Saturday, May 14, 2011

Choosing a broker for trading Singapore stocks

Latest update: This post has been obsoleted by a new kid on the block. Standard chartered online trading brokerage has stormed into the Singapore brokerage industry with a whole new pricing. Here is my update.

One of the favorite questions asked by newbies to the stock market in Singapore is "who should I use as my broker"?

This is what I did for myself. I use DBS cash-upfront account primarily for buying Singapore stocks. The price comparison is compelling. DBS cash-upfront charges 0.18% of invested amount or minimum SGD18. This is way cheaper than (0.275% or minimum SGD25) charged by the rest. DBS cash-upfront is 35% cheaper than all the other brokers. 

Why so much cheaper? Where is the catch? The key lies in being cash-upfront. You have to deposit cash upfront into an account with DBS Vickers to buy stocks. DBS Vickers is able to charge lower commission rates because the risk of customer not paying up for his share purchases is zero.

Please note that you cannot buy on contra (buy now, pay 3 days later. Uniquely Singapore) with cash-upfront. That is the catch. However, I hardly think this is a disadvantage. So far, I have never seen a consistent winner in the Singapore stock market using contra. Conversely, I have encountered and read about several market participants getting burnt using contra. It is hard enough to be a market timer. To get your timing right to an accuracy of 3 days is even harder. It is possible to make good profits in one or two occasions using contra. Who doesn't have luck on his side sometimes? But to be profitable consistently by playing contra? I think you will have better chance of getting rich by working hard at your day job.

After shares have been deposited into your CDP(Central Depository) account which occurs 3 days after purchase, they cannot be sold using the cash-upfront account (they can still be sold within 3 days using cash-upfront). So, for the sale of shares, you are free to use other brokers but will have to incur the higher commission rates of 0.275%. If you are a big customer, you can pressure your existing broker to charge you cheaper rates by using the cheaper cash-upfront rates to bolster your bargaining position. Congratulations if you are successful. However, please be very careful when you are using one broker for buying and another broker for selling. It is easy to become confused during periods of active trading and you may accidentally do a naked short-sell. The penalties for naked short-selling in Singapore is hefty. In the worst case, it can be a minimum of SGD1000 or 5% of trading value.

I have accounts with several brokers. This is because of the bad experience with the inadequate reliability of the online trading platform of Singapore brokers, especially on days when trading volume is high. By having several brokers, if you cannot log in on one particular online account, you can still try the others.

Having said that, it is best to keep your trades to one broker, at most two. The buy/sell limits granted by the Singapore broker depends on the volume business he gets from you. If you need more firepower, you have to fire more shots using the same broker.

By using one broker exclusively, you can use that broker to track your portfolio accurately and keep good trading records. A good online platform should update the portfolio automatically. Trading records are vital to traders who want to become good traders. I doubt if any experienced traders reading this post will disagree with that.


45 comments:

  1. I am still a student and still have not opened any account. You mentioned that the rest of the brokers charge 0.275% of invested amount or minimum of $25. Is this correct? How can all the other brokers be charging the same price?

    ReplyDelete
  2. This comment has been removed by the author.

    ReplyDelete
  3. It is short-sighted to focus on just the price alone. When choosing a broker, you should consider other things like level of service, information and research provided, good advice.

    This are what remisiers can provide to their clients which a faceless cash-upfront account cannot.

    ReplyDelete
  4. Hi Gary,

    I agree that good remisiers are worth paying. A newbie can be saved by a good remisier who will be there to smack him when he takes excessive risks. You can be sure that a Singapore remisier will do that because he assumes the credit risks of his clients. Under the contra system, if the clients cannot pay up after 3 days, the remisier has to pay up for them. This is why brokerage commission rates in Singapore can never match that of the US because brokers here have to be compensated for the credit risk.

    With the introduction of the cash-upfront account, the remisiers are under huge pressure to provide better service because they can never match the competitive pricing of cash-upfront. They have to be compensated for the credit risk and customers do not have the confidence to place cash-upfront with their remisiers.

    I am not surprised this post recommending cash-upfront will make remisiers uncomfortable. If I were a remisier, I would feel my rice-bowl is being threatened by the cash-upfront system.

    If you do have the fortune to meet a good remisier, do consider his services. A newbie will benefit from an experienced mentor. However, that should be only in the beginning. If you want to become a good investor/trader eventually, then you have to have your own mind, make your own mistakes and develop your own style along the way. I myself am not fully there although I have gathered plenty of mistakes now. I will boast that my achievements lie in not being wiped out by those mistakes.

    ReplyDelete
  5. hyom said

    If you do have the fortune to meet a good remisier, do consider his services. A newbie will benefit from an experienced mentor.


    This advice sounds good but impractical. Newbies don't get the attention of remisiers because they make too few trades and do not generate enough business for the remisiers. Why should an experienced remisier spend so much time to mentor a newbie at a cheap price? It is more profitable to serve high net-worth individuals.

    ReplyDelete
  6. Hi Kang,

    It makes good business sense for the brokers not to engage in a price war. Hence, the commission rates across all the brokers hover around 0.275% or min SGD25.

