When you sign up to StockWatch Trading, you are given a fictitious AUD$50,000 to trade on the Australia Stock Exchange (ASX). We have implemented some rules to help you with your trading:
Diversification
Rule 1: You can buy a maximum of $10,000 for any company
One of the most important lessons in investing in shares is to diversify your portfolio. In other words, don't keep all your eggs in the one basket. It is a good idea to have at least 8 different companies.
Risk
Rule 2: Only the top 500 companies can be traded
As a beginner to share investing, it is a good idea to stick to shares that are less volatile. Even though there are over 2000 companies on the ASX, we have limited the trading list to the top 500 companies.
Brokerage
Rule 3: Each action, Buy or Sell incurs a brokerage fee of $29.95
Like real trading, there is a brokerage cost incurred whenever you make a buy or sell. This is the fee you pay to your broker. In real life, expect this cost to be around $20 to $30. We have set the brokerage fee to $29.95.
Minimum amount of shares to buy
Rule 4: Minimum amount of shares for each buy is $500
In real trading, the minimum amount of shares you can purchase for any particular company is $500. We have also set the minimum purchase to $500.
Remaining money
Rule 5: Surplus Cash is treated as cash in hand
Surplus cash is treated as cash in hand, i.e. cash that is NOT earning you any interest.
Too much trading
Rule 6: Limit of 10 trades per day. This includes buy and sell orders
Beginners usually lose a lot of money on share basics such as trading too frequently and not considering the brokerage cost. We have made a 10 trade limit per day.