Tap Into The Investing Highway
Sydney Morning Herald
Wednesday January 19, 2000
The first click of the mouse which puts you on the road to share-trading independence can be nerve-racking, so make sure you do your homework.
Buying shares through an online discount broker is a popular and convenient alternative for the increasing number of Australian shareholders with an interest in managing their own portfolios. With lead-in prices of $29 plus tax for a trade, the sharemarket no longer appears to be the exclusive playground of the well-heeled and their personal stockbrokers.
There are a variety of options on offer and finding the one to suit your style and trading ethos can take a lot of research. Some of that work can be done by checking out online broker information services like www.yourbroker.com.au, or look up the www.asx.com.au broker referral service.
Before heading down the discount broking track, you should ascertain your investment personality and decide what trading style you want to follow. If you don't have the time and patience to do your own research a managed fund or a
full-service broker might be preferable.
It is a good idea to know your strategy, to feel comfortable with the type of bid you make and your buy and sell price, because the first click of the mouse which puts you on the road to share-trading independence can be quite nerve-racking.
Education is one of the keys to successful investing. Reading newspapers and surfing online to glean information from companies that might interest you are ways to gather information to help you make your decisions. A selection of sites which may help in this respect include: www.investorweb.com.au, www.aspectfinancial.com.au, www.fap.com.au,
www.tradingroom.com.au and www.money-manager.com.au.
When you decide to make a purchase, it is a good idea to put a price limit on your buy order. If you don't, there is no guarantee at what price your trade will be made and you could find that a share you considered buying could have doubled in price. Conversely, the same is true when selling.
You should bear in mind that not even the professionals are successful every time. Knowing when to cut your losses is as important as knowing when to buy and sell.
If you decide that using an online broker is for you, consider the following points:
How many trades are you likely to make a year? If you trade infrequently, paying
monthly subscription fees can be uneconomical.
Do you require research information? Is there a subscription fee for this information? Is there access to a news service like AAP or Reuters?
What are the fees per trade? Are there discounts for volume trading and is there a limit on the maximum or minimum trade?
Do you need a special bank account? Is a minimum amount required? How long does it take to transfer money in and out of this account? Are any additional fees involved?
How reliable is the computer system used by the broker?
How quickly is the trade executed? Can all listed shares be traded? Is there access to the US market, money market, options, warrants or other derivatives?
Can limits be placed on orders, or are trades made at market value?
What telephone support is available?
Don't forget that you can have more than one broker and that you can also use a full-service broker, someone who will give advice and make the trade. The important thing is to use the service or combination of services which suit your requirements.
© 2000 Sydney Morning Herald