How does stock trading work in Singapore?
What is stock trading?
Stock trading is the buying and selling of stocks or shares. When you buy stocks, you become a shareholder of the company that issued the stock. You can sell your bought shares at any time, and the market will determine the price.
The two types of stock exchanges in Singapore are the Singapore Exchange (SGX) and the Over-The-Counter (OTC) market.
The SGX is a regulated exchange where companies can list their stocks. The OTC market is an unregulated market where companies can list their stocks without going through the SGX.
There are three ways to trade stocks on the SGX:
- Via an Electronic Trading System (ETS)
- Via a Telephone Brokerage (TB)
- Via an Automated Quotation System (AQS)
Via an Electronic Trading System (ETS)
An electronic trading system is a computer-based system that allows traders to buy and sell stocks electronically. The SGX has two electronic trading systems: the SGXnet and the Catalyst.
SGXnet is the primary market where most of the stocks are traded. It is a regulated market where only listed companies can trade. The Catalyst is a secondary market for smaller companies. It is unregulated, and anyone can trade on it.
Via a Telephone Brokerage (TB)
A telephone brokerage is a system where traders can buy and sell stocks. The SGX has two telephone brokerages: the Full-Service Brokerage (FSB) and the Limit Order Brokerage (LOB).
The Full-Service Brokerage is a brokerage where traders can buy and sell stocks over the phone and receive investment advice from a broker. The Limit Order Brokerage is a brokerage where traders can buy and sell stocks over the phone, but they cannot receive investment advice from a broker.
Via an Automated Quotation System (AQS)
An automated quotation system is a computer-based system that allows traders to buy and sell stocks automatically. The SGX has two automated quotation systems: the Automated Trading System (ATS) and the Central Limit Order Book (CLOB)
The Automated Trading System is where traders can buy and sell stocks automatically. The Central Limit Order Book is a system where traders can see the best stocks traded on the SGX. It is used to place limited orders.
What are limit orders?
It’s an order to buy/sell stock at a specific price or better. You can place a limit order to buy a stock at $2.00 or better. It means that you will only buy the stock if sold for $2.00 or less.
What are stop-loss orders?
It’s to sell a stock at a specific price or worse. For example, you can place a stop-loss order to sell a stock at $1.00 or worse. It means that you will sell the stock if sold for $1.00 or more.
What is the spread?
It’s the difference between the buy and sell prices of a stock. For example, if the buy price of a stock is $2.00 and the selling price of a stock is $2.05, the spread is 5 cents.
What are penny stocks?
Penny stocks are traded on the OTC market and have a price of less than $1.00. Many penny stocks are high-risk and may not be worth investing in.
What is a market order?
It’s an order to buy/sell a stock at the current market price. For example, you can place a market order to buy a stock at $2.00. It means that you will buy the stock at the best available price.
How do I trade stocks on the SGX?
To trade stocks on the SGX, you need to open an account with a stockbroker. You can then buy and sell stocks over the phone or through an electronic trading system.
What is a stockbroker?
A stockbroker is a company that allows you to buy and sell stocks over the phone or through an electronic trading system. The two types of stockbrokers are: full-service brokers and limit order brokers.
How do I open an account with a stockbroker?
To open an account with a stockbroker, you need to provide them with your name, address, contact details, and proof of identity.
