Shares Trading Guide: How To Trade Shares In Malaysia

So you’ve decided to do some share trading but don’t know where to start? Here are four simple steps to get you started:

Step 1: Know your market

There are many different stock markets around the world. Among the most famous are the New York Stock Exchange, the London Stock Exchange and the Tokyo Stock Exchange. Depending on your interest and risk appetite, you may find certain companies listed in foreign stock markets more attractive.

Step 2: Open a Central Depository System account

Before you can start trading, you need to first open a Central Depository System (CDS) account with Bursa Malaysia. A CDS account is an electronic book-entry system used to record and maintain share ownerships and transfers. Just like how you keep money in your bank account, you “keep” shares in your CDS account.

There are 2 types of CDS accounts:
(i) Nominee Account
(ii) Direct Account

Nominee Account
With a nominee account, your stockbroker / remisier holds the shares on your behalf. The key benefit of nominee accounts is that your stockbroker / remisier typically handles any adminstrative tasks / paperwork for you (e.g. filling up forms for rights entitlement and bonus issue). You would still receive any dividend paid out by companies you own.

Direct Account
Direct accounts are the complete opposite of nominee accounts. You will need to personally handle all activities and tasks related to owning shares (e.g. receive and bank in any dividend pay out cheques, complete any necessary paperwork).

In choosing between the two, think about what is best for you. Ask yourself if you have the time to do some of the admisntrative tasks yourself. Are you familiar with what needs to be done? Do you have the patience to handle these issues?

[Note: These days, most brokers would offer to help new customers set up a CDS account upon signing up.]

Step 3: Select a broker

Once you have set up your CDS account, you will need to select a trustable broker to help you execute share trades. There are many different brokerage services offered by finanical institutions in Malaysia. If you’re interested in trading foreign shares, remember to check that the broker you select offers such services.

Different brokers will have different brokerage rates, fees and trading options. For example, one broker may have cheaper brokerage rates but may not offer foreign market stock trading. For a comparison of share trading brokerage services in Malaysia, check out our Share Trading Comparison Table.

Step 4: Do your homework

It is not easy to make money from investing and trading shares. You will have to do your homework on companies you want to invest in. This includes taking the time to research whether the company’s business strategies are sound and executable, the quality of management, its relationship with suppliers and customers, and how it is positioned relative to its competitors. Even so, many professional share traders struggle to make consistent profits over the long term – so tread carefully!