Online share trading allows you to buy and sell shares in publicly listed companies over the Internet. Where previously you needed a broker in order to access the share market, these days investors can trade directly by opening a share trading account with an online share trading platform.
This guide allows you to easily compare online share trading accounts, and takes you through the steps involved when choosing a platform.
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When they think of share trading, many people still imagine a crowded and chaotic trading room floor. The reality is that thanks to modern technology, the vast majority of share trading is done online. According to a report from Investment Trends, the number of active Australian online share investors grew from 595,000 in November 2014 to 635,000 in May 2017.
Trading shares online offers a secure and easy way to manage your investments. You can place trades at a time and place convenient to you, while buying and selling shares offers the potential to benefit from share price increases and also enjoy an income from dividend payments.
There are of course risks attached to trading shares, including the potential to lose the money you invest, so it’s important to make sure you’re aware of those risks before you start trading.
You'll need to carefully consider your trading needs before deciding on the right online share trading platform. Some of the issues to consider include:
Your trading knowledge and experience. Some online share trading platforms, for example CommSec and Westpac Online Investing, are designed to suit retail investors, rather than institutional investors and traders. Other trading platforms have special features geared towards highly experienced traders, such as advanced charting tools, speedy execution of trades and live market data. These features may come at a cost, however, and may not add much value if you are a less experienced trader.
The markets you can access. Some share trading platforms only provide access to companies listed on the Australian Securities Exchange (ASX) while others will also allow you to place trades on international markets. Some trading platforms will also provide access to other trading instruments, for example forex and contracts for difference (CFDs).
The fees involved. There are two main costs you need to consider when choosing a share trading platform: the brokerage fee and the ongoing fee. The brokerage fee applies each time you place a trade and is usually around $10-$25, but could be higher based on the size of the transaction. Ongoing subscription fees are charged monthly and vary depending on the provider and the account features you select.
Trading resources. From educational tutorials to research and investment advice, check what tools a platform offers to help you make informed trading decisions.
Customer service. If you ever have a problem or need help with a trade, check to make sure you will be able to access prompt and helpful customer support.
How to open a share trading account
The exact process for opening a share trading account varies depending on the trading platform you select. However, you'll generally need to complete the following steps when signing up:
Choose your broker.Research a range of options to find the online stockbroking provider that offers all the features you want at an affordable price. Some providers also offer a choice of share trading platforms, for example a free web-based platform for casual investors and a more complicated software package with a monthly subscription fee for experienced traders.
Choose your membership level. Some providers offer a choice of membership tiers, each with a different level of features and a different ongoing fee. For example, you may need to choose between a Bronze, Silver or Gold trading account.
Provide your details. You'll need to provide your full name and a valid form of photo ID, as well as your email address, phone number, residential address and Tax File Number (TFN).
Link your bank account. You’ll need to supply details of the bank account which will be used to finance your trades and you may be required to deposit a minimum amount. Some share trading platforms will also require you to open a cash management account with a specific financial institution before you can start trading.
Submit your application. Your application to open a share trading account will usually be processed within 1-2 business days.
Start trading. Once your application has been approved you can login to your account and start trading.
It’s also worth pointing out that it can be a lot easier to open a share trading account if you're an existing customer of the same financial institution; for example if you’re a CommBank customer opening a CommSec share trading account. In this case, you won’t have to provide your name, contact information or proof of ID.
Did you have these enquiries about opening a share trading account?
This depends on the share trading platform you select. Some are only open to Australian residents while others accept customers from all over the world.
Some share trading platforms don't charge anything to open an account. However, other platforms that offer in-depth research and dynamic market data often attract monthly fees. Make sure you're also aware that a brokerage fee will always apply when you place a trade.
Yes, many online share brokers also offer a phone trading service.
Not necessarily. You can buy shares in a float (also known as an initial public offering or IPO) by filling out an application form in the prospectus and paying by cheque, while it's also possible to purchase shares through a managed fund. You may even be able to purchase shares in the company you work for as part of an employee share scheme.
Not necessarily. As per the above question, you can also buy shares through an IPO, managed fund or employee share scheme.
Yes, many platforms will allow you to open a joint account.
Tim Falk is a writer for Finder, writing across a diverse range of topics. Over the course of his 15-year writing career, Tim has reported on everything from travel and personal finance to pets and TV soap operas. When he’s not staring at his computer, you can usually find him exploring the great outdoors.
This depends on the share trading platform you select. Some are only open to Australian residents while others accept customers from all over the world. You may check this by going to the share trading platform’s website and looking for the requirements necessary in creating an account. Hope this helps!
When setting up an online trading account, does the funding account have to be in your own name or can it be a nominated third party’s account, eg a partner or a parent?
Thanks
If you wish to apply with your name and someone else, e.g. your partner, you can apply for a joint account. Please note that the steps may vary slightly depending on the broker of your choice.
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I am not an Australian , How can T open An trading Account ?
Hi Chau,
Thank you for reaching out to finder.
This depends on the share trading platform you select. Some are only open to Australian residents while others accept customers from all over the world. You may check this by going to the share trading platform’s website and looking for the requirements necessary in creating an account. Hope this helps!
Cheers,
Reggie
When setting up an online trading account, does the funding account have to be in your own name or can it be a nominated third party’s account, eg a partner or a parent?
Thanks
Hi Rachel,
Thanks for your inquiry.
If you wish to apply with your name and someone else, e.g. your partner, you can apply for a joint account. Please note that the steps may vary slightly depending on the broker of your choice.
Cheers,
Rench