Your Guide to What the ASX Is and How to Trade It

Your Guide to What the ASX Is and How to Trade It

Reading time: 9 Minutes 

Companies go public by listing on a stock exchange with the aim of raising capital. This allows institutional investors, as well as individual investors, to participate in the company’s growth through the purchase of their shares

Well-known securities exchanges are the New York Stock Exchange (NYSE) and the Nasdaq in the US, as well as the Australian Securities Exchange (ASX).

But what is the ASX, and can we trade its price movements? 


Understanding the ASX 

The ASX is an integrated exchange offering various services, including listings, trading, clearing, settlement, technical and information services, technology, data, and other post-trade services.

In 2006, the Australian Stock Exchange and the Sydney Futures Exchange merged to become the ASX, based in Sydney.

As a market operator and payments system facilitator, ASX upholds compliance with its operational rules and promotes corporate governance standards among Australian listed companies.

The ASX manages markets for various asset classes, such as equities, fixed income, commodities, and energy. They are also a leader in raising capital, ranking among the top 10 global securities exchanges by size and as the largest interest rate derivatives market in Asia.

How to Start Trading the ASX in 2 Straightforward Steps

It's crucial to approach trading stocks with a structured plan to navigate the complexities of the financial markets effectively. The process can be simplified into two easily manageable steps, providing a clear pathway for beginners to start trading the ASX with FP Markets

Step 1: Open a Trading Account with FP Markets

The first step to trading the ASX is to open a brokerage account since trades cannot be executed directly at the exchange by retail speculators.

FP Markets, a Forex and CFDs broker renowned for its extensive offering in over 10,000 share CFDs globally, offers world-class trading platforms, such as MetaTrader 5 (MT5) and Iress, for trading the ASX Limited stock CFD as well as associated ASX stocks. These platforms provide advanced tools and features tailored for CFD trading. 

With CFDs (Contracts for Differences), it is important to note that traders do not take ownership of any underlying shares. Instead, it allows for speculation and hedging on the underlying price movement of those stocks.

Opening an MT5 Trading Account with FP Markets:  

Demo Account

Under ‘Quick Start’ on the main FP Markets webpage, choose ‘Try a Demo’. 

Subsequently, provide your details: name, email, and phone number, for example. 

Select MetaTrader 5 as the platform of choice and select the account denomination. Following registration, you'll receive an email with login and server details.

Download MetaTrader 5

Download the MT5 software suitable for your device (PC, Mac, Android, or iOS) using the link from your email and install it following the instructions.

Live Account

If you're ready for live trading, click ‘Open Live Account’ at the upper right side of the FP Market’s main webpage. Fill in additional details and complete the Know Your Customer (KYC) process by uploading identification and proof of residence.

FP Markets will review your application and documents, and usually takes no longer than 24 hours. Once your trading account is approved, you will receive an email with new account details. 

Authorise Your Account

Log in to MT5 using the account details provided in your email. It's also a good idea to change your password for security.

Add Funds to Your Account

At this point, you can add funds to your accounts using the available payment methods; this can be done through your Client Portal

Step 2: Place Trades

Once you have a brokerage account set up, you are then ready to begin placing trades. 

Placing trades on MT5 is straightforward; whether you’re trading individual share CFDs or the Forex space, you can simply hit F9, and the New Order Window will appear. Here, you can input the necessary data to execute a trade. This includes protective stop-loss orders and take-profit as well as the volume (number of lots). You can choose between immediate ‘Market execution’ or set a ‘Pending order’ to trigger at a specific price. If you opt for a pending order, you can also specify an expiration.

To view all available trading instruments and their related bid (sell prices) and ask (buy prices) prices (as well as the spread and performance change), select the Market Watch tab (CTRL+M) and choose ‘Show all’. Then, select the instrument you want to trade. From here, you can create a new chart by either dragging it from the Market Watch to the chart interface or by clicking on New Order (again, F9).

For quicker trading access, enable One-Click Trading’ by right-clicking on the chart of interest and selecting this option. Here, you can adjust the volume of your trade. To execute the trade, simply click ‘Buy’ or ‘Sell’’. Once your trade is active, it will appear in the trading Terminal (CTRL+T) at the bottom of the MT5 interface and you can manage/modify this trade by right-clicking on it. 

To close the trade, right-click the active position and select ‘Close position’ or ‘Modify or delete’ to modify the order. If you want to partially close the trade, go to ‘Modify or delete’, switch to ‘Market execution’, adjust the volume, and then click ‘Close’. This will partially close your trade as per the new volume set.

Stock Chart Example of ASX Limited

The chart above represents the daily timeframe of the ASX Limited stock in the form of a candlestick chart, the most popular chart type employed by traders and investors. It serves to show the open, close, high, and low prices for each period (in this case, each day, with the range between the open and close representing the real body of the candle), providing insights into the company's behaviour over the observed period. Further, the chart helps identify the volatility of a stock and the trends and trading volume.

What Are the Trading Hours of ASX Limited Stock?

The normal trading hours for the ASX Limited stock CFD with FP Markets on the MT5 platform are from Monday until Friday from 1:00 pm to 7:00 pm, which currently operates on GMT+2. During these hours, trading is continuous, meaning there is no break, and trading activities occur uninterrupted from the market open to market close. 

ASX 200?

As a trader looking to engage with stocks on the Australian Securities Exchange, some look to invest in the S&P/ASX 200 Index in order to gain broader exposure. The S&P/ASX 200 is focused on stocks, specifically tracking the performance of 200 of the largest listed companies on the ASX.

Many instruments like index futures, options contracts, Exchange-Traded Funds (ETFs), and Contracts for Differences (CFDs) are available for trading the ASX 200. CFDs, as communicated in this article, allow traders to speculate on the direction of the underlying asset—in this case, the ASX 200—without owning the underlying asset. 

Trading on the ASX, ASX stocks and the ASX 200 can be done through platforms like MetaTrader 5 (MT5) and Iress with FP Markets. 

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