RealTime IT News

Spread Trading Spreads To SA

[SOUTH AFRICA] Global Trader 247 will be the first online spread trading application in South Africa when it launches early 2001. The company tested their system (available for download from the site ) by inviting 750 traders to see who could make the most profit in 6 weeks. The winner, Wayne Muller, announced this weekend, made R3 million in 6 weeks, and received an Alfa Romeo 156 and R12000 in petrol vouchers.

The Global Trader system gives retail investors access to spread trading, which is speculation on underlying market volatility. Global Trader allows investors to speculate on the price movements of indices, stocks and gilts without actually owning them, through a product known as contracts-for-differences (CFD).

This kind of product is normally only available to professional traders due to the large deposits needed: trading the Safex industrial index, for example, generally requires R70 000 for R100 exposure for each point movement in the index.

CFDs break a bond contract into chunks, allowing retail investors to gain the same exposure for a much smaller capital investment. The Global trading system allows trading in 5 main asset classes: Stock Indices, Bonds, Commodities, Equities and Currencies.

Trading is real-time via a dynamic, automated database system and is tax and commission free. Confirmation of deals is on-screen and via e-mail, eliminating paperwork and manual orders while allowing risk-management mechanisms such as stop-loss and take-profit limits. While business is encouraged over the Web site, the service will also be available over the phone.

The South African market is estimated between 5,000 and 10,000, a relatively small market. Combined with low local development costs, this makes South Africa an ideal testing ground and incubator for Global Trader. The company will focus on the South African market for 6 months, then look to expand into Asia-Pacific, Eastern Europe - anywhere competition is low and demands are high.

With Global Trader 247 the financial markets continue opening up to the small investor, a trend that the Internet has firmly established. But small investors shouldnt let it go to their head and must do as much research as possible before investing. The capability to invest via the Internet is exceeded by the Internet's power to deliver information; investors should utilize the latter before they utilize the former.