What is online share trading and how does it work?

Co-Author: Regina Collins

Online share trading doesn’t need to be hard to understand. We break down how online share trading platforms work.

Online share trading is buying and selling shares in listed companies, usually over the internet. It has given the ability to invest in the share market to anyone with a computer or smartphone with an internet connection.

An online share trading platform acts as your broker, facilitating your purchase and sale of shares. A broker is simply a person who is licensed to trade stocks through the exchange and can either be on the trading floor, or more commonly, make trades by phone or electronically. Because the online share trading platform is acting as your broker, they charge brokerage fees as a commission to buy and sell stocks for you through the exchange.

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Each year Canstar researches and rates online share trading platforms. Some of the features we assess include:

Account services and application processes
Reporting methods for dividends and interest earned, year-to-date profit/loss statements, and tax reporting tools
Client services and support, availability of after-hours helpline, and platform training for the customer online or over the phone
Margin loans available
Company information, market research information, and international market information available
Research tools, alerts, and other technical trading information available
Basic and advanced chartings available
Education and technical help available
Level of online security provided
Flexibility of or restrictions on settlement of account
Trading platform functionality
Dynamic data stream available
Ability to trade in local and international securities or markets, ASX, etc.
Accessibility of the platform via multiple channels
Fees charged – phone fees, general fees

Canstar’s most recent online share trading research compares 42 online share trading platforms from 17 institutions to determine which ones offer outstanding value to investors. You can read the full report here.

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TJ Ryan

TJ was previously a finance journalist at Canstar, preparing a variety of articles from simple-to-understand explainers of financial products through to reporting on industry trends. She graduated from QUT with a Bachelor of Law and Bachelor of Fine Arts, Creative Writing.

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