The Australian Securities Exchange (ASX) is an over-the-counter trade market regulated by the Australian Securities & Investments Commission (ASIC). It’s ranked among the top stock trading markets globally and is an asset considered by many investors.
This quick guide will fill you in on how to buy ASX shares.
1. Find A Registered Stockbroker
You’ll need the help of a registered stockbroker to trade on the ASX. A stockbroker is a financial professional who facilitates buying and selling shares on the securities exchange market. There are three types of stockbrokers:
- Online stockbrokers: As the name implies, an online stockbroker allows users to buy, sell, or trade stocks on an online platform. Nowadays, there are a wide variety of choices available, such as Maqro Capital and others, most of which conduct independent research to provide investment information and a selection of stocks to choose from.
- Full-time service stockbrokers: These provide exclusive interpersonal service to you and give you access to information meant for full-time service customers. This stockbroker will provide you with personalised information about the ASX and better stock options based on your needs.
- Discount stockbrokers: Unlike the first two, discount stockbrokers will only follow up on your orders. They don’t offer advice or market research analysis for you.
A stockbroker will deal directly with you and cN you manage your securities exchange portfolio. Apart from helping you build a portfolio, some stockbrokers also do the following:
- Keep you updated with new policies and legislation on finances and tax obligations.
- Monitor the ASX market performances and provide valuable feedback.
- Research a particular market and provide invaluable analysis for future investment options.
Stockbrokers are sometimes referred to as financial investors. They can also suggest a suitable type of trading based on your needs.
2. Register For A Trading Account
When you’ve selected a brokerage platform you want to use, the next step is to sign up for an account. Registration is usually free with most brokers.
You’ll need to do the following to complete registration:
- Provide your profile information: government name, physical and street address, date of birth, and telephone number.
- Provide your TFN (tax file number).
- Link your bank account number to the trading account.
- Prove your identity by sending a scanned copy of your government-issued passport or driver’s license.
Finally, before you start trading, you’ll need to deposit a minimum amount into your account.
3. Choose The Shares You Want To Purchase
Picking shares is the most important part of trading on the ASX. However, it can also be daunting and intimidating. Some people use their stockbroker’s market research tools to determine the suitable shares for their investment objectives.
Unless you already own stock in a publicly traded company, the minimum value of shares you can trade on the ASX is AUD$500. Therefore, if a company’s stock value per share is AUD$5, you’ll have to purchase a minimum of 100 shares.
4. Place Your Order
After deciding on stock to trade on the ASX, the next thing to do is place your order. You can enter the trade directly through market execution or place a pending order. For the latter, your trade executes automatically once the market reaches your predefined price. This is popular among people who on’t want to stare at the charts, waiting for the prices to rise or fall to a perfect entry point.
Remember, you must have sufficient funds in your online trading account to purchase securities and pay brokerage fees.
5. Track Performance
Once your trade has been approved, you can monitor your stock’s performance based on the type of trade you chose earlier. You can check your performance monthly if you’re a long-term investor, or daily if you choose the short-term strategy.
6. Sell Your Shares
Whether you’re trading long-term or short-term, the goal is to sell shares for a profit at some point. A higher price for your shares would translate to higher profit margins.
The whole process of selling your shares is similar to buying. All you have to do is set a market order. Under a limit order, you’ll have to set the minimum sale price for your shares. You can also sell your shares at the current market price and exit the trade immediately.
The ASX offers an opportunity for investors to invest in one of the most popular global stock markets. However, you need a lot of guidance as a beginner trader. A reliable broker can help you choose the appropriate stock on the ASX based on your investment needs. Trading on the ASX involves insightful stock market analysis and calculated risks. However, it remains a gamble, meaning you can win or lose any particular trade. Your winning point is picking a strategy that has positive returns in the long term.