Most people have only a basic understanding of how the stock market works: you invest in companies and if they do well your share prices go up and you make money. This works well in theory but when it comes to actually trading shares on the stock market many people would rather leave their investments in the hands of a broker or unit trust fund manager.
There is that old saying that “practice makes perfect” but unless you have some money to blow while learning the ropes you aren’t going to get much practice in share trading. The good news is that there is another way to learn about the Johannesburg Stock Exchange and that’s through the JSE’s Virtual Trader, a stock market game that lets you try your hand at trading on the real stock market with virtual money and at no risk.
You sign up at the JSE’s Virtual Trader website, and open a 30-day virtual trading account, pre-loaded with R350 000 in virtual cash. You can then log into the system and buy and sell shares in your virtual account, and watch how they perform. This will give you a sense of the short-term returns you would be able to generate with your mix of shares.
Of course, you shouldn’t just choose shares at random to see how they perform. The whole point of educating yourself about the stock market is that you learn which companies to watch and how to create an investment strategy. These are some ways to broaden your understanding of the stock market:
If, once you’ve tried out virtual trading, you think you’re ready to give real trading a hand, one of the best and safest ways to do this is through your bank. You can trade online through their virtual platforms and many of them offer free educational talks on online training.
You can also invest through Easy Equities, an online platform that allows you to invest in fractions of shares. This kind of micro-investing allows you to spread your risk over multiple stocks with small amounts of money and you can invest in a company of your choice with any amount you can afford.
Lastly, if you feel you are ready, you can start investing directly yourself.
Of course, if you already invest in the stock exchange through a broker, you can speak to him or her about taking greater control of your portfolio or at least being involved in any decisions that are made about your spread of stocks.
Whether you become a fully-fledged share trader or just educate yourself about how shares and investments work, playing a virtual trading game will broaden your financial and business understanding. And you know what they say about all work and no play…