Share Trading Tips - An Australian Guide to Investing in
the Stock Market
"The goal of this site
is to show how ordinary Australians can earn substantial
profits from the share market without taking unnecessary
risks all explained in simple, easily understood
Remarkably, Australia has one of the highest
rates of share ownership in the world something like
40% of Australians are shareholders.
What's the attraction?
Well, apart from respectable historical returns,
one of the benefits most investors love about the share market
A liquid investment is one which can
be easily bought and sold.
Compared to other investments with comparable
historical returns such as the property market
shares are incredibly easy to buy and sell, taking
about as much effort as ordering a pizza!
One phone call to your broker does the trick.
Or if that's too much trouble, place your order via the Internet.
If you need ready access to cash in an emergency,
shares are just as easy to sell no waiting
months, or even years, to find a buyer and dispose of your
And the down side?
Isn't the Share Market Risky???
We all know that property only goes up,
right? after all, they're not making any more
Whereas the share market
well it can crash
at any time. The whole thing is just a kind of sophisticated
Well, that's often the popular perception. But
let's look at the reality
Here's a chart of the All Ordinaries Index
(historically, the main Australian Stock Exchange index)
from the Yahoo!
Finance web site. It goes from 1984 (as far back as data
is available on Yahoo!) to the time of writing. We can see
that the index has increased from around 700 points to about
6300 points over the past 23 years an average increase
of over 10% per annum.
And this period INCLUDES the crash of
'87, the aftermath of 9/11, and the US
invasion of Iraq all periods of pronounced
What's more, despite all the ups and downs,
the increase is remarkably consistent the market
was higher in 1990 than 1985, higher in 1995
than 1990, higher still in 2000, and in 2005, and
higher still as I write.
VOLATILITY Blessing or Curse?
Nevertheless, we can see there ARE sustained
down periods in the market. The perception of riskiness
in the share market comes from its VOLATILITY. Although
the market does seem to consistently move up over time, it
doesn't do so smoothly and predictably. That line
is JAGGED. Short-term, the market seems to jump up and down
all over the place. The jaggedness is what we
refer to as volatility.
Put slightly more scientifically, volatility
refers to the market's ability to move up and down significantly
in a short space of time.
Ironically, the very volatility that puts people
off from investing in the share market, CAN be one of its
greatest blessings to the investor.
After all, if the market has the ability
to make significant moves in a short space of time,
then it has the ability to return significant PROFITS in
a short space of time profits that would not be available
if the market did move up sedately in a predictable
(But I'll save further discussion of the joys
of volatility for a subsequent page.)
Is there an element of risk involved
in investing in the share market? Of course there is! As
there is in any investment that has the ability to provide
greater than average returns.
But you'll soon learn that the risk can be controlled
and managed by a variety of techniques including position
sizing, stop losses and hedging.
Share Trading is Simple People Make It SEEM Complicated!
When I watch the stock market roundup on the
evening news, I often get the impression that there's a conspiracy
in the financial services industry to make the whole business
of investing in the stock market seem as arcane and complicated
to ordinary folk as possible. Portentous meanings are ascribed
to the most trivial of market movements.
Traders themselves often seem to rejoice in
inventing complicated mathematical indicators to apply to
share price charts. Some areas of the discipline of technical
analysis of share prices (such as Gann angles, Elliot waves
and Fibonacci retracements) seem to owe as much to mysticism
And the market is steeped in obscure
jargon which makes it seem even more puzzling to most
Unfortunately, all this perceived complexity
tends to make people rely on the advice of others when investing
in the market or avoid the market altogether. Personally,
I don't think either option is a good move.
I'm a great believer in taking responsibility
for your own money and making your own investment
decisions, rather than relying on the advice of supposed
experts who often have a vested interest in
the investments they steer you towards.
And there's no doubt the share market is
a great investment vehicle. Apart from the potential of high
returns and the ease of buying and selling, you
can get started with a small amount of investment capital,
and the transaction costs (i.e. brokerage) are relatively
low compared to other popular investments such as property.
Time to De-mystify the Market!
The truth is, successful, profitable share market
investment is not really that difficult. It's simply
not necessary to understand all the ins and outs
of the market in order to make good profits. In fact, most
successful share traders use simple, basic, easy-to-understand
There are strategies that can make you profits
in rising, falling, or even sideways
The goal of Share Trading Tips is to
show how ordinary Australians can earn substantial profits
from the share market without taking unnecessary
risks all explained in simple, easily understood
So let's get to it!
to Use Technical Analysis and Other Stock Market Analysis
discusses the two basic methods for finding the right
share to invest in.
Trading Learn to Trade Short-Term to Boost Your
explains the difference between traders and investors
and why volatility is your friend!
Market Guide to Using Leveraged Equities to Double Your
introduces the power of LEVERAGE with a warning!