What is a brokerage account and how do you open one?
Embarking on an investment or trading journey will require that you open a brokerage account. Find out what a brokerage account is and how to open one with us in Australia.
Start trading today. For account opening enquiries call 1800 601 799 between 9am and 6pm (AEDT) weekdays, or email newaccounts.au@ig.com.
Contact us: 1800 601 799
Start trading today. For account opening enquiries call 1800 601 799 between 9am and 6pm (AEDT) weekdays, or email newaccounts.au@ig.com.
Contact us: 1800 601 799
What is a brokerage account?
A brokerage account is used to trade or invest in securities in the financial markets. Having an account with an online brokerage has become popular in Australia. A share trading account will enable you to buy and own shares outright. A leveraged trading account, like a CFD trading account, will give you exposure to various markets that you can trade without taking ownership of the underlying assets.
Share trading account
A share trading account enables you to buy and sell shares and exchange traded funds (ETFs). You can also use it to re-invest any dividends you earn from company shares that make for such a provision.
Leveraged trading account
When you trade on financial markets using leveraged trading accounts, you’ll be required to put down a deposit – called ‘margin’ . When trading with leveraged products such as CFDs, your margin is much less than your full position size.
When trading on the price movements of the underlying assets, you’ll get exposure to 17,000+ markets. Some of the markets you can trade include:
How to pick a brokerage account
The type of account you open will depend on whether you want to trade or invest.
An investment account is more suited to someone who wants to buy and own shares for exposure in the long term.
A trading account, such as a CFD trading account, would be suited to someone who wants to speculate on the short-term rise and fall of the market price movements.
So, if you want to buy and hold the assets and earn an income from dividends, then you’ll choose to invest. If, however, you prefer to have exposure to assets over the short term, then you’ll likely go with trading.
When choosing the best brokerage account for you, consider:
- Objectives and available period of activity
- Commitment time and energy
- Markets
- Experience
- Risk appetite and available capital
Types of brokerage accounts
With us, you’ll get to choose from two types of accounts to either trade or invest in various financial markets.
| CFD trading account | A traditional approach to trading |
| Share trading acccount | Invest in shares and ETFs |
CFD trading account
Use your CFD trading account to go long or short on the price market movements and get exposure to the underlying assets.
CFDs are leveraged products, meaning you can open a position with an initial deposit – called margin – which is a fraction of the full value of your position. The profits and losses you make will still be based on the full size of your position, which can outweigh your margin. Trading with leverage has associated risks as compared to non-leveraged products like share trading. Remember to manage your risk carefully.
With your CFD trading account, you can trade the spot price, or futures and options of shares, ETFs, commodities, forex and indices markets.
Share trading account
You can use a share trading account to buy and sell shares and ETFs. You may want to open this kind of account when your intention is to buy and hold shares with hopes to sell once the share’s price increases. When investing using a share trading account, you can also earn dividends from the shares you own, provided the company makes for such a provision.1
You can’t short a position on this type of account, meaning when share prices fall, you won’t make a profit. So, if you’re looking for medium-to-long-term investment opportunities, then share trading may be more suited to you.
How to open a brokerage account in Australia
- Decide whether you want to trade or invest
- Understand the charges and risks
- Fill in an application form
- Get verified
- Fund your account
1. Decide whether you want to trade or invest
Choose whether you’d like to trade or invest. If you’d like to trade, you‘ll have to open a CFD trading account. However, if you decide that you want to invest, then you’ll open a share trading account.
2. Understand the charges and risks
It’s important to understand the costs that come with trading with your online broker. With us, creating an account comes at no charge, but once you open or trade a position, there will be costs involved. Direct charges you’ll likely incur are the spread, which occurs when you trade.
Other costs are the commission rates, which you’ll incur when you’re trading shares via a CFD account or share trading. With us, you’ll get competitive commission rates. For example, when you trade US shares on a share trading account, the commission is as low as $0 with a FX rate of 0.7%.2
Because CFDs are leveraged products, you’ll put down an initial margin that gives you increased exposure at a fraction of the full market value of the underlying asset. With leverage, your profits will be magnified when the market moves in your favour. But, if the market moves against you, you’ll make losses that might exceed your initial outlay. Always make use of our risk management tools and ensure that you only use an amount you’re comfortable losing.
3. Fill in an application form
Fill in an application form. We’ll then ask you a few questions to determine your trading or investing knowledge before proceeding with the next phase of the application.
4. Get verified
Once you’ve filled in your application form, it’ll need to be verified. This process usually takes a few days, at most.
5. Fund your account
When your application has been approved, you can credit your account with funds and start trading or investing. credit card, debit card, Apple Pay, PayPal account or via BPAY.
FAQs
What is an online broker?
An online broker is an independent company with a digital platform that helps organise and execute transactions on your behalf when you want to trade or invest in the financial markets. Online brokers, like traditional ones, usually charge a commission for brokering or executing the transaction on your behalf.
What is a brokerage account?
A brokerage account is a trading or investment tool you’ll use when you want to buy and sell securities in the financial markets.
Do I need a brokerage account to buy shares?
Yes, you’ll need to open a share trading account when choosing to invest in company stocks with us. Alternatively, you can trade on share price movements without taking ownership of the share via a CFD trading account.
An investment account allows you to buy and hold shares over the long term, while CFDs enable you to trade on share prices in the short term.
What is a margin brokerage account?
A margin – or leveraged – brokerage account gives you access to margin trading, which enables you to put down a deposit to open a position with a much larger market exposure. With this type of account, your profit or loss will be calculated on the full size of your position. You trade on margin using CFDs.
What can I trade with a brokerage account?
Our brokerage accounts enable you to trade a host of assets on 17,000+ financial markets.
Try these next
Learn how traders in Australia can choose the best online broker
A step-by-step guide on how to trade using our award-winning platform3
Explore our resources and take your trading skills to the next level
1 When investing with us, you’ll do so via our share trading platform using our custodial model. This means that we manage, hold and safeguard securities you choose to buy and sell on your behalf. Via our custodial model, you’ll be able to buy and have a stake in actual assets – for example, shares in an ASX 200-tracking ETF or ASX 200-constituent company. You’ll also be entitled to dividends if any are paid, and granted voting rights if applicable.
2 Note for multi-currency accounts: These figures apply to clients who opt for the default setting of 'instant currency conversion'. Clients who choose to convert currencies manually will pay commission of 2 cents per share with a minimum charge of $10 on US stocks and, for European markets, we charge £10 / €10 per trade or 0.1%, whichever is higher. Other fees and charges may apply, please refer to our share trading fees and charges page for more information.
3 Best Finance App, Best Multi-Platform Provider and Best Platform for the Active Trader as awarded at the ADVFN International Financial Awards 2024.
Contact us
Interested in opening an account?
Contact 1800 601 799 or newaccounts.au@ig.com
Want to check on your application’s progress?
Email newaccounts.au@ig.com
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