If you are a brand new investor, it might be helpful to read this series of articles on the accounts you need to set-up in order to trade in financial assets or securities in Singapore.
In order to buy and sell securities, you need to learn how to trade securities on the online trading platform provided by your stock broker. Essentially, you will learn how to execute the trades yourself on your computer.
Of course, you can take the easy route and simply convey the order to your human stock broker but that would involve high fees which will add up especially over the long run.
Note: In order to be allowed to trade in certain Specified Investment Products (SIPs), you must first pass a Customer Account Review (CAR) / Customer Knowledge Assessment (CKA). This is compulsory for all Singapore retail investors (you!).
Assuming you have passed the CAR/ CKA, we will now discuss how to execute the trades using the stock broker’s online platform.
Now, different online platforms have their own designs and layouts so watch the demos of your online trading platform and read the tutorials. Or, simply make an appointment to go down to their office for a tutorial.
All good trading platforms will have the few basic functionalities to execute the trades. You just have to get used to the positions, size and colours of the “buttons” of your chosen trading platform.
Here are the basic steps to take:
Step 1 – Login to Your Online Trading Platform
You will need your username and password. A 2-Factor Authentication process may also be required with an OTP device or your mobile phone.
Step 2 – Click on “Trade” or “Buy/ Sell”
Once you are logged into the trading platform, click on the “Trade”/ “Buy/ Sell” button/ link to bring you to the trade or buy/ sell module.
Step 3 – Search for the Security
Enter the stock symbol/ code of the financial asset or security that you are looking for. You will need to know the symbol in advance or most platforms will have a search function.
You may also need to specify the country/ exchange/ market that the security is trading on. For example, you will choose Singapore if you are looking for a security on the SGX or Amex or NYSE if you are looking for a specific US security traded in one of those US exchanges.
Step 4 – Choose Action: Buy or Sell
Depending on what you are intending to do, choose “Buy” or “Sell”.
Do not choose “Short Sell”, even if it is an option. Short-selling means that you intend to sell securities that you do not own and is not something you should be doing as a new investor.
Note: Be sure to check your latest CDP account statement or CPF agent bank account to confirm your actual share holdings before placing any sell orders. This is prevent you from potentially short-selling (shares that you do not own).
Step 5 – List the Number of Shares to Trade
List the amount of shares you want to trade. The total value is generally automatically calculated for you. You will have to choose amounts based on the lot size. So, if the lot size of 100 (which is the lot size for most securities), you will have to buy in lots of 100 shares.
Step 6 – Enter the Price that You Want to Trade
Enter the price you want to buy or sell the security at. You can look at the Ask/ Bid Price as a guide.
The bid price is the price a buyer is willing to pay for a security. The ask price is the price a seller is looking to get for his or her shares. The ask/ bid prices should be viewed with the corresponding volume or amount of shares required to command those prices.
You may want to specify a limit order that sets the price at which you wish to buy or sell the stock. If the price is not met, the order will not be executed. For example, if your limit order to buy is $30/share, the order will only be executed when the stock price $30 or under. If your limit order to sell is $30/share, the order will only be executed when the price is $30 or more. This guarantees a price, but does not guarantee a transaction.
It is possible that an order does not get fulfilled or only partially fulfilled.
Step 7 – Specify Order Duration
You can specify how long you want an order to stand for before it is cancelled. By default, an order gets cancelled if it is not fulfilled by the end of the day. That means, a buyer/ seller could not be found at the price and/ or volume you wanted.
If you choose a “Good to Date” order, the order will be automatically good up to the day you specify. This means, the stock broker will try to find a buyer/ seller for you to the date you specify.
A Good till Max order is a limit order similar to Good till Date order. The order will automatically be good for the next 30 calendar days after the order is placed, and cancelled on the morning following the 30th day, unless order is fully filled or specifically cancelled. Good till Max orders are available in the Singapore market only.
Sometimes, you might have an option for “Fill or Kill” where you can stipulate for the entire order to be filled or nothing at all. For example, if you indicate a volume of 1000 shares, the order for the entire 1000 shares must be fulfilled or the order will not go through at all.
Step 8 – Specify Trade Type or Settlement Type
This is where you choose how you want to settle the outstanding payment for the trade:
Cash funded through your trading account (or EPS/ Giro if you had the stock broker set it up)
You will also want to specific the currency type if you are trading an overseas security and you have a multi-currency account. If not, the default will be settled in SG$.