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Community


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Online Share Trading

Engage and learn about markets and trading online

To trade in warrants

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Jemaiks
Frequent Contributor
Do i need to open a new account if i want to trade in warrants. How do i go about if i want to trade in warrants and how do i know which blue chip companies have warrants on it?
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7 REPLIES 7
Q2W
Super Contributor
You can have a SHARE account and/or a WARRANT account. You will just toggle between the two, without logging out. The cost for one or two accounts are the same. No extra cost on an extra one. Just enter the SHARE code on top (example SOL) and on the next page that opens you can click on "warrants associated with this share)
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Ditzy
Frequent Contributor
it's cheaper to trade warrants out of a warrants account. Just have some funds transferred there and when you trade, make sure you do so out of your warrants account. You can find warrants using the 'find or trade shares' tab on the left.
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Tango
Super Contributor
Jemaiks, why do you want to trade warrants? Have you demonstrated that you can consistently make money picking shares? With warrants you need to pick the right shares, pick the right price (strike) AND you must get your timing right or the time-decay will nail you. If you just want gearing, look at installments, SSF and CFDs.
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Jemaiks
Frequent Contributor
Thank you Tango for the information. I dont want to say that I have excellent stock picking skills, I have only started with stock trading a month ago and have about 6 different stocks in my portfolio, of which 2 is making good returns. Luckily I am working in the audit field so some of the fundamental analysis is part of my daily job. However, I read about the warrants and the installments and yes I will go with installments. But also want to go with warrants. What does it mean when they say the warrant is decaying. Why is warrants so much cheaper????? For the installments do I need to open another account?
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CE
Super Contributor
Very important bro, make sure your medical aid premiums are paid to date, teach yourself to type with one finger, it could come in handy at a later stage. Good luck.
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SimonPB
Valued Contributor
Jemaiks, short answer is that you should open a warrants accoutn to trade instalemnts and warrats as the brokerage is a flat R50 (plus taxes) rather then 0.7%. However be very very careful and make very very sure you know 125% what you are doing.
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Tango
Super Contributor
Ok - my advice, for what it's worth - Try installments if you want a bit of gearing. Good instruments particularly if you are starting out. Go to Simon's talk - look out for when there is one close to you. Read everything in the help and education section of this site. You must understand how warrants work - they are not just cheap shares with gearing. Open a warrant trading account separate from your share account (call SFM and they will set it up). Put an amount in there that you are prepared to lose completely (your circumstances will dictate whether this is R10k, R20k, whatever). Start trading warrants with a strict rule that you will not top up that account. See how it goes. Many people (myself included) who can read a chart and pick a share reasonably well still regularly lose money on warrants because of factors like the time-decay, wide spreads, the mental stress that the gearing brings and a host of other factors. good luck
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