Trading Stocks and Shares has traditionally been one of the most exciting investment opportunities for traders around the world offering a wide variety of sectors, industries and countries to choose from.
In the past however, the barrier to entry has been high with the market dominated by hedge fund managers, private investors and major financial institutions.
This is in part due to the large funds required to trade actual shares and the relatively prohibitive cost of managing a portfolio.
The introduction of Spread betting and CFD trading, and the rise of powerful laptops and mobile phones, has opened up Share trading to a new audience, by lowering prices and providing plenty of trading opportunities with greater flexibility.
In this course we’ll look at how to trade Shares, some tips and strategies to help get you started and how to responsibly manage your risk exposure when trading online.
What is Shares trading?
Shares in a company are typically issued to raise capital at launch or for the planned expansion of a business and reflect proportionate ownership of a company or enterprise.
By buying Shares in a company, an investor legally owns a certain percentage of that company and may be eligible to exercise voting rights and receive a percentage of profits, called a dividend, from the company’s earnings.
Share trading is sometimes referred to as Equity trading, as the owner of Shares has direct equity in the company they have chosen to invest in.
When you trade Shares at ETX you are speculating on the underlying Share price movement rather than owning any shares yourself.
This means that you can trade on price movements using a Spread betting or CFD trading account and can open both Buy and Sell positions on a stock, for greater trading opportunities.
Share trading is a diverse, exciting market with plenty of trading opportunities across a wide variety of sectors. Share prices can be influenced by a number of market events such as:
- Mergers, acquisitions, take-overs and special dividends – these events are largely grouped together as “Corporate actions”
- Company news – For example the launch of a new product, change in management, rebrands and big campaigns
- Earnings – These are the earnings a company reports each year which give the market insight into how profitable the business is and its health relative to competitors in the same space
- Wider market events – These can include things like big news events concerning competitors, disruptions to supply chains, economic date, legislation changes and trade tariffs
There is a huge selection of sectors to choose from when you trade Shares including heavily traded industries like mining, banking, tech, pharmaceuticals, retail and telecommunications.
Whichever Shares you choose to trade it is important that you have a strong knowledge of the industry you’re trading on and understand the issues that can move market prices.
Which Shares can I trade?
When you trade Shares at ETX you can choose from a wide range of companies from over 20 countries including the UK, US, Germany, France, Spain and Singapore.
You can trade any of our Shares markets as a CFD or Spread bet, allowing you to profit from both rising and falling markets. In addition, we offer markets on major IPOs (Initial Public Offerings) for even more exciting trading opportunities.
For an idea of the type of markets and sectors available for you to trade, we’ve listed some of the major Shares from popular countries around the world.
You can trade a variety of diverse sectors with ETX when you speculate on Share price movement of UK companies.
We offer a range of major FTSE 100 companies as well as smaller Shares which offer greater volatility and more trading opportunities.
Remember, greater volatility can create more trading opportunities but also brings greater risk.
Some of our most popular UK Share markets include:
- Lloyds Banking Group
- BP Plc
- Rio Tinto
- Anglo American
- BHP Biliton
The US Share market is one of the busiest and most heavily traded in the world and offers investors plenty of opportunities in newer, rapidly growing sectors as well as in more established industries like banking and retail.
We offer Spread betting and CFD trading on a range of iconic US Shares on Wall Street as well as a comprehensive selection from the US Tech 100 and SP 500.
Some of our most popular US Share markets include:
- Tesla Motors
- Pfizer Inc
- Google Inc
With Shares from Germany, Spain, France, Sweden, Italy, The Netherlands and more we have plenty of trading opportunities on European Shares.
The EU represents one of the world’s biggest trading markets with global companies across sectors like retail, automobiles, banking, e-commerce and tech.
Some of our most popular European Share markets include:
- Deutsche Bank
- Volkswagen AG
- BNP Paribas
- Societe General
- Banco Santander
Can I use hedging as part of my portfolio?
If you currently have a Share portfolio or traditional investments that you’d like to offset a portion of your risk exposure in, using CFDs to hedge your portfolio can be a sound strategy.
Because you can Sell (go short) as well as Buy (go long) with a CFD trading account, you have greater flexibility when it comes to your investment.
Many traders who own a physical Share portfolio choose to hedge their investments with a CFD position as a way of minimising risk and potential losses.
You can do this by opening a Sell CFD position in the Shares of the company you have invested directly in.
This trade in the opposite direction will help offset potential losses in your physical Share portfolio should their value decrease rapidly, for example in times of extreme volatility or during periods of heightened uncertainty.
Is Shares trading for me?
Share trading offers investors huge trading and investment possibilities across a number of sectors. When you trade Shares with ETX you’ll have access to Equities from around the world and can choose from solid, blue-chip stocks to newer, more volatile markets. You will also have the option to trade on major IPOs when available.
Share trading could be right for you if you are looking for short, medium and longer-term trading opportunities and have a good understanding of the Shares market.
You can trade Shares on our powerful, award-winning TraderPro platform as well as on our advanced iOS and Android apps.
Read the next section of this guide to trading Shares to learn more how to trade the different Shares we’ve mentioned here as well as how your trading strategy might change depending on the type of Shares you choose to trade.