How To Learn To Trade Shares In Australia

How To Learn To Trade Shares

So you have decided you want to start trading shares and you want to know where to learn how to do it? Before you get started there are a few things you need to decide on.

When You Are Able To Trade?

If you have a full time 9-5 job then it’s no good you wanting to become a day trader. You might be much better suited to being a swing trader (trading daily chart swings over a few days in time), a trend follower that buys and sells either once daily or once weekly, or possibly a long term investor. Note we didn’t mention the speculator who buys a few penny stocks and hopes they moon and any that go up a bit they sell and end up just holding all their losers long term. That’s not how to trade or invest, that’s just gambling.

If you are looking to become a day trader on the asx then we strongly recommend following someone like Nick Fabrio who is one of Australia’s best retail traders. He posts some of his trades on Twitter and you can see how a professional trades. Best of all he doesn’t have anything to sell you and is fully transparent in all his trades so you know you can trust and really learn from him. Unlike many fake guru’s (furu’s) that their sole purpose is to just sell you something or pump stocks for you to get burnt on. People like Tyson Scholz and Bhavdip143 have been accused of doing this but it’s prevalent in the Australian market and nothing seems to be done about it. So you have been warned!!!

Where Do You Want To Trade?

Do you want to sit in front of your computer for 6+ hours a day while you day trade intraday? Do you want to make a few orders after hours (possibly at night or early in the morning) then do other things all day? Do you want to be checking your phone a hundred times throughout the day (usually this is never recommended and only leads to people making bad decisions as a trader).

What Do You Want To Trade?

There are endless things you can trade from securities to crypto to coffee beans to foreign exchange. Once you have determined the timeframe you want to trade on you can then look at your trading style. Different styles might be suited to different instruments. For example if you want to be a day trader and trade normal Australian daytime hours then it’s no good wanting to trade foreign exchange as some of the biggest moves (most popular for trading) occur during the US and London opens which are often when most Australian’s are happily in bed and asleep.

How Are You Going To Trade?

For this you need to decide on a broker/platform to use. For most active trading we recommend FP Markets as they have the best offerings for active traders and some of the cheapest commissions available. You can read more about them and other Australian brokers here.

If you are going to be a long term holder you will probably best suited to using a broker like CBA’s Commsec or NAB’s Nabtrade.

How Much Size Are You Going To Trade?

You need to decide on how much money you are going to put into your trading account to use to trade with. Everyone says it needs to be an amount that you are willing to lose but obviously if you are looking to be a long term investor in asx stocks and not invest in penny stocks then often your max draw down (amount your trade account drops to when you have a few losses) might be around 50% going by the GFC and prior historical moves in the asx. In saying that then if you were to borrow or use a margin loan then at 50% LVR you would have blown up (your account goes to zero) during the GFC!!!

If you have a lower balance then you must make sure you understand commission drag and how it might affect you.

Good luck with your trading/investing and remember it’s a journey of constant learning and developing.

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