For a newcomer who steps into the complex world of share trading, things can look difficult to grasp in the first instant. Putting together all pieces of this complex puzzle can be a daunting task. However, this article will help beginners initiate towards the right path. However, let me warn you this is not a legal advice or a professional sure shot method that will earn you a fortune out of shares. However, these are just simple, practical and effective steps you can make use of.

How to Buy and sell shares

To start ASX share trading (also known as the Australian Share Market), you first need to open a personal online trading account with a broker. This account is also called a Demat account or a cash management account. You can open this account with a reliable bank with just $500 for the initial purchase.

To open this account with your already existing bank, you simply need to go online and take a print out of the required forms. Fill and send them in person (read manually) to the bank. Your physical presence will be needed to verify identity and signature. After you get your login details from the bank, you are ready to share trade!

What shares to purchase in the beginning

This is probably the most daunting question for every newbie. You have two options to invest in: one are the blue chip companies (large stable corporations), which are meant for long term investment and start-ups companies (smaller companies), meant for short term investments.

For beginners, it is better to avoid risk and remain patient; thus, you should think of investing in blue chip companies for long term investments. These companies mostly prove to be a better option as they leave you with better results. The share values might not go up fast but they will grow overtime. In the beginning, your initial goal should be a safe investment with better and not quicker returns.

Factors to look out for

Your online share trading account comes with current share prices and listed companies' historical data. Before investing in a company, you need to do your home work, which is a hell lot of research about the company. This you can do by collecting sufficient data suggesting price growth in the near future. For this, you should look out for the following indicators:

Review historical graphs. If the data indicates towards a probability of better results in the near future, then invest in that company's shares.

Review the company's recent stock market declarations. For any company listed with ASX, it is mandatory to announce any such activity that can affect their share prices by means of financial statement, annual reports, etc. Try to determine a pattern, and invest accordingly.

The above mentioned information, if followed properly, will surely help new beginners set a firm foot in the industry.

The first thing you must learn is that the stock market is not as scary as what it may seem. Buying and selling stocks is actually a great way to earn more money. In fact, many people are quite successful at it. However, before anyone starts, they should first learn some stock trading basic information for beginners.

The first stock trading basic that you want to learn is that there really is a difference between trading and investing. Investing should be considered as a potential long-term gain, while trading can be considered short-term. In other words, trading is going to allow you to buy and sell stock a lot quicker.

When you are considering purchasing stock in a particular company, you want to look at a couple of different things. You will first want to check into the background of the business and its trading history. How have its stocks done in the past? Are they at a high or low on the market? You must consider whether or not the company may have a splurge of activity or whether or not it may take a year or more for the company to experience growth. This will help you to determine whether the amount of money you invest is going to be a short-term or long-term investment.

If you want to consider short-term gains only, you will want to look at businesses that may be getting some media attention. Sometimes, all a business needs is to be put in the spotlight for a few moments and their stock will take off. Keep in mind, however, this does not always happen.

When it comes to stock trading basic information, you are going to find varying opinions from different individuals. The best thing you can do for your future as a stock trader is to take a class on how to buy and sell stocks. The more informed you are and the better decisions you are going to make.

There are a few basic requirements that need to be in place before an individual can start the process of buying, holding and selling shares. This document is a basic guideline to explain these requirements. Please note that this document does not provide any advice on what shares to buy or what investment strategy suits an individual. This is a getting started guide for individuals based on my own experiences.

The 3 basic things needed for getting started are:

* Dmat Account

* Trading Account

* Bank Account

Dmat Account

A Dmat account is like a Bank Account, with the difference being that instead of cash, a Dmat account holds shares. So, if shares are bought, they are deposited into the buyers Dmat account and if shares are sold, they are reduced accordingly from the Dmat account. The shares that are deposited to or reduced from the Dmat account are electronic shares. For an individual wishing to trade in shares, it is compulsory to trade only in Dmat (dematerialized) shares. Physical shares cannot be traded. Dmat shares have many advantages in terms of ease of handling etc.

A Dmat account can be opened through most banks and financial institutions, after filling up the required forms and providing identity and address proofs. The usual charges associated with a Dmat account are:

1. Account opening charges

2. Yearly charges for maintaining the Dmat account

3. Recurring periodic charges for holding shares in the Dmat account

4. Other service charges based on transactions carried out. Usually, there are no transaction / service charges when shares are bought. The charges will be levied when shares are sold.

The above charges may not be the same across different service providers but a big part is likely to be the same as regulatory agencies like Securities and Exchange Board of India (SEBI) specify certain norms.

Trading Account

A Trading account is required if an individual wishes to trade, i.e. buy and sell shares in the stock exchange. The 2 main stock exchanges in India are the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE). A Trading account can also be opened with most banks and financial institutions, after filling up the required forms and providing identity and address proofs. The actual trading can be done by phone, internet or using transaction slips that are provided at the time of opening the account. Personally, I have found buying and selling using the internet fairly convenient. There are options to specify the price at which to buy or sell and it is easy to track the status online.

There is a brokerage charge that is incurred for both buying and selling of shares. This charge varies across different trading houses. Also, government levies like the Securities Transaction Tax (STT) will be incurred on such transactions.

Bank account

Needless to say, a Bank account is required for carrying out various financial transactions associated with trading of shares. This is where the money on sale of shares will be credited or money for buying shares will be debited from. A normal Savings Account is enough and nothing additional needs to be done with the Bank account.

Trading process

Once the Dmat account, Trading account and Bank account are in place, an individual is ready to start trading. While it is not necessary to have the Dmat account, Trading account and Bank account with the same organization, I feel that having it with the same organization offers additional convenience, especially for individuals trading using the internet. The following example of buying and selling using a Trading account on the internet illustrates the convenience of having the Dmat account, Trading account and Bank account with the same organization.

Buying shares: When an individual wants to buy a share, he/she logs into the Trading account and specifies the details like the Company name, no. of shares to buy and the price at which to buy. Depending on this information, the required amount from the Bank account is set aside for this trade. When the desired price is reached, this trade is executed and the amount (after adjusting for charges) is debited from the Bank account and the shares are credited into the Dmat account.
If the Bank account had been with a different organization, then for carrying out this trade, it would have been necessary to move the amount into the Trading account.

Selling shares: When an individual wants to sell a share, he/she logs into the Trading account and specifies the details like the Company name, no. of shares to sell and the price at which to sell. Depending on this information, the required no of shares from the Dmat account is set aside for this trade. When the desired price is reached, this trade is executed and the shares are debited from the Dmat account and the amount (after adjusting for charges) is credited to the Bank account.
If the Bank account had been with a different organization, then after this trade, it would have been necessary to move the amount from the Trading account into the Bank account.

Please note that apart from the charges that are levied by the Bank, the Dmat account service provider and the Trading account service provider, there will be additional government taxes like STT and Service Tax. Also, please make sure to read all the terms and fee details of the service providers before opening any account and be aware of the transaction costs involved with each transaction. Happy Trading!