    DBS Vickers probably made itself unpopular in the brokerage community by introducing the cash-upfront account. I think the worst hurt are the remisiers. Other brokers, particularly those owned by banks, could copy the cash-upfront model to match the competitive rates. The remisiers will not be able to compete. Which client will trust remisiers enough to deposit cash upfront with them? Only banks can command such confidence. But remisiers cannot lower their commission further because they have to be compensated for the credit risk of their clients in the buy-now-pay-later contra system in Singapore.

    ReplyDelete
  7. It is a great post. Thanks Hyom.

    ReplyDelete
  8. and I think the 0.18% com has been over rated in all the forums. Most of it doesn't have any broker services and you probably not aware who is your broker

    ReplyDelete
  9. I am a dbsvo account holder myself but I don't like to use the cash upfront acct. The main reasons are that
    (1) u need to deposit the money from you bank acct into the cash upfront acct. Its not worth keeping money there consistently as theres no interest. Then say if u deposit thr cash place an order but did not get it. U wan to withdraw it back into yr savings acct, it takes 1 working day.
    (2) u need to log into ibanking to place an order. Its fine if u have a predetermined price to queue at. But if u want to change your price, u will need to log into ibanking again since ibanking logs out after a while. This may cause u 1-2 bids if say if there is a selldown and u wish to queue lower for a margin of safety.
    All these just for a couple of bucks savings is just too much hassle and not worth it, imho.

    ReplyDelete
  10. Hi.I'm a DBSv acc.holder too.is there any way I can find a better broker?I'm a bit frustrated to pay 0.28% when I don't get any advice from my broker. I think paying 0.28% just to use their online platform to trade is unreasonable.it's not that I'm unwilling to pay the 0.28%.i'm expecting a better service from the broker.i look for the stock, i gain profit from the stock n i share the profit with my broker(that I don't even know what he is doing)Is there a place for me to source for another broker?

    ReplyDelete
  11. Hi Anonymous at June 7, 2011 12:08:00 PM GMT+08:00,

    The DBS cash-upfront is only 0.18% commission. Standard chartered has announced last week their new brokerage services which is very price-competitive.

    http://help-your-money.blogspot.com/2011/06/standard-chartered-online-shares.html

    ReplyDelete
  12. Good information.
    I have DBS vicker account and just came to know about the cashupfront while googling for SC offer. I am kind of disappointed that Vicker did not inform the existing customers about the cashupfront promo.
    invtraks.blogspot.com

    ReplyDelete
  13. You could certainly see your enthusiasm in the article you write.
    The sector hopes for more passionate writers such as you who aren't afraid to say how they believe. At all times go after your heart.
    Also see my web page :: burberry headband thin

    ReplyDelete
  14. How can one learn trading on stocks? Appreciate all replies

    ReplyDelete
  15. Excellent and decent post. I found this much informative, as to what I was exactly searching for. Thanks for such post and please keep it up.

    ReplyDelete
  16. I suggest you also check some insights, suggestions, strategies and information coming from traderush review site www.traderush-review.com you can get a lot of trading tips and lists of reliable broker sites, just check them out today.

    ReplyDelete
  17. Hi,

    i am curious that how do i sell my shares? i have buy share more than 10 days and its not reflected in DBS vickers but is in CDP... so do i sell my shares in CDP or DBS?

    ReplyDelete
  18. Hi, I want to say that Your efforts are really terrific. I always found it very difficult. your way of explaining is more convenient to understand for the readers.

    ReplyDelete
  19. The excellency of your post compelled me to give a comment. Your post is awesome. Keep up the good work. We are always here to support you.
    Compatible Cartridges

    ReplyDelete
  20. Thank you very much and it is very informative.

    ReplyDelete
  21. Thanks for sharing your knowledge about choosing a broker. This would help many business minds.

    buy twitter followers

    ReplyDelete
  22. How to invest in stocks with little money - Invest $1k Return $250 Hourly For 100 Hours
    Invest Now
    http://www.libertyreservestock.com
    Investment Insurance
    http://www.payinghyiponline.com/libertyreservestock.html

    ReplyDelete
  23. I enjoyed this post a lot. Thanks for sharing the post & information on stocks.You need a good online platform to update the portfolio automatically. Trading records are vital to traders who want to become good traders. Now do
    online currency trading with Tradesmartonline.

    ReplyDelete
  24. This post is very interesting for the traders as well as brokers, choose is your right broker who gives profitable Singapore stock recommendations and people can earn money via his/her signals.

    ReplyDelete
  25. really i like this post,Singapore stock recommendations is very interesting this market always gives good return of investment.

    ReplyDelete
  26. One should rightly choose the broker to trade in Singapore stocks or in any other stock. The success and failure of the trading strategies very much depend on the broker you choose.

    ReplyDelete
  27. For me, it was really difficult to choose a broker who can carry all the trades at nominal charge and just because of this, I started trading at my own without any broker.

