What is Online Share Trading?

Online share trading is simply buying and selling stocks (or shares) in a company over the internet. Because online trading is often cheaper and more transparent than using a traditional stockbroker, it's a popular way for investors to buy and sell shares.

To sum it up, online share trading:

· Is a simple way to buy and sell shares in a company online

· Allows you to monitor your trades with complete transparency

· Can be done on most devices with an internet connection, such as a computer, tablet or smartphone

What are the basics of online share trading?

· Shares: Owning a share, or stock, in a company means you own a very small part of that company.

· Share price: The share price will rise and fall based on supply and demand. In other words, the more people want to buy a share, the more its price will rise. Generally, the price of the share goes up and down based on what people believe about a company’s future prospects and profits.

Other factors such as broader economic conditions, market expectations, the likelihood of dividend payments, and even new laws and regulations can also affect a company’s share price. It's therefore worth keeping an eye on the market so you can make strategic decisions about when to buy or sell shares.

How does online share trading work?

At its most basic level, online share trading is essentially a modern-day marketplace. People ask a certain price for their goods (i.e. shares) and others name the price they're willing to pay for them. When these two prices match, a sale takes place and ownership of the shares changes hands. But there’s a little more to it than that.

· Making a bid: For every security listed on the share market, there will generally be a number of offers to sell at a certain price (known as ‘offers’), as well as offers to buy at a certain price (known as ‘bids’).

· Types of bids: You buy shares by putting in your own bid. This can either be an ‘at market’ order, which means you’re happy to pay the price the seller is asking, or an ‘at limit’ order, where you agree to buy if the seller comes down to a certain price.

· Trade confirmation: If there’s a match on what you’re bidding and what someone is prepared to sell it for, the transaction will take place. You’ll receive a confirmation showing details of the trade. In approximately 48 hours, the trade will ‘settle’ and you’ll receive confirmation that you’re now the owner of the shares.

What shares can you buy and sell online?

Most Australian-based online share trading platforms will give you direct access to shares listed on the Australian Stock Exchange (ASX). They may also give you access to shares on other exchanges, including a limited number of shares listed on overseas exchanges, such as the New York Stock Exchange (NYSE) and Nasdaq, which lists technology.

When can you use online share trading?

There are both short-term and long-term strategies for growing your share portfolio. Long-term strategies consider companies with the potential to grow over time, while short-term strategies rely on day-to-day price movements (known as volatility). Short-term strategies involve more frequent trades in order to see a return on your investment.

If you're interested in building an online portfolio, start by comparing margin loans or finding an online broker to simplify the process.

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