How to Trade Shares in South Africa?

South Africa is one of the primary financial hubs in Africa. The country is renowned for a solid banking system and it boasts stringently regulated, sophisticated financial markets. The Johannesburg Stock Exchange (JSE), the country’s national stock exchange, ranks 19th among the world’s bourses by market capitalization, which tops US$ 1 trillion. 

The JSE is Africa’s oldest and largest stock exchange, and home to a wide range of financial instruments. The JSE’s market depth and liquidity, supported by a strong system of regulation, makes it an attractive destination for local and international investors who want to gain exposure to companies and assets in South Africa or the African continent. 

Assets listed on the JSE can be traded directly on the exchange, using local stock brokers, or on online trading platforms as contracts-for-difference (CFD) assets. There are significant advantages of trading stocks as CFD assets as opposed to trading them on the exchanges.

Why Should You Trade Stocks as CFDs?

Here are five advantages of trading share CFDs: 

1. You have the opportunity of trading with leverage. ThinkMarkets is one of such brokers that offer CFD leveraged trading on share CFDs.
    

2. You can profit from rising and falling prices. Use buy orders to benefit from prices that are climbing, and use short orders to profit from falling prices.
    

3. You can trade thousands of stocks from different exchanges across the world all from a single platform such as the MT4/MT5, and the ThinkTrader platforms offered by ThinkMarkets
    

4. You can use the tools on the charts to perform analysis of the stock you intend to trade.
    

5. Share CFD trading is commission-free and tax-free as well. You only pay the spread when trading and you keep all your profits too.

The Regulatory Background to Trading Share CFDs in South Africa

In 2018, the European Securities and Markets Authority (ESMA) made some changes as to how much leverage brokers in the United Kingdom and European Union offer their traders. Leverage for CFD share trading was capped at 1:10, meaning that margin requirements were raised to 10%. Given that most stock trading had been allowed to go on at a leverage of 1:500 on most EU/UK brokerages before this ruling, this change represented a major stumbling block on the trading of shares. 

The ESMA ruling meant that it was now significantly more expensive to open and operate a CFD share trading account with any of the UK or EU-based brokerages, used by many traders in South Africa. 

As a result, many South African traders and traders from across Africa found themselves locked out of CFD share trading, with some of the flocking to offshore locations with shady regulation and virtually zero protection for traders.

To counter the adverse effects of such migration to unregulated jurisdictions, brokers such as ThinkMarkets made a move to South Africa to open a new location for African traders. The Financial Sector Conduct Authority oversees trading in South Africa, and this agency offers world-class regulation and trader protection comparable with what the ESMA offers in Europe. There is also an added advantage of generous leverage being made available  to traders, similar to what they previously enjoyed before 2018 in the EU/UK jurisdictions.

The opening of the South African division of ThinkMarkets has opened a whole new vista of opportunity for traders in South Africa and in Africa as a whole to trade shares as CFDs. With ThinkMarkets South Africa, you enjoy the best of both worlds. Not only do you enjoy top-notch regulation and trader protection, but you also trade share CFDs using significant leverage.

Trading shares with ThinkMarkets South Africa is very easy.  Once you have an account that is verified and funded, you can go to the asset index of your MT4/MT5 platform and ThinkMarkets platforms. 

In MT4/MT5, select the stock you want to trade by clicking on the "Show" button, and then use the various order buttons to buy or sell the stock using any of the instant or pending orders.

Making the stock available for trading is done using the Symbol tab. Click View -> Symbol, or use the Ctrl + U button to call this function up.

What you see the asset classes,  click on Equities to view the complete listing of the stocks that you can trade on the ThinkMarkets MT4  platform.

If the dollar icon beside the stock is grey,  it means the stock is not yet available for trading. You can make these stocks available for trading by either clicking once on the stock name and then clicking on the SHOW tab. Alternatively,  you can double-click on the stock name. The dollar icon will change from grey to a gold colour, as shown below.

Once the colour of the icon beside the stock has changed from grey to gold, it means that that stock is now available for trading. If you want all the stocks to become available for trading, click the SHOW tab once.

How to Perform Some Key Stock Trading Functions

Here are some key facts about how to perform some critical stock trading functions. 

1. Opening a Stock Chart & Adding an Indicator

Scroll down the asset list on the Market Watch window. Right-click on the stock of your choice and click on CHART WINDOW in the dropdown menu. This opens the chart of the stock you are interested in. You can now add indicators on the chart. Assuming you want to add a moving average indicator to the chart, you can do this by clicking Insert -> Indicators -> Trend -> Moving Average.

2. Order Placement/Executing a Trade

Click on the New Order tab, or press the F9 button and scroll down the list of stocks to select the stock to trade. You can also open the chart of the stock in question as described above, then right-click on the chart and press the New Order tab in the dropdown menu.

The New Order function opens the dialogue box that allows the trader to set up the parameters for the trade:

You can:

• Choose between market execution (Buy by Market or Sell by Market) and Pending Orders (Buy Stop, Sell Stop, Buy Limit, Sell Limit).

• Select the trade size (minimum is 0.1 lots or 10 shares on many stocks)

• Set the Stop Loss and Take Profit price targets

• When all is ready, you click the Order Execution button.

There are a host of other functions. 

• You can change the time frame of each chart.

• Check for news updates using the News tab in the Terminal Window.

• View your account exposure, order history and alerts. 

• Add and remove indicators.

• Rescan your servers.

• Use a variety of chart tools such as the trend line tool, Fibonacci tools and Gann tools.

• Zoom in and zoom out of charts.

All these functions can be replicated in the ThinkMarkets mobile application, downloadable from the App Store (iPhone and iPad) or the Google Play Store (Android devices).