October 19, 2018Share/Stock Trading
How To Get Started on Trading in the Malaysian Stock Market
In just about any market, the prices can rise and fall due to a number of factors such as inflation, supply and demand, and many others.
The same can be said in the stock market. Because of its volatile nature, would-be investors freeze in fear because they might not be able to handle the stress of the stock market trends.
Still, with proper preparation and knowledge, you can get by. Here are some easy and simple steps that you can follow to help you get started on Trading in the Malaysian Stock Market before you open a stock broker account in Malaysia:
1. Identify Your Risk Tolerance
Before you hop into stock market trading, you have to first identify your risk tolerance. Basically, this term refers to how much risk you’re willing to take.
You see, investing in the stock market is a risky business because its volatility will affect the prices erratically. One day your shares might be higher in value and the next day, its intrinsic value plummets to its lowest level.
Evaluating your risk threshold is important because it can affect your decision-making process. Are you willing to spend money on investments that might not give you the best possible profits? Or are you going to patiently wait for the right time to trade, even though it will take a long time because you do not want to suffer the stress due to the risks involved?
2. Create an Account
In Malaysia, you are required to open a CDS or Central Depository System account. You can either do so by going to a brokerage firm or you can also do that by going to an investment bank.
This account is akin to a brokerage account which allows you to buy and sell shares in the stock market. Whenever you earn money from trading, all of the profits will directly be deposited in your CDS account.
The process of opening a CDS account is actually quite easy. All you really need is to go to a brokerage firm or investment bank, present a copy of your official identification card and also your RM10 postcodes as well.
In conjunction with opening a CDS account, you will also need to open a trading account as well. Both of them will be used simultaneously when you are conducting trades in the Malaysian stock market.
3. Find the Right Broker
After creating an account, it is best for novices to find a suitable stockbroker to help them with the trades. You can find one in the stock brokerage company of your choice.
However, keep in mind that this is just optional. You can pretty much do trades yourself, but If you’re still new, I highly recommend that you start with a stockbroker first.
4. Do the Necessary Prep Work
The stock market, in reality, is not as easy as just investing in a company and calling it a day. No, you have to conduct your own research.
Find the best companies to invest your capital in and buy some shares from them. Do not just settle for a company or two- buy as many shares as you can from as many different sources as possible to help diversify your investment portfolio.
Always think of investing for the long-term as you will reap greater benefits if you do. The stock market is not for the weak and for those who want to just withdraw their money without holding on to it for years. Doing the necessary prep work will give you an edge over the other novice traders.