Keeping up with investing terms? We're here to break down spreads, pricing, and transaction limits on EasyEquities in simple terms. Let's get started!
What Are Spreads and Pricing?
- Spread: This is the gap between the highest price someone is willing to pay for a share (buy price) and the lowest price someone is willing to sell it for (sell price). Think of it as the difference between the price a store buys a product for and the price it sells it for.
- Pricing: The price of a share depends on how many people want to buy it (demand) and how many people want to sell it (supply). If more people want to buy, the price goes up. If more want to sell, the price goes down.
What is Liquidity?
- Liquidity: This term describes how easily you can buy or sell a share without changing its price much. A share is "liquid" if you can buy or sell a lot of it quickly and without affecting the price too much. If it's "illiquid," there aren't many buyers or sellers, so large trades can change the price a lot.
Several factors influence the width of spreads. During uncertain times, spreads tend to get wider. On the other hand, higher trading activity usually makes spreads narrower. Smaller or less traded companies often have wider spreads because there are fewer buyers and sellers.
Transaction Limits on EasyEquities
EasyEquities sets limits on how many shares you can buy or sell in one go. These limits depend on how liquid the share is:
- High Liquidity: More shares available, higher limits, and smaller spreads.
- Low Liquidity: Fewer shares available, lower limits, and larger spreads. These limits ensure that EasyEquities can match your buy or sell orders with what's available on the market.
These limits ensure that EasyEquities can match your buy or sell orders with what's available on the market.
Dealing with Transaction Limits
If you want to buy more shares than the limit allows, you can do multiple smaller transactions. For example, if you want 3,000 shares but the limit is 1,000, you can make three separate purchases of 1,000 shares each.
Contacting the Trading Desk
If you find the limits too restrictive, you can contact EasyEquities' trading desk. They can help you make larger purchases for an extra fee. Just email tradingdesk@purplegroup.co.za during business hours (9:05 AM - 4:40 PM, Monday to Friday).
Tips for Investors
- Always check the transaction limits for each share before you trade.
- To control the price you pay, use limit orders. This way, you set the maximum price you’re willing to buy at or the minimum price you’re willing to sell at.
- Keep an eye on any changes to transaction limits and liquidity profiles.
For more information or help, refer to EasyEquities' glossary or contact our support team.
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Any opinions, news, research, reports, analyses, prices, or other information contained within this research is provided by an external contributor as general market commentary and does not constitute investment advice for the purposes of the Financial Advisory and Intermediary Services Act, 2002. First World Trader (Pty) Ltd t/a EasyEquities (“EasyEquities”) does not warrant the correctness, accuracy, timeliness, reliability or completeness of any information (i) contained within this research and (ii) received from third party data providers. You must rely solely upon your own judgment in all aspects of your investment and/or trading decisions and all investments and/or trades are made at your own risk. EasyEquities (including any of their employees) will not accept any liability for any direct or indirect loss or damage, including without limitation, any loss of profit, which may arise directly or indirectly from use of or reliance on the market commentary. The content contained within is subject to change at any time without notice.