As a beginner stock trader in AU, it is essential to become familiar with the types of stocks and how they are traded. You can use many available resources to help you learn about the stock market and how to trade stocks. It is also essential to understand the risks involved in trading stocks and find a broker you can trust.
What are the different stocks?
There two main types of stocks are common stock and preferred stock. Common stock is the most popular type of stock, representing ownership in a company. Preferred stock pays fixed dividends, and many traders prefer it over common stock when it comes to receiving assets in the event of liquidation.
How do you trade stocks?
Stocks are traded on an exchange, such as the Australian Securities Exchange (ASX). When you buy stocks, you are buying shares of ownership in a company listed on the exchange. You can buy or sell stocks through a broker. You can have a look at the stocks you can trade in Australia via Saxo Markets.
How do I find a broker?
When you are ready to start trading stocks, you will need to find a broker. There are many brokers available, so it is essential to compare different brokers to find the one that best suits your needs. You can search for brokers online or ask friends and family for recommendations.
What to consider when selecting a broker
- Commission rates
- Services offered
- Minimum account balances
- Customer service
- Ease of use
What are the risks involved in trading stocks?
Volatility is the degree to which the price of a security, such as a stock, fluctuates. A stock with high volatility is riskier than a stock with low volatility.
Liquidity refers to how easily securities can be bought or sold. Highly liquid security can be traded quickly and at a low cost. A security that is not very liquid may be challenging to sell and trade at a higher price.
Market risk is the risk that the market will go down and your stocks lose value. This risk is present in all markets, but it is imperative in the stock market.
Interest rate risk
Interest rate risk is that interest rates will rise, and your stocks lose value. This risk is present in all markets, but it is imperative in the stock market.
What resources can you use to research stocks?
ASX is the primary stock market in Australia, and it offers a wide range of resources to help you research stocks.
Yahoo Finance is a website that offers financial news, data, and tools. It also has a stock screener that you can use to research stocks.
Investopedia is a website that offers investment information and educational resources. It has a stock simulator that you can use to practice trading stocks.
How to trade stocks in Australia
Open an account with a broker
To open an account, you’ll need to provide your details, including your name, date of birth, address, and contact information. You’ll also need to provide ID proof, such as a driver’s license or passport.
Deposit money into your account
After opening an account, you will need to deposit money into it before you can start trading. Most brokers accept bank transfers, credit cards, and debit cards.
After depositing your money, you can start researching stocks on your trading platform. It is vital to research a stock before you buy it. You can use resources like ASX, Yahoo Finance, or Investopedia to research company backgrounds and you can use your platform market charts to take a look back at the stock’s past performance.
When you are ready to buy a stock, you must place an order with your broker. You will need to specify the stock you want to buy, the number of shares, and the price you are willing to pay.
Monitor your stocks
After buying a stock, it is essential to monitor it by watching the stock price and the news about the company. If the stock price goes down, you may want to sell it.