Stocks are bought and sold on the Stock Exchange. In Australia, we have the Australian Stock Exchange (ASX) in Sydney – www.asx.com.au. To buy stocks you can open an online trading account or find a Stock Broker who can buy and sell on your behalf. Individuals cannot buy directly from the ASX.
EquitySmart carries a number of news feeds relevant to the stock market within the platform and has links to information available on every listed stock. You can also find information via the ASX website, the Company’s own website, business news channels and print media.
Your online trading platform will enter your shares in your portfolio. Your shares are also registered with CHESS (Clearing House Electronic Subregister System) under your HIN (Holder Identification Number) and a statement of your share holdings will be sent to your registered address.
You will also enter the details of your share purchases into your EquitySmart platform to allow you to monitor the stock and set stop losses etc. EquitySmart also produces detailed records of your current holdings and previous buy and sell activities.
When buying online, you need to have sufficient cleared funds in your online trading account before you can place your order. Your stockbroker will advise their trading terms with you prior to making any purchases for you.
The proceeds of the sale are credited to your online trading account following the sale of your shares. Your stockbroker will advise their trading terms with you prior to making any sales for you.
Yes you can purchase more shares immediately; however, the sale must be settled before you are able to withdraw the funds.
Penny Stocks are stocks that usually trade at low prices per share; in Australia that is generally under $1.00. The Penny Stock market can be risky, highly volatile and often subject to manipulation by unscrupulous traders. These traders often promote a stock they have purchased cheaply, only to sell out when the price has reached a certain level. This is called a “pump and dump” and those left holding their shares are caught out with worthless shares.
On the other hand, there are a vast number of opportunities available (provided by EquitySmart) every day and many of these companies rise from humble beginnings to become stable and secure businesses in the medium to long term. The opportunity to take a position at an early stage of a company’s growth can add considerably to the returns you enjoy.
Going long refers to a trading strategy whereby you purchase a stock in the belief that the price of the stock will rise over time. This is the most basic form of share trading.
|Long Trading Example|
|1/01/2015||$ 5.00||1,000||$ 5,000.00|
|1/12/2015||$ 12.00||1,000||$ 12,000.00|
|Potential Profit||$ 7,000.00|
In the following instance, we purchase a share in Jan 15 for $5.00 and anticipate an 8% monthly increase in the share price.
Shorting is another way of trading shares and allows you to make a profit when the price of a share falls. In the case of a short sale, you “borrow” a stock from a broker and these shares are then sold into the market. You then wait until the price falls to your target price and then buy them back from the market at the lower price. The difference between what you sold them for initially and what you bought them back for (to return to your broker) is your profit.
|Short Trading Example|
|1/01/2015||$ 12.00||1,000||$ 12,000.00|
|1/12/2015||$ 4.80||1,000||$ 4,800.00|
|Potential Profit||$ 7,200.00|
In the following instance, we purchase a share in Jan 15 for $12.00 and anticipate an 8% monthly decrease in the share price.
The term Bull Market describes a situation where a financial market is rising in value. It generally refers to the Stock Market but can also be applied to other forms of trading such as bonds, currencies and commodities etc.
In a Bull Market, there is a great deal of investor confidence and optimism and share prices are generally rising with an expectation that this will continue.
The term Bull comes from the way in which a bull attacks its opponents – by thrusting his horns upward into the air.
The term Bear Market describes a situation where a financial market is falling in value. It generally refers to the Stock Market but can also be applied to other forms of trading such as bonds, currencies and commodities etc.
In a Bear Market, there is a lack of investor confidence and little optimism and share prices are generally falling with an expectation that this will continue.
The term Bear comes from the way in which a bull attacks its opponents – by swiping its paw in a downward direction.
You can trade with small amounts of capital; however, fees related to the buy and sell of the order need to be considered. Let’s say you buy one share in a company for $5.50 which costs you $9.00 to buy and $9.00 when you want to sell. That’s $18.00 in fees for a $5.50 share that needs to increase in value to $23.50 before you break even. If you purchased 18 shares in the same stock equalling $99.00 and costing you $18.00 in total, you would need the share price to increase by $1.00 before you broke even on fees.
A stock (or share) is a share in the ownership of a Company. By owning stock in a Company, you are entitled to a share of the profits based upon the amount of stock you own. The more stock you own, the greater your share of the Company.
Dependent upon the type of stock you own, you may have voting rights attached. This may allow you to vote on the Board elections but does not give you the right to have a say in the way the Company is run on a day to day basis.
The Stock Market offers investors the opportunity to leverage income from the movement of prices of listed Companies. It is important that you are able to identify when a price is about to move and be able to open and close your position to gain the maximum return possible. The difference between your entry price and exit price (minus commissions) determines your profit and the bigger that difference, the greater your profit.
EquitySmart incorporates a proprietary market analysis system designed to bring to your attention your next profitable trade on a daily basis and this information is crucial for any serious investor as it identifies when to enter and when to exit a position.
The ability to regularly and profitably trade stocks offers you the opportunity to increase your wealth over time. This is where the combination of EquitySmart and our comprehensive training program come together to enable this positive outcome for you.
