How To Trade Shares Online
In recent times the Stock market has become more accessible and more popular. With the choice of brokers increasing all of the time, trading shares online has never been easier. However, that doesn't mean you should jump straight in and start trading online without doing your research on how to trade online.
This article aims to teach you how to trade shares online and show you the tools you will need and the best online brokers to choose from. We will look at the different online trading accounts available, as well as how to choose an online brokerage, make trades and protect yourself from fraud and scams.
Basics of Stocks & Markets:
Before we start getting into the Buzz of Online Trading, lets start from the real basics of the stock market, how the stock market works and what it all means.
A single share of any stock is in essence a small piece of a corporation of a business. People who buy stocks are known as Shareholders. A shares trader is investing in the future of a company or commodity for as long as they own their shares. Shares prices fluctuate according to the current economic conditions around the world, how the company is performing and what the larger investors do with their shares. When a company decides to offer its stock for public sale, this is known as an initial public offering, (IPO) or the wider used phrase of “going public”.
Depending how a company does and how much profit it makes, it is able to share that money with its shareholders by issuing a dividend. However a company can retain its profit or re-invest into the company by buying more assets, making improvements to the business or employing more or better people. Some companies shares that yield frequent dividends are known as income stocks. Stocks in a company that retain their profits and re-invest into the business are known as growth stocks . Above anything else, you must do this research before you decide how to trade.
Brokers buy and sell stocks through an exchange, CFD Service providers and Online share trading companies. Most of these charge a commission for the pleasure to do so. They will offer CFD trading commission free. Someone known as a broker is just a person who is licensed to trade stocks through the exchange. Brokers can be on the trading floor or can make trades by phone or electronically enabling you to trade shares online.
An exchange is basically an office complex or warehouse in which people buy and sell stocks. Someone or computer software must match each buy order to a sell order, and vice versa. Some exchanges work like auctions on an actual trading floor, and others match buyers to sellers electronically online.
Effectively when you buy and sell stocks online and you have started to learn how to trade shares online, you're using an online broker that for the most part takes the place of a human broker. You still trade real money, but instead of talking to someone about investments over the phone, you decide which stocks to buy and sell, at what price and you request your trades yourself. Some online brokerages offer free advice from live online brokers and broker-assisted trades as part of their service.
If you decide you need a broker to help you with your trades, you'll need to choose a firm that offers that service, either online or over the phone, some of these companies also offer you advice on how to trade online. We'll look at other qualities to look for in choosing the right online broker for you and offer more advice on how to trade shares online later on.
Choosing a Broker
To buy stocks online, you have to find a suitable online broker for you. The online broker will open your trade positions and store your money and stocks in an account. The online trading industry is very competitive, lots of companies have merged together but there are still many trading firms to choose from. Each broker offers different levels of support, different trading account types and many other services such as how to trade shares online. Before you select the right broker for you, consider these points:
- The amount of money you plan on investing. Some trading companies require you to deposit certain amounts of money in order to open your online account. to have a certain amount of money to open an account. Also some companies require you to have a minimum account balance, which is something to look out for. We only recommend the UK and Europes top brokerages and they are all secured, Authorised & Regulated by the Financial Conduct Authority or an equivalent body.
- The question of “how to trade” depends on How frequently you are going to make trades. If you are going to buy shares in a company and plan on keeping it for a relatively long time, ensure your brokerage does not charge you a maintenance fee for non-activity. However, if you plan on making lots of trades daily (this is known as “day trading”) you want a lower fee per trade or some even offer no commission positions . Whichever brokerage you choose you should look at how much the site will charge you for maintaining and opening stock positions.
- Consider your level of trading experience, do you need guidance on how to trade shares online? if so many brokerages offer free training manuals, advice and online support. Some offer market analysis, links to google and yahoo finance stats and tools to aid in helping you trade successfully. Understand that the better you do, the better the broker also does, so they are there to help. UK Share Trading offer 24 hours support, 7 days a week.
With any site that needs your personal and finance information, ensure that your brokerage is accredited and your online brokerage has good security measures in place. To trade shares online, you should also make sure your brokerage is reputable. We only recommend legitimate and reputable companies that are considered some of the top online brokers in the world.