Fri. Jan 21st, 2022

Understanding the essentials of stock trading

The Australian stock market is amongst the biggest globally, with about 1.8 trillion Australian dollars market capitalisation. It has over 2000 listed companies, more than half of which are foreign-owned or traded on other exchanges worldwide. With so much money being invested every day, it becomes essential to understand what factors affect stocks and how these factors will impact the movement of stocks both in the short term and long term.

You can visit Saxo Bank for all your stock trading essentials in Australia. They offer sufficient training and resources to set you up for success.

6 Essential stock trading tips for Individual Investors:

People invest in shares mainly for capital appreciation- the process of buying low and selling high. This enables an individual investor to make huge profits from share ownership, providing they keep their wits about them and remain focused on the long-term prospects of the investment rather than trying to buy and sell shares based on short term sentiment and market fluctuations.

When individual investors purchase shares, they intend to hold them for an extended period – usually years. This contrasts with most institutional investors who hold stocks only for days, weeks or months at a time as dictated by their investment strategies or investment mandates.


Individual investors often fall into one of two categories: those who invest in individual stocks and those who invest in mutual funds/ETFs (exchange-traded funds). Concerning picking stocks, individuals will typically select companies that they believe have strong earnings growth potential over the next year or maybe three-five years and beyond. These companies are either leaders within their respective sectors or offer a new product or service that consumers cannot get enough of.


Most investors choose to buy and hold Australian stocks for the long term, depending on an individual company’s ability to continue growing its profits (and paying dividends) over time. If the market crashes, most people still hold their stocks because they recognise that even in a bad year, some areas of the economy may do well while others struggle. Once this occurs, it is typically only recommended to sell when an individual company continues stagnating or begins to falter dramatically in earnings growth.


There are thousands of stocks you can research and purchase should you want to go down this path, but be prepared for some sleepless nights as well as indecision because you have plenty of choices to choose from.


Many people prefer investing in mutual funds or ETFs, which are baskets that hold multiple stocks at once. It is much easier to own a fund than individual shares. The only work involved in making one purchase and deciding what percentage of your money you want to be tied up in each type, such as large-cap growth stocks, large-cap value stocks and so on. You can change these proportions whenever you want for a small fee. This is often seen as the best option available for those who do not have the time, resources, or expertise required to pick individual companies for themselves because it still permits them to invest their money wisely.


You can find mutual funds/ETFs with every investment objective imaginable, so you have many choices. The best course of action is to speak to a financial advisor who can help determine your risk tolerance and hear about any other financial goals you may have (such as buying a home or retiring early). From there, they will be able to recommend appropriate investments tailored to your exact needs.


When you are ready to start trading your Australian stocks or ETFs, you will need to open a brokerage account with an intermediary such as the ones listed earlier in this article. Your next step should be to speak with its customer service department about how much money they require for opening an account and what kinds of fees you can expect to pay on top of that (e.g., commissions). Then, place orders whenever you wish based on your research and preferences!

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