How to choose the best broker, know how much to risk per trade and how to trade overseas options

by , 17 May 2018
How to choose the best broker, know how much to risk per trade and how to trade overseas options
Dear reader,
Q. “I want to start trading but don't know how to choose a broker. Can you help me?”
 
The safest way to find a highly reputable broker is to find one that is FSB approved and regulated.

You can do this by looking up the Top 10 Stockbrokers in South Africa. Once you have a list of brokers to choose from, you’ll then need to go to each of their websites to research the following.
 
1. Make sure the brokers are registered companies and FSB approved as I mentioned before.
 
2. Make sure they have been around for at least five years. This will allow you to see their credibility through portfolio performance, customer reviews and improved facilities...
 
3. Decide what it is you want to trade e.g. CFDs, stocks or currencies etc and make sure they offer the relevant instrument.
 
4. You need to decide whether you want an execution only broker – i.e. you will decide what to invest in and when to sell versus a discretionary broker who you will deposit your funds with and they will decide how to invest it for you.
________________________________________
 
 
What if you could add two, three or four extra paydays to your diary every month?
 
And what if you could do it with just a few clicks of your mouse?
 
That’s exactly what this secret approach to the markets lets you do.
 
We call it the ‘multiple payday secret’ and today you can discover how it works and put it to the test without risking a single cent.
 
Just see how it works, get comfortable, and then make a call as to whether it’s right for you.
 
________________________________________
  
Q. “Is it possible for a local South African to trade overseas markets, particularly in the US and Canada to get directly involved in options trading?”
 
Yes it is possible. You will have to open an offshore account where you can invest up to R1 million which doesn’t require South African Reserve Bank tax clearance.
 
If you’d like to invest more than R1 million in an offshore account then you need to apply for a tax clearance certificate.
 
  
Q. "Hi Timon I have R10,000 and I want to subscribe to your Red Hot Storm Trader service but I want to know how much should I risk per trade with my R10,000?”
 
With Red Hot Storm Trader, I tell my subscribers to never risk more than 2% of their portfolio per CFD trade.
 
Here’s a recent trade I sent to my Red Hot Storm Traders, as an example to show you how to invest your R10,000 and only have risked 2% or R200.
 
e.g. Barclays Group Africa
 
To make sure you don’t risk more than 2% (R200) of your portfolio, you’ll need to know these three numbers to make a simple calculation:
 
The amount you wish to trade with: R200
 
Entry level =R194.00
 
Stop loss = R186.00 No. of CFDs to buy = (The amount you wish to trade ÷ (Entry – Stop loss)
                          =(R200 ÷ (R194.00 – R186.00))
                          =25 CFDs
 
So, with a R10,000 portfolio if your trade hit your stop loss and you bought 25 CFDs you won’t risk more than R200. 
 
Always remember, “Wisdom yields Wealth” 
Timon Rossolimos,
Managing editor, Red Hot Storm Trader


How to choose the best broker, know how much to risk per trade and how to trade overseas options
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