounts that are not active. Generally most firms do not require a deposit from you.

After I got an account, who else can help me?
Different types of account provides different services. Some advisory accounts provide you with advices, with a price of course (nothing comes free). You may also be interested in attending seminars conducted by SGX Academy SGX Academy Site. Some securities firm also conduct their own seminars, you may take a look at their websites.

Most importantly friend, have fun.