How to buy & sell shares

Buying and selling shares

The most common way to buy and sell shares is on the share market using a broker or broking service.

You can also buy shares through a prospectus when they are first put on the market or indirectly through a managed fund. Another way to buy shares is through an employee share scheme.

Buying shares on a share exchange

There are five public share exchanges in Australia. Four of them directly supervise the companies that issue the shares that trade on their markets. The fifth exchange, Chi-X, currently only provides the infrastructure for trading shares already quoted on the ASX. 

The five exchanges are:

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Buying shares on the ASX or Chi-X

While Chi-X commenced on 31 October 2011, your broker may continue to buy ASX-quoted shares only on the ASX until 1 March 2013. After that date your broker must consider whether they can achieve a better outcome for you by trading on Chi-X.

As there are now two markets to choose from when you trade ASX-quoted shares, once your broker joins and trades on Chi-X they must provide the best execution for your trade across both markets, in terms of best outcome (e.g. price). Your broker should send you their best execution policy. If you have not received it you can:

  • Ask your broker to provide their best execution policy to you
  • Look for the best execution policy on your broker's website

You can also ask your broker to demonstrate they have complied with their best execution policy on your trade. 

If your trade is executed on both the ASX and Chi-X, you can ask your broker for a single trade confirmation that takes into account orders executed across both of these markets.

You should also ask your broker whether they are using dark pools or internalising your trades and decide whether you would prefer them to be executed on the ASX or Chi-X.


If you are not happy with how your trade has been executed you should complain to your broker. Details of how to do this will be on their website. You can also complain to the Financial Services Ombudsman.

Using a broker

You can choose whether you want to a use an online broking service (sometimes know as a 'discount broker') and make your own investment decisions, or use a full service broker who can provide you with advice and recommendations. 

Online broking service

If you are looking for the lowest possible fees, then you should look at an online trading account. The fee to buy or sell a parcel of shares starts from around $30. They charge you only when you buy or sell a share.

Full service brokers

A full service broker will charge more but they can also give you advice on what to buy and sell. The law requires brokers to have a reasonable basis for any recommendation they make to you. They must also tell you about any interests they have in investment decisions which they recommend to you.

Brokerage fees are usually based on a percentage of the value of the purchase or sale. The percentage typically reduces as the amount of the transaction gets bigger. Most brokers have a minimum fee which they charge. Typically, the fee on a transaction of up to $5000 will be 2.5%. For large trades, it may only be 0.1%. Small trades worth a few thousand dollars can therefore be relatively expensive.

Use the Australian Securities Exchange find a broker tool to help you find a broker that suits your needs. You should check whether the broker uses dark pools or internalisation to execute trades, as this may have an impact on the price you pay for shares.

Case study: Katarina buys some shares

""Katarina, 35, inherited $10,000 from her grandmother and decided to invest in shares. She has some knowledge of the share market but decided to ask a stock broker for advice to be on the safe side. When Katarina presented her choices to the stock broker, he cautioned her against investing in one company that had recently been hit with a lawsuit. He then organised for her to buy shares in the other companies she nominated. While his fees were higher than an online broker's, Katarina was happy to pay extra for his advice and service.

Buying shares in a float

Companies may decide to offer new shares to the market as a way of raising capital. This is called a 'float' or an 'initial public offering' (IPO). You don't actually need a broker to buy shares in a float. All you do is send the application form in the prospectus and your cheque to the company.

Many popular floats are oversubscribed, which means you may get only a proportion of the shares you applied for, or in some cases, no shares at all. Keep this in mind when sending off your application cheque, because your money can be tied up for a couple of months before you will get a refund. For more information, see prospectuses.

Buying shares via a managed fund

You can buy shares indirectly by buying units in a managed share fund. For more information, see choosing a managed fund.

Buying shares via an employee share scheme

Some companies offer their employees the opportunity to purchase shares in the company. The shares might be offered without a brokerage or at a discount to the market price. For more information, see employee share schemes.

Selling your shares

Whether you buy shares through a broker, IPO, employee share scheme or through a managed fund, at some stage you may want to sell them.

If you hold the shares directly you can sell them by placing a trade online or contacting your broker. When your trade is executed you will be charged a brokerage fee, just like when you buy shares.

When you sell shares the legal title of ownership is exchanged. Settlement for the sale and transfer of ownership occurs 3 business days after the trade takes place (this is known as T + 3).

Once settlement is completed, the money for the sale of the shares is transferred into your designated bank account.

Selling shares in a managed fund

If you hold shares indirectly through a managed fund you can sell the shares by selling your units in the managed fund. Before you sell units in a managed fund it's important to check if there are any withdrawal costs. For more information see how to buy and sell managed funds.

Keep the paperwork

When you sell your shares or units in a managed fund make sure you keep a copy of the trade confirmation or receipt for tax purposes.

Types of orders

When you buy or sell shares through a broker there are different types of orders you can use. It's important to know how each order works and the impact different orders could have on the price when you buy or sell.

Market order

A market order is an order to buy or sell shares at the best available price at the time the order reaches the market.

These orders are generally executed very quickly once you send them to your broker, however, the price the market order is executed at is not guaranteed. If the share price moves from when you submit the order, to when it is executed, the final trade price could be higher or lower than you expect.

Limit order

A limit order is an order to buy or sell shares at a specified 'limit' price or better. If you are buying shares and place a limit order, it will only be executed if the share price falls to the limit price you set or lower. If you are selling shares, a limit order will only be executed when the price reaches the limit price you set or higher.

For limit orders, it's important to remember if the share price does not reach the limit price you set, your trade won't be executed and there may be an expiry date for how long the trade can sit there unfilled.

Stop-loss order

A stop-loss order is an instruction placed with your broker to sell shares you hold, if the share price falls to a specified price. Stop-loss orders, as the name suggests, are used to limit the amount you could lose if the share price falls.

If the share price falls and your specified price is reached, your order to sell is automatically placed as a market order and executed at the best possible price. 

Conditional orders

Many brokers have a range of conditional orders that can be placed and are executed only if a certain set of conditions are met.

Before you place conditional orders, it's important to understand how they work, if there is an expiry date on the order if the conditions are not met and the brokerage fees to place the trade. You should be able to find more information on conditional orders on your broker's website or ask them to explain how they manage these types of orders.

Invest in shares only if you are happy with your understanding of the stock market and are prepared to research and manage your portfolio on a regular basis. Otherwise, you should get financial advice and assistance.

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Last updated: 08 Oct 2015