What is Share Trading?

Share trading is the buying and selling of company stock with the aim of making a profit. It allows you to obtain legal ownership in a specific company. Once you have shares in a company you own part of the underlying asset. This means you can receive company dividends and are able to vote in company meetings.

When you buy or sell shares, the trader enters into a contract to exchange the legal ownership of the shares for money. This exchange is called ‘settlement’ and usually occurs two business days after the trade takes place. You can purchase shares through a broker, using individually-held electronic funds or leverage your share trading using a margin loan from a margin loan provider.

A CMC Markets stockbroking account enables you to easily and efficiently access the direct share market. It includes competitive online brokerage, order processing in less than a second, and unlimited free conditional orders for all clients. Our stockbroking platforms also gives you access to in-built fundamental research and risk analysis tools.     

What are Shares?

Shares are units of ownership in individual companies. Owning shares entitles the holder to a proportion of the companies’ profits. When you share trade, profits come from increases in the value of company shares and the payment of dividends to shareholders, and these are based on company performance.

Investors have seen the stock market offer better long-term returns than many other investments. With low minimum investments, you don’t need significant capital to get started and there are thousands of companies across a wide range of market sectors for you to choose from.

What Stocks to Trade?

ASX Listed Securities

Choose from an extensive selection of Australian shares. There are over 2200 companies listed on the Australian Securities Exchange (ASX), covering most sectors of the Australian economy including financial services, industrials and healthcare. Use the integrated technical and fundamental research available on our share trading platform to identify opportunities and build a diversified investment portfolio.


CMC Markets
CMC Markets

SSX Listed Securities

We were the first accredited broker to offer our clients shares through the Sydney Stock Exchange (SSX). Via the SSX, CMC Markets Stockbroking clients have the opportunity to invest in growth-oriented companies across Australia and Asia. Note that trading SSX shares is limited to phone trading.

T+2 Settlement

When you buy or sell shares, warrants, ETFs and other listed instruments through a CMC Markets share trading account, you enter a contract to exchange the legal ownership of those instruments for money – this exchange is called 'settlement'. In today’s market, standard settlement occurs two business days (T+2) after a trade takes place.

How to trade shares

When you buy or sell shares, warrants, ETFs and other listed instruments through a CMC Markets share trading account, you enter a contract to exchange the legal ownership of those instruments for money – this exchange is called 'settlement'. In today’s market, standard settlement occurs two business days (T+2) after a trade takes place.

When it comes to trading stocks, you can choose to either buy or sell via your share trading account. If you want to buy shares, you would make a bid. If you want to sell shares, you would make an offer. The bid is the highest price someone in the market is willing to pay, while the offer is the lowest price someone is willing to sell. There are a number of different types of orders you can place, such as market order and limit order. Which type of order you use depends on your trading goals.

Finding the stock for company XYZ
 
In this example, you want to find the stock for company XYZ. You can either look at the top shares for the day on the dashboard, or search for the company by its name or code.
 
Select the company from the menu to access the company’s market data, course of sale, research, charts and more.

CMC Markets

Placing a trade for XYZ
 
In order to place a trade for company XYZ, go to the ‘Trade’ option on the menu bar. You can choose to ‘buy ‘ or ‘sell’ directly from the menu

CMC Markets

This will display the ‘Place order’ form. The same order form is used for both buying and selling a stock.
You need to provide the following details to place the trade:


  • The stock field will show the company whose stock you are buying. Here it is XYZ
  • On order type select ‘Buy’ or ‘Sell’ depending on your order
  • Specify the number of shares you want to buy in the quantity field, which in this example is 100.
  • Select the order instructions – choose between ‘Limit price’, ‘At market’, or ‘Conditional order’*. These are conditions set to mark the price at which you will place a trade for XYZ
  • You can also place an expiry on the order by setting one of the ‘Expiry definitions’**
  • The final step is to enter your trading PIN to confirm the order
CMC Markets

*Order instructions:
Limit price – a maximum price on a buy order or a minimum price on a sell order. If the market doesn’t reach the set price, the order won’t be executed.
At market – an order that you use to specify the direction and size of a trade, but not the price which could be placed three price steps above or below the last sale. This ensures your order will be filled as quickly as possible.
Conditional order – an order that sets a ‘trigger’ to execute based on a set of criteria or market conditions.
 
**Expiry definitions:
Good till cancelled – the order will not expire until it is filled or the stock is purged by the ASX.
Day only – this type of order will expire at the end of the day if it has not been filled.
Stop loss – an option to submit an order to the market to close your position when the price reaches your specified stop-loss level.
Take profit – an option to submit an order to the market to close an open position at a more profitable price compared to the price when placing the order

Buying the Stock

Having found the company XYZ, you can see the stock is currently valued at $10. Let’s assume that you think XYZ’s price will rise in value, and you want to buy 100 shares of XYZ.

Scenario 1 – buy at a limited stock price
 
You want to buy the shares at $10 each, so choose the limit price option to freeze the order at that price. The buy order will not be processed unless the share value is the same.

CMC Markets

Outcome A: Profitable trade
Your prediction was correct and the price for XYZ increased during the next week from $10 to $12. The value has moved $2. Multiply the moved value with the number of shares you bought (100 shares) to calculate your profit if you choose to sell at that point: $2 x 100 = $200.
 
Outcome B: Losing trade
Unfortunately your prediction was wrong and the price for XYZ dropped during the next few weeks from $10 to $6. The value has moved $4 against you. Multiply the moved value with the number of shares you bought (100 shares) to calculate your loss if you choose to sell at that point: $6 x 100 = $400.

Scenario 2 – buy at market price
Just before you placed the order, you found that the stock price started to move higher than $10. You now believe that the company stock is going to rise and want to place an order for the stock immediately.
 
Select the ‘At market’ option, which will lock the price three steps above the last trade at the time of your order. This type of order is normally filled quickly

CMC Markets

Outcome A: Profitable trade
Your prediction was correct and the price for XYZ increased quickly after your order was processed. The value has moved $5 from $10 to $15. Multiply the moved value with the number of shares you bought (100 shares) to calculate your profit if you choose to sell at that point: $5 x 100 = $500.

Outcome B: Losing trade
Unfortunately the price for XYZ dropped considerably. At the time of placing the order the stock price was at $10, but when your order was processed the value dropped to $9.90. Even though you bought the stock at a lower price, the stock went on a downward spiral, with the value resting at $4 by the end of the month. So the moved value is ($9.90 - $4 = $5.90). Multiply the moved value with the number of shares you bought (100 shares) to calculate your loss if you choose to sell at that point: $5.90 x 100 = $590

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