Trading is gambling if you have no idea what you are doing. Operating on “hot tips” from a mate of a mate is a sure fire road to failure, as is trading on emotion.
Successful trading requires a trading plan which sets out a road map for your trading activities. With this in place, every trade you make is based on your trading plan and you are able to achieve your goals in a much shorter time span.
EquitySmart will work with you to develop your own trading plan, designed to meet your own personal goals.
There are a number of different types of orders you can place when purchasing stock inc:
1. Market Order
A Market Order is a buy or sell order that is to be executed immediately at the current market price. This is subject to there being buyers and sellers in the market and as such, Market Orders are generally placed when there is certainty that the order will be completed.
2. Limit Order
A Limit Order is an order to buy a stock at no more than a predetermined price or sell a stock no less that a predetermined price. Whilst this gives you control over the price your stock sells for, it does not guarantee your sale will proceed. It offers the investor the opportunity to control the price rather than the certainty of execution.
3. Time in Force (Day Order or Good for Day Order)
A Time in Force (most commonly Good for Day) Order is a market or limit order that is in place from the time the order is placed until the close of trading on that day. Once trading has closed, the order is cancelled. Should you wish to leave the order in place until filled or cancelled by you, then a Good Till Cancelled order should be placed.
4. Stop Loss Order
A Stop Loss order is an order to buy or sell a stock once the price reaches a predetermined level. This type of order is used to protect profit on a stock – either long or short.
Sell Stop Order (Long): This is placed when you believe the price of a stock is going to drop and you wish to protect your profit. If you hold a stock (purchased at $3.00) that is currently trading at $4.00 and feel it may drop, you can set a Sell Stop Order at $3.60 (10% fall). If the price reaches this level, the stock is sold at the next available price. This allows you to lock in some of the profit from your investment.
Buy Stop Order (Short): This is placed when you believe the price of a stock is going to rise and you wish to protect your profit. If you hold a stock (purchased at $4.00) that is currently trading at $3.00 and feel it may rise, you can set a Buy Stop Order at $3.30 (10% rise). If the price reaches this level, the stock is bought at the next available price. This allows you to lock in some of the profit from your investment.
Trailing Stop Loss Order: As the name suggests, this Stop Loss Order moves or trails the stock price. For example, if a stock is purchased for $3.00 with a 10% Trailing Stop Loss order and then falls to $2.71, the stop loss will not be executed as the price has not fallen by 10% ($3.00 x 90% = $2.70). The stock then turns around and rises to $5.00 which resets the Stop Loss to $4.50. Soon after, it falls again to $4.50 and the Trailing Stop Loss order becomes active and is entered as a market order.
There are 4 main areas of risk when considering the stock market as follows:
1. Market Risk
Regardless of the type of stock you have invested in, be it a small cap stock or a broad based index fund, you must understand that the overall economic conditions prevailing in Australia (and overseas) will have an effect on your investment and may cause the value of your investment to change positively or negatively.
2. Default Risk
This is directly related to the strength of the underlying investment and is especially relevant when investing is a Company through share ownership. Whilst the returns available are generally higher than those available from Term Deposits or Savings Accounts, there is the possibility that the Company may go bankrupt or not be managed well in which case, you may not receive the returns you were promised or felt achievable.
3. Inflation Risk
You must ensure that the return you achieve keeps ahead of inflation otherwise you will be “going backwards”. Financial Planners like to assume that inflation runs around 3-4% per annum over long periods of time. Unless your savings and investments are exceeding this (inc an allowance for taxation on earnings) then in real terms you are indeed “going backwards. “
By investing in the stock market, you have access to returns well in excess of inflation – regardless of the movements in the market.
4. Mortality Risk
You must take mortality risk into account when considering investments in Superannuation, insurance contracts, annuities or any investment that has a long term until maturity.
Life is short – sometimes shorter than we would like, however, you also need to plan your investments to last your lifetime. If you live longer than expected, you may well face the risk of running out of money if you have planned to spend your wealth during your retirement.
When planning any investment, be sure to consider the risks. You may find that you have a very low tolerance for risk or alternatively, you may need to adjust your risk levels to meet your financial goals.
Technical Analysis is the method of forecasting the direction of stock prices based on historical market date. The main elements studied are price and volume and these, in addition to other indicators are able to accurately predict price movements based on the previous price activities. Trends are your friends and this can have an effect on price movement as shown by investor’s emotional responses to price movements. Technical Analysis does not tend to take into account the Fundamentals of a Company; rather it believes that those factors are reflected in the current stock price.
Fundamental analysis looks at the financial statements of a Company and takes into account the Management Team, the industry in which the Company operates and who its competitors are and how they are performing. It also takes the overall economic conditions into account when valuing a stock. Fundamental Analysis relies more upon facts and figures and often uncovers undervalued stocks that offer good value once the “correct” price is recognised by the market.
You can trade any exchange traded securities inc shares, indices, bonds, hybrid securities, ETFs, Managed Funds, warrants, options and a variety of derivatives.
