Media release for technology publications
Online share trading a natural fit for IT professionals
Johannesburg, July 17, 2009: Online share trading is a particularly natural fit for people who live and breathe technology. The tool, which is growing in popularity, allows individuals to trade directly in shares on the stock market from the comfort of their keyboard. This investment method is cost-effective and compelling and, if done correctly, need not be too risky.
According to Gerhard Lampen, head of Sanlam iTrade, one of South Africa’s most successful online trading providers, the ‘shoots of green’ which experts are noticing in economies globally make now the perfect time to start trading. “We have seen online trading activity pick up significantly in the past three months as a result of better market news and, while full recovery from the global crisis could take years, using a clever investment strategy now can produce some good results. By taking profits when share prices rally and waiting for setbacks to buy back shares, traders can benefit from the current market conditions.”
He says the online share trading market has more than doubled in the past five years and that the technological revolution has now largely run its course – offerings are mature, secure and stable. “It has become almost unthinkable to consider doing banking, comparative retail shopping, travel bookings and any number of other things without the web. Investments are now also part of the online world. Online share trading has grown in leaps and bounds over the last few years, and will continue to grow at a faster pace than other modes of investing.
“Now really is the time for everyone who’s in love with the Internet to use it to the full,” says Lampen.
Online trading 101
Investing on the stock market is not quite as complicated as some professionals make it out to be. By following a few basic guidelines, even the amateur can realise nice returns on his or her investments.
Lampen says that, first and foremost, the trader must conduct careful research. “It is imperative that he or she knows a lot more about the stocks being invested in than simply the share price. They should find out as much as they possibly can about the company and also if the share is expensive or not
Don’t put your eggs in one basket. “Diversifying across sectors is essential because industries and sectors fall in and out of favour based on a smorgasbord of complex factors. Practically, this means that the investor should hold some equities from the financials and industrials sector, some from retail, some from industrials, mining etc. They should also invest in a selection of preference shares and bonds. By spreading funds in this way they will be in an excellent position both to protect themselves against downturns and reap the benefits of good runs.” Even if an investor does not have enough funds to diversify into 10 or more shares, he or she can buy any of the listed Exchange Traded Funds (ETF).This gives the investor a portfolio of shares by making only one purchase with the cost saving benefits.
Think long-term and don’t expect miracles. “Trading in shares is not a quick fix and, while it is likely to deliver better returns than most investment vehicles, these returns don’t come quickly. Patience is imperative. Before anyone starts trading they should develop an investment strategy and timeline – three to five years is advisable,” says Lampen.
The technology
As one of SA’s first online trading sites, Sanlam iTrade is a benchmark for other offerings. It offers members an increasingly advanced, easy-to-use environment in which to proactively manage a diverse portfolio and to trade on the JSE at competitive rates. (For Features and benefits, go to https://www.sanlamitrade.co.za/eng/AboutSanlamItrade.aspx).
Jacques Winter, head of IT at Sanlam iTrade, provides insight into the platform, which was developed and is being updated and maintained by online trading development gurus Nutcracker:
· The solution is based on service-orientated architecture (SOA),allowing Sanlam to add new data feeds, update risk rules, order routing logic and add front-end features with minimal disruption.
· Considerable challenges were overcome in its development:
o Firstly, the trading website had to integrate many sources of data, including market and research data, order routing (for multiple instrument types) and post-trading activities. These sources have different archive and validity times, which had to be catered for, and may have individual failures, which are handled independently.
o Secondly, the 24-hour nature of an online platform clashes with nine hours of active operation in an exchange. The website therefore has to restrict and control user functionality, depending on the time of day. Examples include designating orders as pending while allocating client funds to satisfy risk rules. In some order types (typically derivative orders) there are two levels of business logic required, at exchange level and Sanlam business level.
o A further challenge is that the website is not the only conduit of accessing trading capabilities. A client may submit one order via the website and another telephonically, with a broker. The broker may be using a different system to access the market and the client’s data. All these different systems, and ultimately Sanlam’s business rules for trading, could not be compromised.
· The system was designed to scale to 10 000 concurrent logins.
· The website and backend are hosted in Cape Town and replicated to Johannesburg. iTrade’s production and redundancy sites are hosted in-house.
For more information call Sanlam iTrade on 011 778 6614 or visit www.sanlamitrade.co.za or www.nutcracker.co.za.
Media snippet
10 Online Share Trading Myths
By Gerhard Lampen, head of Sanlam
1. You have to be rich to invest on the JSE.
· It is advisable to have about R50 000 to start a portfolio and not trade less than R5 000 in one share, but many clients trade with smaller amounts, as little as R3 000.
· Portfolio managers require a minimum of R500 000 and will charge management fees.
· Unit Trusts also charge buying commissions and management fees.
2. Online share trading is expensive.
· Trading shares online is much cheaper than trading on the telephone through your broker.
· Sanlam iTrade charges a monthly fee of only R57 and a broking fee of 0.75% with a R99 minimum per trade. The monthly fee includes live share prices, watchlists, alerts, real-time data and news, comprehensive data and charting on every share as well as Sanlam iTrade’s exclusive MAPS function.
3. You need to be a computer and Internet expert
· The Sanlam iTrade website is very easy to navigate and there is an explanation under “Website Demo” on www.sanlamitrade.co.za.
· We also present Investor Education Courses with a session devoted to website navigation.
4. You can accidentally sell all your shares for 1c.
· You cannot buy or sell shares with just a click or two. After entering an order you are taken to a confirmation page where you are asked to check the order.
· You are prevented from placing an order if you have insufficient funds to buy or insufficient shares to sell.
· Before the order is entered into the JSE you must enter your password to prevent unauthorised persons from trading on you account.
5. Another person can easily get access to your account and transfer your money.
· You select your own user name and password and must keep it safe. Without your user name and password nobody can access your account.
· The Sanlam iTrade website has full encryption and security firewalls.
· Money will only be transferred to the client’s bank account registered with us and not to another bank account.
6. You must have a B Com degree to make investment decisions
· Most investors are ordinary people with a keen interest in the JSE. You will need to spend some time reading and learning, but it can be a very rewarding and fulfilling adventure.
· Sanlam iTrade provides a Learning Centre with online modules on investment basics including technical analysis.
· This is supplemented with Investor Education Courses.
· The Sanlam iTrade website provides a wealth of news, data, information, model portfolios and also research to help investors.
7. All shares are risky and can easily halve in value
· The top 100 shares in the Top 40 and Midcap Indices have proven over decades that, despite short term setbacks, they provided a return far in excess of inflation.
8. You must watch your share portfolio constantly for 8 hours a day
· You can set alerts on any shares and be notified by e-mail and/or SMS when a share breaks a price level set by you.
· You can enter stop-loss orders that will trigger a selling order at a price level set by you. This will protect you from market falls while away on holiday in Antarctica.
9. Investing in shares is boring stuff
· “The Market” is never dull or boring. So many factors all over the world influence The Market that it is probably the most exciting adventure to be a part of.
10. I can’t do it.
· More than 40 000 people in South Africa do it and so can you.
Ends