An introduction to the JSE for beginner traders

The Johannesburg Stock Exchange is the official stock exchange of South Africa. It is also the largest in Africa and lists over 66,500 different shares which are spread across all industries and sectors in South Africa.

Short History

The JSE was first established in 1887 with the first South African golden rush experienced on the Witwatersrand. In the early 1990s, the JSE transitioned to electronic trading systems and by 2005 the bourse was demutualised and was listed on its exchange.

The JSE is one of the most sophisticated markets in the world, accommodating all types of investors, traders and their unique trading styles and trading strategies, regardless of whether they are short-term or long-term.

How to start trading shares

The first step involved revolves around acquiring the necessary knowledge and information regarding the stock market, the process involved with trading shares, risk management and several other components.

Investments of any kind are risky, and you need to determine what type of trader you are, what your risk appetite is, your willingness to be exposed to risk and whether you can afford to face such risks.

Once you have a fundamental understanding of how the stock market and stock trading works, you can find a stockbroker. Shares that are listed on the JSE cannot be bought and sold directly from the exchange, you will need a stockbroker and an online share trading account to facilitate your trades on your behalf.

You will send the trade request to your broker through the trading platform that they provide, and they will process it and fill it, adding their service fees and costs that will be subtracted from your shares account or trading account.

READ MORE: How to buy shares in South Africa

Select a stockbroker

Hundreds of brokers will offer online trading accounts and share dealing accounts. It is important to use a stockbroker registered in South Africa that has the necessary regulation, authorisation and licensing through the South African market regulator, the Financial Sector Conduct Authority (FSCA).

Once you understand what type of share investor or trader you are, you can compare different brokers to choose one that serves your unique investment and/or trading needs and objectives the best.

Register an account

The first account that you must register once you have selected your stockbroker, is a demo account. This is a practice account that will allow you to buy shares using virtual funds. It is important to use this account to gain trading and investment experience before you use real money to buy shares.

Once you have gained enough experience and you have a fundamental understanding of the stock market and other financial markets, you can register a live online trading account which will require these documents:

• A valid copy of your ID book/card or your Passport
• Financial details and information
• Proof of residence
• Your South African Revenue Service (SARS) Tax Number

Fund your trading account and start trading

The broker that you choose may have a minimum deposit requirement, which can start from as low as R14.00, depending on the broker. Even if the initial capital requirements are low, traders and investors are urged to deposit more to cover trading and non-trading fees, and any losses that they could incur.

Once your account has been funded, you can start building your diversified share portfolio or participate in different short- and long-term trading strategies such as swing trading, trend trading, day trading, and several others.