Relying upon the basic principle of purchasing a position for a certain price and selling this position once its value reaches a certain margin, even novice investors can enjoy an impressive amount of financial freedom. Those who may be new to this strategy will likely have many questions.
CMC Markets has therefore made the effort to provide a quick and handy guide. Let us take a basic look behind a handful of underlying principles to keep in mind.
Appreciating the Market
The primary resource that investors utilise is known as the Australian Securities Exchange (ASX). With an estimated market capitalisation of approximately $1.6 trillion Australian dollars, it is one of the largest indices in the world. There are currently no less than 2,194 listings, so most investors can encounter the position that they desire. Some of the major blue-chip companies trading on the ASX include:
- ANZ Banking Group
- Insurance Australia
- National Australian Bank
- Woolworths Limited
- BHP Billiton Limited
Much like other indices, there are also subcategories within the main exchange. Examples are the ASX 20, the ASX 50 and the ASX 100. These are all determined by the market capitalisation of specific companies.
Basic Trading Principles
In the most general sense, the term “shares” actually refers to what are known as Fully Paid Ordinary (FPO) shares. Options trading and managed funds are the two primary methods that investors will employ. Once a specific share is requested with the help of a broker, this representative will purchase the asset at the best price offered at the time. The main strategy is to wait for the share to rise to a certain predetermined level. Assuming that this occurs, the client can then sell the share to accrue a profit. Please note that the ASX supports both short- and long-term positions. This is entirely up to the discretion of the investor.
The Use of Electronic Platforms
Thanks to the continuing advancement of the Internet, the most common way to invest in the Australian Securities Exchange is through the use of a third-party online broker. Clients will have instantaneous access to a number of discrete positions while they are able to follow the latest news feeds and enjoy advanced charting techniques. This is also a great option due to the fact that electronic trading helps to eliminate the hefty fees often associated with traditional middlemen. As a result, higher profit margins can be enjoyed. Only the most dedicated share trading systems such as those offered at CMC Markets should be employed, for the investor is guaranteed the utmost levels of efficiency and transparency.
Other Information in Regards to the ASX
Normal trading hours take place between Monday and Friday from 7:00 in the morning until 4:00 in the afternoon. The market can be monitored in real time utilising CMC Markets as a centralised portal. Like any investment strategy, losses can and will occur from time to time. It is for this reason that a great deal of research should always take place before opening up a live trading account.
