What is an Investment Brokerage Firm?
- An investment brokerage firm allows you to buy and sell shares on the stock market. Every investor needs to choose an investment brokerage firm before they can start investing and trading. You’ll want to choose a brokerage that suits and understands your needs, especially if you’re just starting out. Typically, you get charged commission fees each time you conduct an online trade. That’s why frequent traders choose a brokerage firm with the lowest brokerage commission.
Who can open an online trading account?
- If you’re above 18 years old and not an undischarged bankrupt, you can open an online trading account in Singapore. Even if you’re a foreigner working outside of Singapore, you can open a trading account any time you want as long as you meet the above requirements.
How much do I need to pay to open a trading account?
- The initial deposit required by brokerage firms in Singapore varies. To accommodate the different risk appetites and budget of individuals, brokerage firms offer different funding tiers. For example, Saxo Markets requires a minimum S$3,000 funding for a Classic Account whereas IG does not have any minimum funding requirements.
How long does it take to process a new trading account?
- The time it takes to successfully open an online trading account depends on the internal process of your chosen brokerage firm. It usually takes 10 working days to complete the process upon application submission.
What are the different types of trading markets in Singapore?
- Singapore Exchange or SGX is the stock trading market in Singapore. It offers an extensive suite of investment products that include securities, derivatives, and commodities.
How do I open a CDP account?
- There are 2 ways to open a CDP account. You can either go directly to the Central Depository to process your own account or seek assistance from an investment brokerage firm.
What is the difference between Cash Upfront Trading and Cash Account?
- Used as collateral, cash upfront trading requires you to pre-fund your account before you can start trading. Usually, this type of account has lower commission fees since your purchased stocks are held by the brokerage firm. Cash account trading, on the other hand, doesn’t require prepayment. It makes use of the available cash in the fund. This means you can only trade when there’s enough capital in your account. Without sufficient funds, you won’t be able to enter a trade transaction.
What’s the difference between a CDP and a Custodian Account?
- These terms are more relevant when you intend to purchase stocks and shares in Singapore. CDP is a depository account that applies to the securities market in Singapore. With a CDP account, you will be able to purchase stocks legally in your name and become the owner of the stocks you’ve purchased. Since the stocks are now yours, you’ll have access to all the benefits of a stockholder. Your CDP account also stores your SGX stocks in a centralised location, so you can buy and sell from different brokerage firms. The downside of storing your stocks in your CDP account is cost – you may incur more fees when you buy and sell via brokers but transfer your stocks to your personal CDP account instead of storing them in a custodian account managed by the brokerage. With a custodian account, your stocks are in the custody of the brokerage firm. This means you’re not the rightful owner of your purchased stocks because they’re held under a trust. While a custody account may grant you lower trading fees, you’ll still incur additional account maintenance fees if you don’t fulfil the quarterly trade requirements. In Singapore, most brokerage firms hold your stocks with the CDP. So, even when you execute the trade through them, no one else owns the stocks but you.
What is margin trading?
- Margin trading is done by borrowing money from your broker to execute a trade in hopes of profit. The profits (if any) are used to repay your broker. As such, you can start with a small investment, but the risk is significantly higher. Here’s an example, you can buy 250,000 USD/ SGD with a margin of only 2%, which translates to 5,000 USD. This also means that you are leveraged 50 times – in other words, you are only forking out 5,000 USD to gain an exposure of 250,000 USD.
What is initial margin, maintenance margin and margin call?
- There are two types of margins – initial margin, and maintenance margin. A margin call is an alert. Initial margin is the deposit needed for each trade that you enter in. If your initial margin falls short along the trade process, you’ll be given a margin call which alerts you each time your funds fall below the minimum requirement. As such, in order to keep your position open, you must ensure that the available funds in your account meets the maintenance margin.
Where can I buy cryptocurrencies?
- There are many cryptocurrency exchanges available and we selected a couple of the best crypto trading platforms out there. Do head over to compare the best crypto exchanges and find one that suit your trading needs best!
Frequently Asked Questions
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Category : News