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6 steps to open a trading account
Choose a broker
Select your membership level
Provide ID
Link bank account
Submit application
Start trading
If you want to invest in shares, you'll need to sign up with a stockbroker.
You have 2 choices here – you can hire the services of a traditional full-service broker or you can do the trading yourself through an online broker (share trading platforms).
Online brokers allow you to buy and sell shares in publicly listed companies over the internet. You can set up an account and it will usually be activated within 1-2 business days.
Where previously you needed to call up a broker to buy and sell the shares for you, these days, investors can trade directly by opening an online share trading account for a much lower cost.
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Important: The standard brokerage fee displayed is the trade cost for new customers to purchase $1,000 of either Australian or US shares. Where a platform charges different fees for both US and Australian shares we show the lower of the two. Where both CHESS sponsored and custodian shares are offered, we display the cheapest option.
Why share trade?
If you take a historical period, buying shares can be a financially rewarding experience.
While the share market will be volatile, if you take a historical perspective, share market indexes, say the Australian ASX200 or the US S&P 500, historically have always reached a new peak, even if past performance is not a reliable indicator of future returns.
Now this doesn't mean that every single company listed on an exchange will make money. In fact, the majority of businesses on an index will underperform the market as a whole. But winners will often offset losing stocks.
To illustrate the point, every year, Vanguard releases a chart that shows what $10,000 invested over 30 years would look like.
As you can see, this period includes multiple recessions, conflicts and changing political administrations. But from a market perspective, you would have gained financially if you bought and held stocks.
How do I choose an online share trading platform?
Different online share trading platforms come with a range of different features and markets they'll let you invest in. As such, you should carefully consider your needs and objectives before signing up. For example, if you want to buy Australian shares, you'll need to open an ASX share trading account. If you want to buy US stocks, you'll need a platform with access to Wall Street.
Some of the main things to consider include the following:
Trading experience. Some online share trading platforms, for example CommSec and Selfwealth, 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. However, these features may come at a cost and may not add much value if you are a less experienced trader.
Available markets. 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, such as forex and contracts for difference (CFDs).
The fees involved. There are 2 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, depending on the size of the trade. Newer providers are coming into the market and are looking to compete on price. 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.
Investors should prioritise simplicity, security and cost-effectiveness when choosing a trading platform... Finally, make sure the platform has an AFSL (Australian Financial Services Licence) for that peace of mind that it is being regulated by ASIC.
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 that 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 log in 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.
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.
Disclaimer: This information should not be interpreted as an endorsement of futures, stocks, ETFs, CFDs, options or any specific provider, service or offering. It should not be relied upon as investment advice or construed as providing recommendations of any kind. Futures, stocks, ETFs and options trading involves substantial risk of loss and therefore are not appropriate for all investors. Trading CFDs and forex on leverage comes with a higher risk of losing money rapidly. Past performance is not an indication of future results. Consider your own circumstances, and obtain your own advice, before making any trades. Read the Product Disclosure Statement (PDS) and Target Market Determination (TMD) for the product on the provider's website.
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.
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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