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The mere introduction of affordable high-speed computers and internet connections in the mid-1990s, and their increasing popularity ever since has made life so fast, easy and secure. Won’t you agree?
Likewise, investing seems to be very essential these days as savings alone might not suffice all our financial goals nor efficiently beat inflation. The habit of investment, especially when started young so as to reap maximum returns, is believed to bring a sense of financial discipline in a person’s life.
Now rethink this- in the contemporary times, stock trading has become as easy as grocery shopping online. Welcome to the Digital Era!
What we mean to instigate is that with the internet in an amalgamation with technology touching almost every sphere of our lives at present times, the share market is no exception to its aura and efficiency. Call it e-trading, self-directed investing or simply online share trading, the buying and selling of securities on the share market using internet-based proprietary trading platforms has been gaining massive traction off late.
Online Share Trading & Advantages
Online trading entails the trading of securities via an online/virtual forum that facilitates the trading of several financial instruments like mutual funds, bonds, equities and commodities. The online platforms are ideally provided by internet-based brokers. They are available to anyone who desires to make money from investing in the share market.
Below are a few advantages of online share trading-
- Gives a lot more control (place, monitor and close out the order online) over the trade to the customer
- Online equity trading gives you the added advantage of a better price for execution
- Online trading becomes a seamless and relatively faster platform for the customer as there is no need for paper-based documents to be copied, filed and entered into an electronic format.
- An investor can also access investment and confirmation statements along with investment tax forms using the online system
- Few discount brokerages link the bank accounts of their digital clients to their investment accounts, making initiation of a transfer between accounts held under the same financial institution lot easier
- To encourage people towards DIY (do it yourself) investments, brokers tend to lower commissions for trades placed online than for trades placed over the phone with a representative
How to Conduct Online Share Trading in Australia?
Online share trading makes it both easy and inexpensive for anybody who desires to invest in shares through the Australian Securities Exchange (ASX). The ASX is the largest stock market in Australia and comprises of more than 2,000 companies with a market capitalisation over $2 trillion. This translates into plenty of options to choose from, depending on the investors need and risk appetite.
Share experts opine that the easiest (and most common) way currently to buy and sell shares is by using an online broking service. Let’s graze through the procedures that can be followed to conduct online share trading-
Please note that the below should not be regarded as a recommendation-
Step #1- Selection of Online Share Trading Platform
Australia offers a hoard of options in the form of Online Share Trading Platform, some of them being the “Big Four” and other major banks. Besides these, there are specialist share brokers. These options allow investors to compare the features and fees before choosing the right platform.
A flat fee or a percentage of the total transaction cost (brokerage fees), accessibility, ease of use and customer support are a few parameters that an investor ideally adheres to before selecting the platform to start virtual trading.
Step #2- Signing Up & Opening an Account
After the investor has selected the Online Share Trading Platform, registration to open an account with the platform is requirement. While this is ideally a free of cost process, some platforms might charge a subscription fee.
While registering, information like personal details, ID proof, linked bank accounts etc. might have to be produced and a minimum amount could be demanded to open the account.
Step #3- Share Selection
With a platform decided and account opened, investors start researching stocks (and the number of stocks to be invested) that match their investment goals. Interestingly, the platform itself provides a wide range of information- market research, analysis and even trading recommendations to make informed decisions.
Step #4-Placement of Order
The investor, after selecting the desired stock, places an order- to either buy a share immediately at the best price currently available or set a maximum purchase price for the buy order.
Step #5- Transaction Payment
Before placing the order, investors need to be wary of the fact that they should have sufficient funds in their online share trading account to cover the cost of the transaction. If this is catered to, transaction of the placement takes place.
Step #6-Scrutinising the deal
In regard to the investment plan, investors are required to now be constantly vigilant of their deal and monitor the performance of their shares. This review of the performance of the investment can be easily done by logging into the trading account, at any point in time.
Step #7- Shares Sale
This step is optional. If the investor desires to sell his shares, he can do so immediately at the best price currently available (market order) or set the minimum sale price he is willing to accept (limit order).
One should remember that making informed trading decisions is crucial to the success of any investments. Staying updated with the economy, macro and micro economic factors impacting the share market and diversification for risk cushion should be given some food for thought.
