The Australian Securities Exchange (ASX) is one of the world’s largest exchange groups by size. It is also Australia's largest interest rate derivatives market. If you have decided to invest in stocks, ASX is one of the perfect places to begin. In this guide, we explain how investors can start ASX share trading.
Understanding ASX and how it works
Before we get deep into how to start investing in ASX stocks, let’s understand the basics first:
What is ASX, and what types of stocks are traded there?
ASX is an integrated exchange that facilitates listings, trading, settlement, clearing, and more. It was created back in July 2006 after the merger of the Australian Stock Exchange and the Sydney Futures Exchange. Today, it is among the world’s top 10 listed exchange groups by market capitalisation.
There are three main types of stocks trading in ASX:
Ordinary shares – Represent equity ownership in a company, voting rights, and entitlement of dividends.
Preference shares – Priority over ordinary shareholders during dividend payments or winding up the company.
Partly-paid shares – Installment-based shares payment until full payment is made.
ASX business hours
The ASX business hours for normal trading are from 10 AM to 4 PM (Sydney time), Monday to Friday, excluding public holidays. You get a continuous trading period of 6 hours per day.
In addition, there is a pre-open period from 7 AM to 10 AM, during which traders can place orders. Similarly, there is a post-close trading session from 4:12 PM to 6:50 PM, during which investors settle trades.
How does stock trading work in Australia?
The typical workflow is as follows:
Investors open a brokerage account with a licensed broker, which acts as an intermediary to buy and sell shares.
Investors use their brokerage account to analyse the market and buy/sell ASX stocks.
Trader settlement occurs in about two business days (T+2) through the CHESS system, which involves transferring shares ownership.
Trading costs are deducted for each trade, including brokerage fees, ASX fees, capital gains tax (CGT), and more.
The investor receives the dividend (a sum of money from the profit based on the investor's share in the company).
Choosing the right ASX trading platform
When you open a trading account, an ASX trading platform like Tiger Trade may be helpful. An ASX trading platform like Tiger Trade is a digital platform with a graphical interface provided by Tiger Brokers. It allows you to view the ASX market, visualise stock performance with different indicators, and buy/sell stocks. Think of it as an intermediary that provides a pathway to invest in the ASX.
Key features to look for in an ASX trading platform
Below are six key features to look for in an ASX stocks trading platform:
Interface and usability: With an easy-to-use interface, everything is accessible from simple clicks.
Fees/commissions: Lower fees and commissions for trading ASX stocks. Clear commission structure with no hidden charges.
Research and educational resources: Offering insightful analytics, financial news, and other educational resources that can help understand market trends and make data-driven investment decisions.
Regulatory compliance: Complies with ASIC and other regulations.
Reputation and reviews: With a well-reputed name in the market, backed by positive feedback from existing users.
Mobile trading: A mobile trading app provides a seamless trading experience.
Step-by-step guide to start investing
Follow the below step-by-step approach to get started with stock trading:
Step 1: set your investment goals
First thing first, set your investment goals, including:
Purpose of investment
Investment amount
Duration of investment
Risk level
Preferred ASX stocks
Step 2: open a brokerage account
When you choose an ASX trading platform to open a brokerage account, prioritise platforms that are CHESS-sponsored. CHESS is the official system for settling and registering shares on the ASX. The CHESS-sponsored platform will make sure your shares are in your name. Every trade and holding gets a unique HIN for registration.
Step 3: research and choose stocks based on market performance
You have to undertake thorough research to analyse market trends and identify potential stocks. Based on your research, select a few stocks to invest in.
Step 4: place your first trade during ASX opening times
Use the trading platform to place your first trade during ASX opening hours. To make the trade, you have to:
Pick the stock
Choose the current market price or set a specific price to buy
Specify how many shares you want to buy
Confirm the trade
Step 5: monitor and manage your investments
Keep evaluating market conditions and stock performance. Adjust your portfolio by buying/selling ASX stocks based on their performance or market trends.
Conclusion
The process to start trading stocks is straightforward. All you need is a powerful ASX trading platform like Tiger Trade. We provide CHESS-sponsored trading, free real-time financial news and low brokerage fees. So, what are you waiting for? Download the Tiger Trade app to begin your trading journey and start practising your stock trading without real capital risk with our free demo account.
Disclaimer: Information provided may contain general advice without taking into account your objectives, financial situations or needs.
Capital at risk. See FSG, risk disclosures, PDS, TMD and T&Cs via our website before trading.
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