Like many other clueless people out there, you’re probably wondering how to go about trading shares or many other financial instruments on the Singapore market. Because your daily mundane job only provides you with a certain income, you are exploring options to further increase your income be it for your children tuition or for future use. In this article you will learn how to start up an online trading account for your investment purposes.

Basically to start trading stocks on the market, you have to open 2 accounts. Mainly the Central Depository Account (CDP) and a trading account. The CDP account is the most basic thing you require before you start investing. It is basically a central storage which keeps all the shares that you have bought on the market and it is owned by the Singapore Exchange (SGX). Thus, if you were to purchase 3000 shares of company A from Brokerage X, you could sell your shares using Brokerage Y. However, do note that not all the brokerages are linked with your CDP account.

On the other hand, the trading account is an account opened with your brokerage firm. The trading account is mainly the account whereby you conduct your transactions on the market and usually a commission fee will charged to you for every transaction made.

Above is a table on the comparisons of different brokerage firms in Singapore.  The different brokerage firms each have their own trading platform and it is generally advisable to research on the different platforms provided as some may be easier to use. For beginners, I advise using Phillips Securities as it is easy to navigate around the web.

The required age limit to open both the account is 18 or above (with some firms requiring an age of 21). You could open the accounts by visiting one of the brokerage firms listed above. The process is relatively simple and although it is free opening the accounts, brokerage firms usually require you to deposit a certain amount of money into the trading account. This sum of money could be withdrawn after you set up the account should you feel that you need it urgently.

For investing, there are usually 2 different methods of approaching it. The first method (Technical) involves using complex technical indicators (graphs etc) to predict the stock movement. This method generally requires a dedication of time and investors under this trait usually trade on a daily basis. The other method (Fundamental) of investment involves looking at companies’ financial reports to evaluate their performance. Things to look at includes a company’s balance sheet, income statement and cash flow. Investors under this trait usually trade long-term (5 years and above). One prominent example is Mr Warrant Buffet the Omaha Investor.

Now that you have the required knowledge to start, the idea of investing may come off as intimidating to you as the chances of losing money scares you. But like what Lemony Snicker said “If we wait until we’re ready, we’ll be waiting for the rest of our lives.” In fact, the greatest lessons I learnt came from my losses in trading (I lost 50% of my wealth initially trading penny stocks). It is perfectly normal for beginners to lose money in the stock market. Whats important is that you learn from your mistake and continue to pursue knowledge on the topic of investment.