Trading stock is the first thing that comes to mind when the word 'trading' is uttered. You can keep them for years as a portfolio, building your wealth gradually, or try some risky market gambling for quicker profits. So, if you are interested in this solid and 'aristocratic' kind of assets, read this guide on how to perform stock trading in South Africa and when to do it for maximum effect.
Stock Trading In South Africa: How-Tos And Useful Insights
There are two main ways to trade stocks in South Africa, at least legally and safely. First, you can open an account for trading with a member firm that hosts brokers (intermediaries) and buy shares through this account. All orders will go through the hands of a broker, and you may ask for professional advice or trade at your own discretion. Opening such an account with a stock exchange will require quite a lot of paperwork and effort, but you will be able to buy actual stocks and ETFs. Then you can keep them for years (make a portfolio) or sell and buy new products as you please (do high-risk and high-profit trades).
Second, you can trade in CFDs or contracts-for-difference. This trade is conducted through convenient online trading platforms, like forex, and you do not need any intermediary. CFDs mean that you operate only through current stock prices as representations of actual stocks, and you don’t get the ownership of stocks as such. You trade in money equivalents of Apple or Tesla stocks, in other words.
One of the biggest advantages of CFDs is that you can trade with leverage, thus buying more assets than you would be able without leverage. Another key advantage is that there is no minimum deposit to upload into your account or a minimal number of shares to buy. You may start with the price of one share, employ leverage, and expand your portfolio as you reap your first gains. Besides, you can open long and short positions and trade all round the clock, since electronic stock exchanges open and close sessions at different times around the globe. Then the decision on when to buy stocks during the day in South Africa will depend on your own timetable and specific goals.
Shopping Spree: Where To Buy Stocks In South Africa
Since you plan to trade in shares or their electronic equivalent that have real value and represent real companies, you have to know the real-life stock exchanges that host them and set the trends. NYSE (New York Stock Exchange), NASDAQ, and Toronto Stock Exchange (TSX) are globally known stock exchanges that set trends and provide the most prestigious venues for new companies to perform IPOs. If you plan to do trading seriously, you need to know these trading giants and how they operate. They have their own specialization, and shares that constitute the S&P 500 index are traded at NYSE and NASDAQ.
The Johannesburg Stock Exchange (JSE) is the long-standing and the most reputable exchange in South Africa, and when local shares are traded or their price is researched, the JSE is the first place to go. If you deal directly with a local broker, ask if they are licensed to trade at JSE, and if you trade in CFDs, you should go to the JSE site to check the performance and abbreviations of local shares you plan to buy through online platforms.
If you want to trade globally without intermediaries and buy shares of international companies, renowned trading platforms like MT4/MT5 and JustMarkets are your safe choice. Here, you’ll find lots of profitable and reliable stocks to choose from.
Narrowing The Focus: The Best Days To Trade Stocks In South Africa
The best day of the week to buy stocks in South Africa is the day when the local SA market and global stock exchanges are open. Then you are able to benefit from combined liquidity (thinks trillions of dollars) and changes in price that follow the big news rollouts. It means that you should schedule your trades on weekdays when the markets are booming. Thus, you have 5 days a week (working days, we mean) for trading.
Technically, there are no official working hours for exchanges on weekends, so the markets are still. If you catch a glimpse of news on Sunday that stocks go up/down, it is because the futures trading starts at 6 p.m. Sunday EST (Eastern Time).
Besides, if you trade professionally, you know that it’s necessary to follow the news related to companies or industries represented by the shares you hold (or trade), including stock market monthly trends in South Africa, quarterly reports, annual summaries, and trends, and so on. The days (or time spans) when some breaking news is published may see a drastic fall or increase in price.
The most obvious example is how Facebook shares dropped in price when the news about its improper use of users’ data was published. So if you see such alerts or the steady accumulation of smaller signals that something big is going to happen, watch the market closely. You may need to take measures immediately.
The Shop Is Open: Schedules Of Important Stock Markets
If you ask yourself when should you trade stock in South Africa, it’s necessary to learn about the schedules of the biggest exchanges first. The important trio of New York, NASDAQ, and Toronto stock exchanges have the same operating hours: they open at 9.30 a.m. EST and close at 4 p.m. EST. When converted to Pretoria time, it is the daytime from 4.30 p.m. to 11 p.m.
London Stock Exchange Group operates from 3 a.m. to 11.30 a.m. EST. It means that the oldest and one of the most reputable exchanges works from 10 a.m. to 6.30 p.m. Pretoria time.
The JSE trading session runs in more traditional hours: from 9 a.m. to 5 p.m. Pretoria time.
Pick Your Time: The Best Hours To Trade Stocks In South Africa
Unlike the forex market, stock trade has its physical representation in the form of exchange headquarters with employees and trading that happens during working hours. That’s why the most active trading hours are the working hours of global and SA stock exchanges. When trading sessions close, the markets will be dull, even if you can access them all round the clock via trading platforms.
The best time to buy stocks in South Africa, then, is during the working hours of NYSE, NASDAQ, and TSX, that is, from 4.30 p.m. to 11 p.m. Pretoria time, and when sessions overlap.
Besides, if some big news breaks out after the session is closed for the day, expect the stock price reaction right at the start of the next session. So, enter the trade immediately at the opening of the session or step aside and observe quietly while the storm settles down (if you don’t have to deal with this fluctuation).
Trading Tides: Markets’ Follow-Ups And Overlaps
If we compare the operating hours of the key stock exchanges including NYSE, NASDAQ, TSX, and London Stock Exchange to those of JSE, we’ll see the following. The first morning session by Pretoria time is that of JSE (9 a.m. to 5 p.m.), then the London session begins at 10 a.m. to 6.30 p.m. (Pretoria time). Finally, NYSE, NASDAQ, and TSX open their sessions at 4.30 p.m. and close at 11 p.m. Pretoria time.
So markets follow each other and overlap, thus boosting liquidity and trade volumes. The first overlap happens from 10 a.m. to 5 p.m. Pretoria time, when JSE and London trading sessions converge. The second overlap happens from 4.30 p.m. to 6.30 p.m. Pretoria time, when London and NYSE/NASDAQ/TSX trading sessions converge.
There is a brief overlap of JSE and NYSE/NASDAQ/TSX trading sessions. The JSE stock trade ends at 5 p.m. local time, and NYSE/NASDAQ/TSX trading session starts at 4.30 p.m. So, this overlap lasts 30 minutes only.
Other Considerations On Right And Wrong Time To Trade Stocks In SA
Probably, the worst time to trade using online platforms is stock market holidays celebrated globally when nothing happens and the biggest exchanges are closed. So check in advance, what days are marked as holidays, and take a break on these days, too.
The really optimal time to trade is when you have some money to invest and a clear vision of what stocks to buy. Then you will make successful trading any day of the week, navigating the market and the news professionally.
Final Tips of Weathered Experts
We hope we have covered all important questions related to the best time to trade stocks in South Africa. Read it carefully, choose the stocks smartly and, for better outcomes, try trading in stocks/CFDs using a demo account first. When you learn the ins and outs and define what works best for you, you’ll be able to start your real journey through the stock markets with JustMarkets as a trusted partner and advisor. Start building your wealth now!
by , 2021.11.23