Something you don’t hear much about from many brokers in South Africa is the number of their clients who lose money through trading. Europe-regulated brokers are required to disclose this, and the numbers are pretty grim, with three-quarters on average lost money, according to a Finance Magnates’ Intelligence survey.
For online broker IG Markets, that figure is 66% and down. “This number was higher in the past and is now declining,” said Shaun Murison, senior market analyst at IG Markets SA. “Market conditions certainly play a role in the success of traders in general, and prices have been rising for a long time now, making it difficult to bet against the trend. Interest rates are low and that has given stocks a boost, but there are those who try to call market highs and they can be hurt by doing so. “
Murison says Covid lockdowns, remote working and booming markets are driving an increase in customer numbers. It’s more important for the business to make sure those who sign up become long-term customers – and that means making sure they are successful.
A crucial factor in securing a higher percentage of winning traders is education and market analysis.
“There is no doubt that the more educated traders who stick to a trading plan, with stop-losses, and who don’t over-trade or risk too much capital tend to win,” Murison declares.
“We have great quality educational material on our website and through IG Academy, which can also be downloaded to your smartphone. It is important as a broker to align your interests with those of your clients. We make our money through financing and transaction fees, not by betting against our customers. We therefore have a very strong interest in seeing our customers succeed.
IG Markets, part of the London-listed IG group, has been operating for over 40 years and for a decade in South Africa. It has offices in 17 countries and serves more than 300,000 clients worldwide. It is licensed in all the jurisdictions in which it operates, including SA, where it obtained an ODP (OTC Derivatives Provider) license – and was the first player in the non-bank market to be granted this license. by the financial sector. Driving Authority (FSCA). Earlier this year, IG Markets acquired US brokerage and financial media firm Tastytrade Inc for $ 1 billion.
IG offers its South African clients contracts for difference (CFDs) on more than 150 JSE stocks, exchange-traded funds (EFTs) and the Top 40 index. CFDs are a type of derivative instrument that follows the movement prices of the underlying security without beneficial ownership. For example, you can buy a CFD on Anglo American that will give you leveraged exposure to the underlying stock, without the perks (such as the right to earn dividends or vote) or bonds (such as custody) of the beneficial ownership of the shares.
South Africans with an offshore account can trade over 17,000 global instruments, from currency pairs to global commodities, stocks and indices. The ability to buy shares directly is a service being rolled out in the UK, and will eventually come to South Africa.
Risk management tools
Due to the risks of leveraged trading, IG Markets offers negative balance protection to prevent clients from getting into debt in the event that a market move erases capital and pushes it into negative territory. This can happen when markets move rapidly in response to an unexpected event, such as the “Covid crash” of March 2020. This sudden move was so rapid that markets were temporarily suspended and did not resume until the next day. . It was a disaster for many traders with exposure to the leveraged market.
Negative Account Protection resets a customer’s account to zero in the event of negative losses – at no cost to the customer.
Other risk mitigation features offered by IG Markets include automatic stop-losses, which allow traders to set closing prices in case the market moves against them. The same goes for profit taking levels.
“We strongly encourage our clients to take basic precautions when trading – don’t over-trade, don’t risk too much capital on a trade, develop a trading plan – and we provide all the online tools to help them do that. to do. Once they’re in a trade, we encourage them to set stop-loss and take-profit levels, ”says Murison.
Regular webinars keep traders and investors up to date with the latest corporate and fundamental events impacting the markets.
Murison advises those who wish to start trading online to open a demo account, study the educational material on the IG Markets website, and experiment with various trading styles and strategies. When you are ready to go, you can fund your account and start trading live.
“It’s a new era of online brokerage,” says Murison. “In the old days, the broker had all the information and gave you advice. Today, customers have access to the same information. It creates a level playing field – and for those who show patience and diligence, becomes an extremely popular way to work towards individual wealth.
About IG Markets South Africa: IG Markets South Africa was established in 2010 and is regulated by the FSCA, operating under a Financial Advisory and Intermediation Services (Fais) License, FSP # 41393, and is an OTC derivatives provider . She has an office in Sandton to serve her thousands of South African clients. Its board of directors and senior management in South Africa is largely made up of South Africans, making it a truly South African operation. As one of the largest employers in the online brokerage category, it is proud to play a leading role in South Africa’s growing financial services industry.
Presented by IG Markets South Africa.
Note that CFD losses may exceed your deposits.
Moneyweb does not endorse any product or service advertised in sponsored articles on our platform.