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How does Share Trading Work



Here we breakdown share trading beyond simply buying and selling. Read below to understand the steps involved.

What to buy and what to sell?

Being well-informed is the first step to making positive investment decisions. As an investor, there are a range of useful tools that you can use to help guide such decisions. Although, if you do not have the resources or the time to equip yourself with a good understanding of the share market, you may be better off speaking with a financial planner.

Executing trades

On the share market, each security will generally have a range of prices for which buyers are prepared to buy shares at, known as ‘bids’. There are also a series of prices for which sellers are willing to sell their shares for, known as ‘offers’. When the price of a bid and an offer align, a trade will be executed.

Trade settlement

Trade settlement occurs 2 trading days after trade execution. At this point, transfer of ownership is made between the buyer and the seller.

Types of Orders: ‘at market’ vs. ‘at limit’

An ‘at market order’ is a basic type of order to be executed at market value. Note, if the market price moves away from the order price, the order may not be completed in full.

An ‘at limit’ order is another basic order type, which allows the investor to set a ‘limit’ in regards to the price they will pay or accept. Whilst ‘at market’ prices are open to fluctuations, placing an ‘at limit’ order can help you be specific about your purchasing or sale price.

What is a contract note?

Once your trade is executed your broker will send you a contract note (commonly referred to as a confirmation), which will outline the details of the trade.

Buying new shares

If it is your first time purchasing a company’s shares, you will need to complete and return documents such as your bank details and tax file number. You will also be given a letter from the company’s share registry welcoming you.


Dividends will usually be paid into the bank account that you provided the company. The share registry will provide a statement notifying you of any payment. Often companies will have Dividend Reinvestment Plans (DRPs) which will allow you to use your dividends to purchase additional shares, often at a below market price.


Important information

The information on this website has been prepared without taking account of your objectives, financial situation or needs. Because of this, you should consider its appropriateness, having regard to your objectives, financial situation and needs and, if necessary, seek appropriate professional advice. If a Product Disclosure Statement is available in relation to a particular financial product, you should obtain and consider that Product Disclosure Statement before making any decisions about whether to acquire the financial product.

The information contained on this website does not constitute the provision of advice or constitute or form part of any offer, solicitation or invitation to subscribe for or purchase any securities or other financial product nor shall it form part of it or form the basis of or be relied upon in connection with any contract or commitment whatsoever. Any securities or prices used in the examples on this website are for illustrative purposes only and should not be considered as a recommendation to buy, sell or hold. Past performance is not a reliable indicator of future performance. This website may contain material provided directly by third parties. This information is given in good faith and has been derived from sources believed to be accurate at its issue date. While such material is published with necessary permission, no company in the Westpac Group nor any of their related entities, employees or directors (together, "Westpac"), nor the Participant, accepts responsibility for the accuracy or completeness of, or endorses any such material. This website may also contain links to external websites. Westpac and the Participant do not accept responsibility for, or endorse the content of, such external websites. Except where contrary to law, Westpac and the Participant intend by this notice to exclude liability for material provided directly by third parties and the content of external websites.