How to Trade Stock : Investing Basic

Some people said that the share market is the good investment. It is true and can be prove it but it not for the short-term which mean buy and sell it in the same day, week or month. But some people play it very well, with knowledge and analysis than you can play such way. If you don’t have those capabilities, just forget it. It so risky, but all the risk only we call it paper lost or paper profit unless you sell it at lower prize. Herewith the basic thing before you get involved in the stock market in Malaysia.  

Do you qualify to trade at Bursa Malaysia?
You have to be at least 18 years old. If not, wait until your 18th birthday.

Step by Step Guide:

1. Open a Central Depository System (CDS) account: you can do this by approaching an authorized depository agent such as stockbroking company (OSK, Kwang DBS) and some banks (Maybank, CIMB).

• provide photocopies of IC (identity card)
• fee RM10

You will receive the account document by mail.

2. Open a trading account with stockbroker: this will be done simultaneously when you open the CDS account.

• need to provide income statement
• fill out trading account form
• the stockbroker will check your credit status at CTOS (Credit Tip-off Service) and stockbrokers’ defaulters’ list – in order to qualify you and set your trading limit

What do you need to know about CDS account?

• it allows you to buy and sell shares
• it also allows you to trade non-equity counters such as bond and warrants
• it is something like a bank account – you keep cash in bank accounts, you keep shares in CDS accounts.
• you can have more than one CDS account
• there are two type of CDS accounts: direct and pledge
• if you have a direct account, you will receive the dividend checks and prospectus mailed to your house.
• if you have a pledge account, the stockbroker will receive the dividend payout and prospectus on your behalf. Then the stockbroker will bank in to your account.
• normally banking stockbrokers will require you to open a pledge account.
• you will get CDS account statement monthly. If there is no activity, you will still get the statement on June and December.

3. Get a remisier: normally your stockbroker will appoint one to you if you don’t have any particular preference.

• remisier has to be licensed by the Securities Commission
• remisier helps you make the order: sell? or buy? at what price?
• get someone you like and trustworthy as your remisier 

But if you register with the Maybank or CIMB you can play it by your own and not involve remisier. The fee is quite same for remisier fee but more less because no personal remisier and you become the remisier.  

4. Buying and Selling Shares: You can key in your order at online system provided by your stockbrokers, or call your remisier to make the order. If you’re buying order match a selling order, you will get a trade confirmation. The stock broking firm will then send out contract notes to you specifying details of transaction.

5. Payment: When you buy share of company S, your CDS account will be credited with share S at 9am on T+3 (T=transaction date). The 3 days only include working days. Your payment had to be made on 12.30pm that day. If not, your share will be forced sold at a contra loss or contra gain.

Fees involved:

• brokerage fees – maximum 0.7% of the value of total shares traded, normal practice is 0.6%
• Clearing fees - 0.04% of contract value subject to cap of RM500
• stamp duty – RM1 for every RM1,000 worth of value

So after you know the entire thing above and please try find some books or attend some course to gain more knowledge of stock market. To be able know when to buy or when to sell. How the market, it is in bull or bear. Every movement of stock market has the opportunity for some people who are knowledgeable.The first thing is you must know which stock or which counter to buy after you analyze it base on fundamental and graphical. Then you decide it and prepare to take the risk.But the important thing is you must open the account and then you can think to play the risk.