Buy. Sell. What are the ins and outs of online share trading?
Last year’s launch of Facebook shares was one of the most hyped stock market floats of recent times.
And the lacklustre performance of the IPO could have left many Australians traders out of pocket had the US company been easier to buy online.
The Facebook float was so popular that many trading firms set sale requirements that eliminated most small investors.
One underwriter demanded its customers have $500,000 in their accounts and had made 36 trades in the past year to be eligible. Another asked for $250,000 and 30 trades in three months.
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If the Facebook story spurred anyone’s first investigation into online trading, chances are that account is still idle.
However, the account can still be ready for your next bullish move, with buying shares online becoming a popular tool in many Australian investment kits.
How to buy shares online
Just because it’s easy, don’t forget the homework. Before you invest in any company you should understand the benefits and risks. Your bank may already have an electronic trading account option or you can hunt around for the best deal.
Expect to pay around $15 to $30 per trade with a discount house.
An online account will usually give you the option of buying shares ‘at market’ or ‘at limit’. This means you can either accept the current price or wait to buy at the highest price you are willing to pay for the shares.
How different is buying shares online?
A full-service stockbroker or financial planner usually buys and sells on the behalf of their clients. At the same time they offer advice, recommendations, planning and alternative investment options.
They can tell you whether a share price could be set to change due to something as simple as an impending announcement or distribution of dividends. If you have this knowledge covered, many banks offer live stock quotes, charts, indicators and market commentaries to complement your hunt.
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How to have an online stock portfolio
Work out what you want to achieve from your investments. Are you bullish or bearish (risk taking or risk avoiding) about the state of the current market? What sort of stocks do you need to buy to fit within your investment goals? Also, think about what return you want from your investments and a realistic time frame to get there.
If you have a free Yahoo!7 login you can use the portfolio section of Yahoo!7 Finance to keep track of different stocks with your own personalised watchlist, and set up alerts so you can receive news of when your stock in announcing important changes.
Also useful are the stock quote pages which include current price, press releases, and company information.
How to buy non-Australian shares/stocks online
Investors can invest overseas using the ASX World Link Service or an online service. Major brokers such as CommSec, HSBC and Macquarie all offer access to a number of overseas stock exchanges.
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Although online trading makes jumping in and out of the stock market so easy, shares are often seen as a way to build wealth over time.
However, for those willing to do careful research, it could pay to have the options ready.
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