What you need to start trading

At a glance: to start trading you need money you can afford to lose, a financial safety net, a basic grasp of what you're buying, a licensed broker or registered exchange, a short written plan, and a way to keep records for tax. You don't need a finance degree or thousands of dollars.

Why preparation matters more than picking the "right" stock

Many of the problems that catch beginners out — trading money they'll need soon, underestimating fees, acting on emotion — can be sorted before your first trade rather than learned the hard way after it. This checklist works through four groups: money, then direction and knowledge, then setup, then discipline. If you want to understand what trading actually is first, start with our guide to what trading is.

Group 1 — Money

1. A financial safety net first. Keep trading money separate from rent, bills and emergencies. Moneysmart suggests building an emergency fund to cover around three months of essential expenses before you take on other financial risk.

2. Deal with high-interest debt. Credit card interest is often higher than what most investments can reasonably be expected to earn. It's worth paying that down, or at least weighing it up, before you fund a trading account.

3. Money you can afford to lose, and how much to start with. Fees make small trades disproportionately expensive, because most brokerage is either a flat fee or has a minimum. Here's what a $10 brokerage fee (illustrative — check the current fee on your platform) does to trades of different sizes:

On a $500 trade, the price has to rise by roughly 4% just for you to break even on fees alone. A rule of thumb some traders use (not a recommendation): limit the loss on any single trade to about 1% of your account. On a $2,000 account, that's $20.

Group 2 — Direction and knowledge

4. A clear goal and time horizon. What are you trying to do, and by when? If you're not sure yet, the goal-setting step in our steps to start investing in shares guide is a good place to start.

5. Understand what you're buying. If you can't explain in one sentence how it makes or loses money, wait. For shares and ETFs, read the product disclosure statement; for crypto, read the project's own documentation and check the scam warnings first. See Share trading for beginners and How to start investing in crypto for the basics of each.

6. Practise first, with realistic expectations. Your options are a demo account (commonly offered by CFD and forex brokers and some charting platforms), a paper-trading spreadsheet, or a very small first live trade. Practice can't fully copy the emotion of trading with real money, so treat it as a start, not a guarantee.

Group 3 — Setup

7. Choose a licensed broker or registered exchange.

See our full comparisons for share trading platforms and crypto exchanges.

8. ID, banking and security. You'll typically need photo ID (driver licence or passport) and an Australian bank account; some brokers also ask for your TFN. Set up a unique password and two-factor login, and avoid logging in over public Wi-Fi. See how to open an online share trading account or 5 simple steps to buy cryptocurrency for the account-opening detail.

Group 4 — Discipline

9. A one-page trading plan. Write down: your goal and timeframe; what you'll trade; your maximum loss per trade; when you'll enter and exit; a daily or weekly loss limit where you'll stop; and when you'll review your results. Add three rules on top: no borrowing to trade, no trading while stressed, and step away after a loss rather than trying to win it back immediately.

10. Records and tax. Keep the date, asset, quantity, price and fees for every trade. Brokers and exchanges provide statements, but keep your own copies too — it makes working out whether you're an investor or a trader for tax purposes, and calculating any capital gains tax, far more straightforward. A registered tax agent can help if your situation isn't straightforward.

Signs you may not be ready yet

• You'd need the money within the next year.
• You're planning to borrow money to trade.
• You expect regular income from trading a small balance.
• You're acting on a tip from social media or a stranger.
• You can't explain what you're about to buy.

Ready? Choose your path

Once you've worked through the checklist above, the next step depends on which market you're heading toward. Not sure yet? Go back to what is trading for an overview of what you can trade and how it works.