Chapter 7Trading shares online
In previous chapters I've outlined the different online brokers operating in Australia; how to set up a trading account so you are able to trade online; and the planning, monitoring and reviewing you should undertake as part of the online trading process. In this chapter I go into the nuts and bolts of online trading; that is, the types of orders you can place online and how you do so. I'll look at online trading ASX-listed shares using CommSec in my examples, but the same basic principles apply to the trading of any other instrument with any online broker or securities exchange.
Buying and selling
When share trading began in eighteenth-century England, buyers and sellers met at a common location (usually a London coffee shop) and negotiated the trade as a private treaty (contract) between them. Later, share trading exchanges developed where agents (brokers), acting for the buyers or sellers, met and negotiated the trades. This took place on a very busy and noisy trading floor. With the advent of computer technology, in Australia (and most of the world) trading floors became obsolete, and most trading now takes place using the exchange trading software platform that matches buyers and sellers. Trading is essentially an auction between competing buyers and sellers, and trades occur when there's agreement between them on price and quantity. Although share trading today is computerised, this basic principle remains unchanged.
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