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[O246]Online Share Trading Australia

by John Don, Joh

If you are new to share trading, putting the pieces together can be quite challenging in determining where to start and how the whole share trading system works. The following steps may point beginners in a right direction. However, bear to mind that this is not legal advice. Use this information at your own risk.

Where to start in share trading?

To start trading on Australian stock market (ASX), you need an online trading account with a broker (e.g., ComSec or eTrade), a cash management account that is linked to this account, a minimum $500 for the initial purchase, and some common sense.

If you happen to be already with Commonwealth bank, it make sense to setup a trading account with ComSec. This can be done online, but requires printing out the forms and sending them to the bank manually, in order to verify your signature and other details. The bank will then email you your login details and post the share trading account terms and conditions.
Once you are able to login, you will need to transfer some funds to the cash management account connected to ComSec. You will need to check what is the minimum trading amount and brokerage fee – this information is available on their website.

What share stock to buy?

There are two ways to invest. Invest long into blue chip companies (large stable corporations) or invest short into start-ups or smaller companies.
If you are prepared to wait and prefer to avoid risk, investing in blue chip companies may be a better option. Your stock will not grow fast, but it will grow. The goal here is to get a better return than you would normally get from keeping your cash in a high interest bank account.
However, if you are keen to really test out high return investment possibilities, investing in a least known companies may do the trick. In the current economic environment there are many companies with share price below 1 cent. If the share price goes up to 1 or 2 cents, it means that you'll get 100-200% return on your investment. And if often happens in one day.

What to look out for?

Your online share trading account will provide you with real time share prices and historical data for listed companies. Before investing in a specific company it is suggested to collect sufficient amount of data suggesting immediate price growth or at least, price growth in the near future.

There are some indicators that normally suggest that:

First, it is suggested to review historical graphs. It is absolutely paramount to establish a high probability that the company is able to deliver better results in the near future. It is important to check what level the share price got to in the past and then research what company actually did during that time.

Second, it is suggested to review the company's past and recent stock market announcement. ASX listed companies are obliged to disclose all information that affects the share price. These include various financial statement, annual reports and operational and exploration plans and results. Compare the graphs to the stock market announcements. Once you determine a pattern, all you'll need to do is to wait for a similar announcement, invest right away and they see if the company behaves the same way it did in the past.

The old world of stock-broking is changing rapidly: the practice of dealing in stocks and shares, for instance, is no longer purely the realm of high-flying financial executives, as greater numbers of ordinary people are taking part. However, perhaps the biggest innovation in modern trading of stocks and shares is the advent of the internet. Today, a number of online share dealings allow ordinary people to participate in the stock market without ever having to leave their homes.

Whether you're interested in building your investment portfolio, or you're simply looking for a tax efficient investment, trading in stocks and shares online is likely to be a good option for your financial needs. But if you're seriously thinking about embarking on online share dealing, it's important to first evaluate which product matches your investment goals.

Once you've done this, you will also need to assess your investment options in order to choose from a broad range of tradable products and investment applications. Many stock-broking sites will offer a variety of online trading products; from simple stocks, shares and funds to covered warrants and listed CDFs. Funds, for example, allow traders to diversify their investment portfolio and spread their risk. Investment notes, on the other hand, invest in bespoke, one-off products to diversify your portfolio, as well as generate income, limit risk and access investments that are not usually made available to investors.

If you're a new investor in online share dealing, it's also important for you to understand the types of risk that you can face. Market risk, for example, relates to factors that can affect the stock market as a whole, like rising interest rates, for example. Alternatively, unique risk relates to specific stocks and shares. A good investor will minimise his or her unique risk by a process of 'diversification', whereby an investment portfolio is spread over a range of stocks in different market sectors. This allows investors to spread their capital over a range of ventures.

If you're looking to start trading in stocks and shares online, make sure you equip yourself with some basic knowledge before diving in at the deep end. This way, you'll better understand where your investment is going. Many online share dealing sites will offer their own advice and guides to trading, as well as information on the range of investment products and accounts on offer. So novice investors can rest assured that they'll always find the relevant advice and information appropriate to their investment needs.

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Both John Don & Martin Mcallister are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.

John Don has sinced written about articles on various topics from Business Plan, Sleep Apnea and Online College. Please visit or. John Don's top article generates over 33100 views. to your Favourites.

Martin Mcallister has sinced written about articles on various topics from Festival Guide, Personal Finance and Insurance. Many sites will offer their own advice and guides to trading, as well as information on the range of investment products and accounts on. Martin Mcallister's top article generates over 49500 views. to your Favourites.