What you need to know about online share trading

Online share trading (OST) has been around since the early 1990s. Going digital resulted in greater consumer interest, as direct investment in shares became more accessible. Before then, you had to have a broker on the stock exchange floor to trade in shares. These days, you can be your own stockbroker and trade shares online from the comfort of your computer or mobile device.

You can manage your share portfolio through the Nedbank Online Share Trading platform. To enable more investors access to OST, Nedbank has overhauled its digital trading platform. It now boasts a new-look interface designed to make trading online easier, and you aren’t restricted to JSE-listed stocks – you can access a variety of financial instruments, while remaining in constant control of your investment strategy. There is no minimum investment amount required, and you can link your OST profile to your Nedbank account of choice.

To create a Nedbank Online Share Trading account, you must:

  • be 18 or older,
  • upload your identification information (South African ID card, document or passport), and
  • confirm your banking details.

Your unique secret Nedbank ID unlocks your world of possibilities. It’s your secure login that you can use to access your online banking services. Once you have completed the full OST application process, you will be asked to supply additional FICA documents – which you can also complete and submit online.

Once your OST platform access application is verified FICA-compliant, you’ll have immediate access to the platform for a 30-day trial period, with delayed pricing, research data and watch-lists functionality.

 

Each financial instrument offers its own risks and rewards

You can use the trial period to learn the easy-to-navigate dashboard and explore learning guides that can help you sharpen your stock-trading game. You’ll receive insights from Nedbank, feeds from Reuters, stock charts and other wonderful data sets.

Numerous financial instruments to choose from

Here are some of the financial instruments you can use to trade on our OST platform:

  • Publicly listed shares on the JSE – these enable you to own a share of a company without having to invest directly in a business.

  • Warrants – these allow you to buy and sell shares in companies or commodities or both, but you can sell the warrant contract before its expiration date. Numerous types of warrants can be used as investment vehicles.

  • Contracts for difference (CFDs) – when you buy a CFD, you agree to receive or pay the difference between the value of the contract when you entered and the value for which it closed.

  • Exchange traded funds (ETFs) – these allow you to buy stakes in particular sectors, commodities or assets. It’s one of the earliest forms of OST, and you can also enjoy a tax advantage trading ETFs in a unique tax-free savings account.

  • Futures contracts – these enable you to pay for shares later, at a price that is set when you buy them.

Each financial instrument offers its own risks and rewards, so it’s a good idea to improve your understanding of each. You can learn about them in greater detail on the OST platform with e-learning guides.

Once your 30-day trial period has ended, an access fee of R55 is payable per month. If you still want to take your time to learn more about the system and how to trade shares online, you can simply pay the access fee and continue to make use of the learning materials.

But you don’t have to manage your OST investments all on your own. We’ll supply back-end management and brokerage services for a fee that depends on the type of trades you make and their values. Read more about the costs associated with OST.

 

Like most wealth-building investment strategies, OST is more likely to deliver stronger returns over the long term

 

Note that if you’re putting R3 million or more into OST, we offer a managed solution through our stockbroking experts. But if you’re investing less and you want to remain in control, you can self-manage trades on your own based on your analysis of the market.
 

Some important share trading terms you should know before you start

  • Buy – This means you want to buy shares, or a CFD, or any financial instrument you choose.

  • Sell – You want to exit financial instruments that you have already bought. Remember, some instruments (like futures contracts) can close a position at any time.

  • Ask – Through the platform, you will ask about share prices and stock quantities. A seller might ask you what you want to pay.

  • Offer – You’ll offer the price you’re willing to sell your shares at for a particular number of shares for a contract. Your offer can be accepted or rejected by other traders.

  • Bid – This is the highest offer that you are willing to pay for a stock or deal. If you say my bid is [X] amount, a seller knows you’re not going to budge.

  • Bull market – This refers to a period when prices for shares and contracts are rising fast. You can analyse upward pricing trends on the Nedbank OST platform.

  • Bear market – The opposite of the bull market. During this period, stockbrokers expect prices to fall sharply. You can set up alerts to inform you of price drops on the platform.

  • Going long – You’re committing to a particular set of shares or stocks despite short-term pricing fluctuations.

  • Capitalisation – What the market thinks of a particular company’s worth. High-capitalisation shares might cost more to buy, but could be worth it, depending on your strategy.

  • Portfolio – This refers to the collection of deals or trades that you own. Your portfolio could include JSE-listed shares, warrants or CFDs.

The Nedbank OST platform makes it easy for anyone to invest in shares and other stock-market instruments, but only you can decide whether you have the long-term commitment required to trade shares successfully. Like most wealth-building investment strategies, OST is more likely to deliver stronger returns over the long term. If you don’t feel you can develop the expertise you need to grow your wealth in this fashion, you might feel more secure accessing the stock-market through other investment channels like unit trusts.

You can apply to join the Nedbank OST platform online.