New Zealand Stock Exchange Trading: A Complete Guide For Beginners

New Zealand encourages free and open trade. Being isolated from the rest of the world, the country heavily relies on trade to support the economy. This includes not only trading exports, but trading on the New Zealand Stock Exchange (NZX) as well. 

With the interest having record low rates, more and more New Zealanders are motivated to trade and invest. Trading accounts and applications such as Hatch, Sharesies, Stake, ASB securities, among others are becoming more popular all over the country.

Have you started your trading journey or do you want to start now? Take a look at this complete guide to trading in New Zealand.

What is trading?

Trading is a basic economic activity that involves buying and selling of goods and services. It’s the exchange of products between two parties — usually a buyer and a seller. It can take place on a small or big scale, giving people from all over the world access to different international markets.

For stock market trade, trading refers to buying and selling of shares and stock, foreign exchange, futures contracts, among many others. It’s ideal for growing your money with frequent transactions in a short period.

How can I trade on the NZX?

NZX isn’t as big as other established financial markets, but it still gives considerable trading choices. There are no options for shorting companies or financial derivatives like credit default swaps. Trading on the NZX is a straightforward option for you.

For trading on the NZX, here’s what you need to know:

1. Market hours: 10:00am - 4:45pm, Monday to Friday
2. Money required: 100% of the trade amount
3. Trading fees: Based on the trade value
4. Timeframe: Shorter-term
5. Liquidity: Varies on the share traded

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What can I trade on the NZX?

Generally, New Zealanders have three options for trading. Though keep in mind that some platforms may offer more trading opportunities, including contracts for difference (CFDs), indices, commodities, and more.

1. Shares

NZX allows you to trade shares on local and international markets including ASX. You can do this through day trading, as well as medium and long-term investments. Some platforms such as ASB even offer online share trading, which is a cost-effective method for you.

2. Forex trading

Trading foreign exchange currency — also known as forex trading — involves buying and selling of foreign currencies to generate profit. However, keep in mind that it may need comprehensive knowledge on foreign currencies as you’re trading alongside big banks and major investment companies.

3. Future contracts

Futures contracts are the agreement to buy and sell assets at a certain price at a specific date. The assets can be anywhere from daily drivers like petrol to special things gold and silver. The buyer must only sell the asset at the agreed prices, regardless of changes in the current market price or the expiry date.

What are my trading options in NZ?

Trading on the NZX can be a bit tricky and confusing, especially for beginners. However, you just have to know the best trading option for you. Check out the most common trading option you do in New Zealand.

Share trading

Share trading is ideal if you aren’t after immediate profit. It takes a medium to long-term timeframe before you can generate money. To share trade wisely, make sure you decide on the minimum investment amount first as you may need to pay for it upfront.

The best platforms for share trading include:

1. Hatch - Exclusive for US shares, trading for USD3 per buy and sell
2. Sharesies - Exclusive for NZ shares
3. Stake - Exclusive for US shares with options for free trading
4. ASB Securities - Available for NZ and AUS shares
5. Direct Broking - Exclusive for NZ shares

Of course, the fees associated with share trading depends on the platform you use. If you want to generate profit through your trading, you have to sell them when the value increases by about 5%. This is to cover the costs, including brokerage fees.

Day trading

Day trading is a short-term trading option, perfect for those who want immediate profit. From the name itself, it’s great for those who trade quickly and want returns within the day. It’s often characterised as gambling due to its high-risk nature. However, they can come with big returns, if done correctly.

Unlike share trading, most New Zealanders prefer to day trade on the US markets. This makes Hatch and Stake a great choice for day traders. Compared to the NZX, the American financial markets offer a high level of liquidity.

Some of the best day trading tools also include:

1. NinjaTrader
2. TradingView
3. Tradier
4. TradeStation
5. Interactive Brokers

The key important part of day trading is to study the market. It won’t be entirely a gamble because you make strategic and technical choices. Although you can make a profit within the day, don’t rush! It may only result in financial tragedies later on, especially with the economic challenges due to COVID-19.

What are the most traded share picks on the NZX?

Want to start trading on the NZX this 2021? Make sure you trade your shares and grow your money from a competitive company in terms of their financial advantages. Here's a shortlist of companies that most Kiwis buy and share on the NZX. 

Note that it always changes, so conduct your own research before trading.

Top 10 companies to buy shares

This ranking is in order of net value of buy trades, excluding the sell trades. This is based on the data from Direct Broking undertaken from 18-22 January 2022.

1. The a2 Milk Company Limited
2. Spark New Zealand Limited
3. Smartshares NZ
4. Auckland International Airport Limited
5. Air New Zealand Limited
6. Ebos Group Limited
7. Contact Energy Limited
8. Stride Prop and Stride Invest Management Limited
9. Sanford Limited
10. Rakon Limited

Top 10 companies to sell shares

This ranking is in order of net value of sell trades, excluding the buy trades. This is based on the data from Direct Broking undertaken from 18-22 January 2022.

1. Fisher & Paykel Healthcare Corporation Limited
2. Oceania Healthcare Limited
3. Pacific Edge Limited
4. Fletcher Building Limited
5. Meridian Energy Limited
6. Australia and New Zealand Banking Group Limited
7. Genesis Energy Limited
8. Kathmandu Holdings Limited
9. Z Energy Limited
10. Argosy Property Limited

How do I trade on the NZX as a beginner?

Of course, it’s recommended to talk with a licensed financial advisor for professional advice. However, there are now plenty of share investment apps in the market that help you build your portfolio from scratch! Best of all, they don’t only offer investment options, but plenty of trading opportunities too!

If you want to know the best share investment apps that match your trading habits, compare your best options at glimp today!