Your initial purchase of any ASX listed stock must be more than $500. Additional purchases of the same stock can be made in whatever volume you require or whatever is available for sale.
ASX listed stocks are able to be purchased in any whole number providing your initial purchase of any particular stock exceeds $500.
No, GST is not payable on share transactions. Depending upon your broker or platform, you will be charged a commission. This can vary from $9.90 to $100+ dollars per transaction, dependent upon the level of service provided.
During market hours, your orders are able to be processed immediately. Online platforms offer immediate placement however broker’s times may vary depending on their own internal processes. The speed of your internet connection will also affect the time taken for your order to make it to the market.
Prior to the market opening (Pre Open), a buyer can overbid sellers to have their bit at the top of the market. Sellers may also wish to offer their shares at a lower price than the current sell price to ensure the sale goes ahead.
Just prior to first sale of a particular stock, all active bids are compared and the ASX allocates all overlapping shares until the buyers price is below the sellers price.
The most common reasons for an order to be rejected are:
1. You may have entered an invalid quantity to purchase.
2. You may have entered an invalid purchase price – ie the price may be 4 cents and you have entered .4 (40 cents).
3. Orders may also be rejected or forwarded to a Designated Trading Representative (DTR) for compliance reasons.
Brokers and online platforms are required to abide by ASX Business Rules and the Corporations Act and as such they are obliged prevent false and misleading trading and facilitate an orderly market. Each order placed is checked to ensure that it complies with the trading rules.
You can place orders 24 hours a day. Orders placed outside of ASX trading hours are queued and sent to the market 3 hours prior to the next opening time. Orders placed 3 hours prior to opening until 15 minutes after closing are sent directly to the market.
Markets are generally open for 6 hours every week day exc public holidays. For full details of ASX share trading hours, visit. (http://www.asx.com.au/about/trading-hours.htm)
A Waiting status means that the order has been placed outside of normal ASX share trading hours and that it will be sent to the market prior to the next trading session.
"I would like to thank all the staff at EquitySmart for all your help. In only a few of months I started with no knowledge of the Stock Market and I am now trading with a very high success rate. EquitySmart is a great platform, with an excellent education course and fantastic ongoing support...."
Denis L, Woodcroft
"Dear EquitySmart, I was extremely nervous and dubious as to whether I could learn a program like EquitySmart never mind entering a total different industry. I have always worked in the health and wellness sector and didn't really take too much notice of the markets and financial industry. My husband persuaded me to try it as he is too busy and we want to improve our financial situation as we lost a portion of our wealth immigrating ..."
Sharon B, Bridgeman Downs
"I use EquitySmart nightly and it is great not to spend hours researching and looking over graphs as once you have set up your criteria EquitySmart will do it all for you and send an e-mail when a stop loss or buy signal is hit in the watch list or your portfolio, also the home screen notifies you as soon as you start the program. The program is great as being in the latter years and not a computer guru it is so easy to understand and use, the ..."
Ron W, Walkerston
"I joined EquitySmart in June 2014 and since then I have not looked back. I find their software easy to use and it has given me great trades. Even on the days the market was falling I was able to find excellent opportunities. The support I get is also important to me, Jose made himself available to coach me and there is also a fortnightly webinar that keeps me focused. I am so happy with the results that I can now see my financial goals are very..."
Rob K, Mudgeeraba
"I want to thank everyone at EquitySmart for the wonderful education and ongoing support you have given me. I have been actively trading for about 4 months now and just made my most significant gain yet. I realise, as you have often repeated, it is not the stock or my move, but the market timing and trend. In addition, by following your education, I have had very few losses and those have been very minimal. A lot of my friends are so afraid of the..."
M Henry, Kayleen
"Can I also say how good EquitySmart is – a definite improvement on other programs. EquitySmart is much easier. Only including the initial bull signal for the scan reduces the overall scan results down to a much more manageable number. Once you have selected the stocks for the watchlist and set high/lows, then the watchlist itself is easy to view and maintain. I also like the way the portfolio is set out and how it shows clearly where your ..."
Karen, Liverpool UK
"...with their understanding, perseverance, and the general follow-up with help, large problems became small. Courtesy, care and patience always present, nothing left unsolved...."
Iris K, Prospect
"Overall, I think EquitySmart is magnificent. All the staff that I have had anything to do with regarding my problems from time to time, have been like yourself - the best there is. Thank You all so much again, I am truly grateful...."
Lindsay H, Invermay Park
"I was an absolute trading novice when I purchased the EquitySmart programme, apart from severe losses through managed funds. I became determined to manage my money myself, and remain humbly committed to successful trading. There is much to learn, and Jose has been an excellent mentor with undying patience, running fortnightly helpful webinars, and ongoing help whenever needed. I nervously placed my first trade late October 2013. This took me ..."
Sandra F, Croydon North
"This is just to thank EquitySmart for the webinars and confirm that they are most welcome and extremely important to keep improving our trading ability. Trading can be very disheartening without continued support. Most of the feedback we hear form friends tend to be on the negative in the long run! Once again thank you very much for your great support, the quality of the webinars is great and much appreciated...."