Australian (ASX) Stock Market Forum

Just a couple of practical questions

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Hi Guys, I'm Robert from Sydney. Firstly, it's great to read so many opinions on investing, I really appreciate what you guys have to offer.
So I just wanted to ask a couple of questions. Sorry if they're strange, lol, but in the reading I've done I can't remember finding an answer to them.
So let's say I'm following one Australian stock, and it's normally about $15. So it drops down to $14, so I think 'oh' I'll buy. I've got 40 thousand to invest. Would I be able to buy that many shares? Secondly, if I invest say, 80 thousand in the company will there be any problems?
So back to the example, in a couple of days the stock is back to $15 and I want to sell, can I just sell all of my investment, or is it possible I won't be able to sell it all?

I think the reason I can't find an answer to this is most information is geared to people only investing a little money, but I would rather make one or two trades a month for quite a lot - say $80-100,000.

Thanks to anyone who can help.

Cheers,

Robert
 

tinhat

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Hi Guys, I'm Robert from Sydney. Firstly, it's great to read so many opinions on investing, I really appreciate what you guys have to offer.
So I just wanted to ask a couple of questions. Sorry if they're strange, lol, but in the reading I've done I can't remember finding an answer to them.
So let's say I'm following one Australian stock, and it's normally about $15. So it drops down to $14, so I think 'oh' I'll buy. I've got 40 thousand to invest. Would I be able to buy that many shares? Secondly, if I invest say, 80 thousand in the company will there be any problems?
So back to the example, in a couple of days the stock is back to $15 and I want to sell, can I just sell all of my investment, or is it possible I won't be able to sell it all?

I think the reason I can't find an answer to this is most information is geared to people only investing a little money, but I would rather make one or two trades a month for quite a lot - say $80-100,000.

Thanks to anyone who can help.

Cheers,

Robert
Some brokers will require you to have enough cash in your trading account before placing the buy order on the market. If you are starting out they probably will require the cash to be in your trading account up front. You will need to set up what is called a "CHESS" account with a broker (example, commsec).

The actual trade won't be settle until two days after the trading day. So, if you buy shares during trading on Monday, they won't settle until the start of Thursday. You won't actually own the shares or be charged for the shares until they settle, but you can sell the shares again as soon as the broker has executed the trade on your behalf. In other words, you can execute a buy order at 11am and then execute a sell order fifteen minutes later.

How easy it is to buy and sell the shares on the market depends on the liquidity of trading in that particular company. Many of the ASX200 (top 200) companies will have a fairly liquid trading volume. A buy or sell of $80,000 in any of the ASX20 companies wouldn't even raise a blip on the radar. For example, today for NAB there was $156 million worth of shares sold. In contrast, today Gazel Corp (GZL) had only one trade worth $1,200. So, if you wanted to dump $80,000 on the market in a company like GZL you are going to have to either accept a massive drop in price to clear that amount of stock or you are going to have to execute an exit over a longer time period, or just hold the stock until there is sufficient buying interest.
 
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So let's say I'm following one Australian stock, and it's normally about $15. So it drops down to $14, so I think 'oh' I'll buy. I've got 40 thousand to invest. Would I be able to buy that many shares? Secondly, if I invest say, 80 thousand in the company will there be any problems?
So back to the example, in a couple of days the stock is back to $15 and I want to sell, can I just sell all of my investment, or is it possible I won't be able to sell it all?
Go to the ASX website and download the getting started in shares PDF. Go to page 9.
http://www.asx.com.au/documents/resources/getting_started_in_shares.pdf

It will talk about the market depth. Market depth shows you how many shares are available to trade at each price level. It varies from company to company, and changes over time.

To answer your questions - It's possible you may not be able to buy all the shares you want at the price you want them. Once you've bought, it's possible you may not be able to sell them again. It's possible to lose the money you invest.
 
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Hi Guys, I'm Robert from Sydney. Firstly, it's great to read so many opinions on investing, I really appreciate what you guys have to offer.
So I just wanted to ask a couple of questions. Sorry if they're strange, lol, but in the reading I've done I can't remember finding an answer to them.
So let's say I'm following one Australian stock, and it's normally about $15. So it drops down to $14, so I think 'oh' I'll buy. I've got 40 thousand to invest. Would I be able to buy that many shares? Secondly, if I invest say, 80 thousand in the company will there be any problems?
So back to the example, in a couple of days the stock is back to $15 and I want to sell, can I just sell all of my investment, or is it possible I won't be able to sell it all?

I think the reason I can't find an answer to this is most information is geared to people only investing a little money, but I would rather make one or two trades a month for quite a lot - say $80-100,000.

Thanks to anyone who can help.

Cheers,

Robert
Should you be playing with that kind of dole when you apparently have yet to know what stocks is and how the market operate?

Maybe put $10K into the trading account, get to know the market better. The rest into your savings account where it'll earn jack but at least you get to keep the principal.
 

Value Collector

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Would I be able to buy that many shares? can I just sell all of my investment, or is it possible I won't be able to sell it all?
It's going to depend on something called "Market depth"

Basically it is going to depend on how many Buyers or sellers are out there.

For the big companies, you won't have any trouble moving that amount of shares, its still a small number in the scheme of things, for a smaller company with not many buyers or sellers you may have trouble moving the shares without affecting the price.

For example, if there is only 10 sellers at the time you want to buy your 10,000 shares.

1st seller might have 1,000 available for $14
2nd seller 2,000 available for $14.20
3rd seller 500 available for $14.50

etc etc

so if you try and buy 10,000 the price is going to be moving up as you work through all the sellers,

same with selling,
I think the reason I can't find an answer to this is most information is geared to people only investing a little money, but I would rather make one or two trades a month for quite a lot - say $80-100,000.
no there are people here with larger accounts than that.
 
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As a quick point of reference here is the orderbook for Austal ASB, which is the smallest company in the ASX200 by market cap.

Screenshot 2016-08-18 10.22.40.png

So if you want to hit the offer then you would move the market with $80K for a stock at this level.

You should be able to work the bid with that kind of size though.
 
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As a quick point of reference here is the orderbook for Austal ASB, which is the smallest company in the ASX200 by market cap.

View attachment 67785

So if you want to hit the offer then you would move the market with $80K for a stock at this level.

You should be able to work the bid with that kind of size though.
Yeh that will make perfect sense to him.

:banghead:
 
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