How to Buy and Sell Shares


Best online brokers for Pythagoras customers

What online brokers do we recommend for our clients? 
There are a many low-cost online brokers available for investors – we have collated a list of the most popular online brokers that Pythagoras customers use, as well as a few others for reference.

Some of the most popular questions we get asked about online brokers are:

  1. What platform is best suited for me when I’m using Pythagoras?
  2. What are the costs of trading?
  3. Any additional fees?

Pythagoras Investing recommendations average 40 buys and 10 sells a year per stock. An online broker that is easy to use and low brokerage fees are very important for making the most of your investing and time.

In the table below, IG Markets offer low-cost brokerage be aware of the Custodian model being used. It is important to know that you don’t legally and beneficially own the stocks in a custodian setup.  For this reason, most clients choose other brokers.

Other popular brokers include Self Wealth and CMC Markets – offering low-cost share trading and good trading apps.

Most platforms charge a different commission rate depending on the amounts being traded. These amounts vary depending on the broker.  The one that stands out is Self Wealth which doesn’t increase its brokerage cost based on the size of the transaction – it’s unusual and lends itself to those working with larger amounts of capital.  They are the only flat fee service operating in Australia, irrespective of trade size.

Broker Standard Brokerage fees App Monthly Fees International Demo Account HIN*
  IOS Android  
IG Markets $8 Yes Yes $0 Yes Yes Custodian Model
CMC Markets $11 Yes Yes $0 no Yes Yes
Self Wealth $9.5 Yes Yes $0 Yes Yes Yes
Open markets $13.95 No No $0 Yes No Yes
Nab Trade $14.95 Yes Yes $0 Yes No Yes
Commsec (CBA) $19.05 Yes Yes $0 Yes Yes Yes
BellDirect $15 Yes Yes $0 Yes No Yes
HSBC $19.95 Yes Yes $0 Yes Yes Yes
ANZ Share trading $24.95 Yes Yes $0 Yes No Yes
Saxo Capital Markets $6.99 Yes Yes $0 Yes Yes Yes

**Note – We do not receive any financial reimbursement from any of the above companies.
*correct at 7/5/2018

Types of Stock Market Orders

When you buy or sell shares through a broker, there are different order types 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.  There are 2 main types – market orders and limit orders.

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 operator.  A market order does not have a price limit and is traded at any price available in the market at that time.  A buy will be done at the “Ask” price and a sell at the “Bid” price.

The principle of this order type is that you will trade at the best price available in the market at the moment the trade is requested. If the whole volume of your order cannot be traded at this price, the remainder of the volume is then converted to a limit order at the price you traded.

These orders are generally executed very quickly once you send them to your broker, however, the price that 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. 

A good online broker should have a minimal delay between lodging a market order and execution.

At Pythagoras we use a “market order” for sell recommendations because when it’s time to go, there is no sense in delaying.

Limit Order

A limit order is an order to buy or sell shares at your specified ‘limit’ price or better. If you are buying shares and place a limit order, it will only be executed if the share price is less than or equal to the limit price you set. This means that for a buy order the price you nominate is the maximum price the order will trade at.

If you are selling shares, a limit order will only be executed when the price reaches the limit price you set or higher.  For a sell order, the price you nominate is the minimum price the order will trade at.

For limit orders, it’s important to remember if the share price does not reach the limit price you set with enough volume, your trade won’t be executed.  To avoid an order sitting in the market indefinitely, we prefer to have an expiry date in each order. There is nothing worse than getting your order filled when the opportunity to buy has passed!

When buying with Pythagoras Recommendations we use a Limit Order or a Market Order.  We don’t see any need to overpay so we adhere to strict price limits in accordance with the recommendations sent.

Preparing to Buy and Sell Shares

Your First Buy

Once you know which shares to buy or sell and you are all set up with your online broker, then you are ready for your first trade.

Don’t get too concerned about what the stock market looks like.  Think of it as a group of buyer orders on the left side of the screen and another group of seller orders on the right side of the screen.  We call this view the “market depth” – showing the number of buy orders and sell orders that people have placed into the market at different price levels.

As the buyers/sellers move their price expectations, so too does the price of the trades. 

There are three basic points to consider:

  1. The price you are prepared to pay.
  2. The number of shares available for you to buy at that price
  3. The type of order.

Broadly speaking, your order can be:

  1. A “limit” order which means you set a particular price that you are happy to trade at or
  2. A “market” order where your order is placed at the top of the price queue and it will trade at the best available price.

Orders to buy and sell shares are typically matched first according to best price and then according to the time at which they are entered into the system. This is known as price/time priority.

Selling Your Shares                                                     

No matter how you bought them, 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 by contacting your broker. When your trade is executed your shares are sold and 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 2 business days after the trade takes place (this is known as T + 2).

Once the settlement is completed, the money for the sale of the shares is transferred into your designated bank account (or back into your online broker account).