    ReplyDelete
  28. Thanks for information. Every one has to made investments according to his financial possibilities, of course, and advices he may get from not involved advisors.

    ReplyDelete
  29. i think you have shared really a nice and informative post about trading,.
    brokers

    ReplyDelete
  30. Broker help for those specially who are new to trade in stock, forex & commodity market, so broker help a lot, there are many firm also who provide trading ideas for those who are ready to trade online or self. as I met with Multi Management & Future Solutions the also provide the live Stock, forex & comex signals.

    ReplyDelete
  31. FAST LOAN APPROVAL AT LOW INTEREST RATE



    Do you need an urgent loan we offer worldwide loan to who in need of loan the business opportunity you having being looking for is here again. email us now at: qmank011@gmail.com
    LOAN APPLICATION FORM
    1) Full Name:
    2) Gender:
    3) Loan Amount Needed:.
    4) Loan Duration:
    5) Country:
    6) Home Address:
    7) Mobile Number:
    8)Monthly Income:
    9)Occupation:
    )Which did you here about us.

    Best Regards.

    ReplyDelete
  32. I have visited your blog and found this very helpful for me,.
    Independent Trading

    ReplyDelete
  33. introducing-brokers introduce new clients to a Forex brokerage, and in return the Introducing Brokers earn a generous, ongoing commission.

    ReplyDelete
  34. Hello everyone, this message is only for people that live in united state if you are interested in credit card top up email us via: jameshacker157@gmail.com we only need people that are very faithful and you will also gain from this alot.

    ReplyDelete
  35. Attention Please!!!

    This is SOF-Standard Online Finance Ltd. A well known and reputable financial lending company giving opportunities to genuine and eligible individuals, companies, corporate organization that is in quest for a loan for personal purpose, business start-ups, business expansion, construction projects, etc. If you are in need of a loan for a legitimate purpose, we urge you all to seize this limited opportunity to join our chains of increasing customers that are giving testimonies of our reliable and efficient lending services. Reach us today via email: standardonlineinvestment@gmail.com for more details and procedures.

    Regards,
    Mr. Hameed Youssef
    Marketing Manager
    Standard Online Finance Ltd.

    ReplyDelete
  36. How Much Money Can You Make From Forex Trading?

    A Brief History Of Forex
    If it’s under the curve I’m buying, if it’s above the curve I’m shorting. I put a stop order for 5-10 pips profit and no cease loss until I’m already in the cash. Once I even have a constructive return I’ll put in a trailing cease loss.

    Unless you have special authorization, a large sum of money to commit and a financial institution to commerce currencies, you will not be able to open a forex trading account with a Philippine-based broker. Many reputable on-line forex brokers will accept clients from the Philippines. Interactive Brokers is a complete buying and selling platform that provides you entry to an enormous vary of securities at affordable prices.

    So I’m new to foreign currency trading, solely been trading for about 2 weeks, but I’m a quick learner…. so first week I misplaced 10% whereas learning the pattern of the market, 2nd week first half I lost one other 10% then the last 2 days gained every penny again. So right here’s my methodology that I developed to start out making the money again. That didn’t work obviously, So now I’m plotting the central curve of the candlesticks.
    Pros And Challenges Of Trading Forex
    With no central location, it's a large network of electronically related banks, brokers, and traders. Unlike inventory markets, which might trace their roots back centuries, the foreign exchange market as we perceive it right now is a really new market. Of course, in its most basic sense—that of individuals converting one forex to another for monetary advantage—foreign exchange has been around since nations started minting currencies. After the accord atBretton Woodsin 1971, extra major currencies have been allowed to drift freely against one another. The values of particular person currencies differ, which has given rise to the necessity for international trade companies and trading.

    The broker solely presents forex trading to its U.S.-based mostly clients, the brokerage does it spectacularly well. Novice merchants will love IG’s intuitive cellular and desktop platforms, while superior merchants will revel in the platform’s number of indicators and charting instruments. Though IG may work on its customer support and costs, the dealer is an asset to new foreign exchange merchants and people who prefer a extra streamlined interface. Forex (FX) is the market the place currencies are traded and the term is the shortened form of foreign exchange.
    15 trades over 2 days, 12 have turned 1-4% gains, 1 broke even, and a couple of have been for a complete of three% losses. IG is a comprehensive forex broker that gives full access to the currency market and help for over eighty forex pairs.
    These professionals use technical, elementary and quantitative evaluation to inform their opinions and should be able to produce excessive-high quality content material in a short time to maintain up with the fast pace of the forex market. Both individual and institutional traders use this information and analysis to inform their buying and selling selections. https://www.reviewengin.com/learn-how-to-do-affiliate-marketing-basics-of-affiliate-marketing/

    ReplyDelete
  37. Thanks, admin, for sharing such incredible content on this topic. Now I have got everything I need about it. Here’s another informative piece of content Forex Trading Master , you may find here more information.

    ReplyDelete

Picking the right Valentine. A much more difficult task than picking the right stocks

9 years ago, I wrote about choosing your Valentine from a value investing standpoint. What I wrote then still stands today, Beauty is over...