What is Share Trading?
Share trading involves the buying and selling of company stock or derivative products based on company stock, with the aim of making a profit. Shares represent a portion of the ownership of a public company and contribute to its market capitalization. The trading of shares is one of the most popular and well-known markets in investing, alongside forex and commodities.
How Can You Profit from Share Trading?
There are two main methods of profiting from the price movements of shares: non-leveraged trading and leveraged trading.
What is Non-Leveraged Trading?
Most shares trading takes place on stock exchanges, where public companies are listed. Only registered participants are allowed to trade directly with stock exchanges, so the majority of traders will do so via a stockbroker. IG’s execution-only share trading service enables you to buy and sell shares using their platform, through a custodian model.
Each share is a single unit of ownership in a listed company, traditionally offered in the form of a stock certificate. If a particular company increases in value on the market, its share price will increase correspondingly. Conversely, if a company decreases in value, so will the value of its shares.
How Can You Make Money from Share Trading?
There are two main ways of making money from share trading:
Price Movement
When demand outstrips supply for a company’s shares, their price will increase. Share traders try to take advantage of these price movements by buying shares at a lower price and selling them at a higher price.
Dividends
As shareholders effectively part-own the company they have shares in, they are entitled to a part of any profits the company decides to release back to investors in the form of a dividend. This provides a steady income stream in addition to potential capital gains from price movements.
What is Leveraged Trading?
In addition to trading on exchanges, it is possible to use derivative products like Contracts for Difference (CFDs) to participate in the shares market. These products allow for more flexibility than traditional trades, with the opportunity to take long or short positions to trade in both bull and bear markets.
These products operate on leverage, which increases exposure on a position without the use of more capital. However, this means CFDs also carry greater risks, including the risk that your losses could exceed your deposits.
Why Trade Shares with IG?
IG’s platform offers several advantages for share traders:
Execution-Only Service
IG’s execution-only share trading service allows you to buy and sell shares using their platform. This service operates through a custodian model, ensuring that your trades are executed efficiently and securely.
Access to Global Markets
With IG, you can access a wide range of global markets, giving you the opportunity to trade shares from various international companies. This diversification can help mitigate risks and increase potential returns.
Leverage and Derivative Products
IG offers the ability to trade derivative products like CFDs, providing more flexibility and the potential for higher returns. However, it is important to understand the risks associated with leveraged trading and to use risk management strategies to protect your investments.
Educational Resources
IG provides a wealth of educational resources to help you become a more informed and successful trader. From webinars and tutorials to market analysis and trading tools, you have access to everything you need to enhance your trading skills.
How to Get Started with Share Trading on IG
Getting started with share trading on IG is straightforward:
Open an Account
First, you need to open an account with IG. This process involves providing some personal information and verifying your identity. Once your account is approved, you can fund it and start trading.
Choose Your Trading Platform
IG offers several trading platforms, including their web-based platform, mobile app, and advanced trading tools like MetaTrader 4. Choose the platform that best suits your trading style and preferences.
Research and Analysis
Before placing any trades, it is essential to conduct thorough research and analysis. Use IG’s educational resources and market analysis tools to stay informed about market trends and identify potential trading opportunities.
Place Your Trades
Once you have identified a potential trade, you can place your order through IG’s platform. Whether you are buying shares directly or trading CFDs, ensure that you have a clear trading plan and risk management strategy in place.
Monitor and Adjust
After placing your trades, it is important to monitor your positions and make any necessary adjustments. Keep an eye on market conditions and be prepared to react to any changes that may impact your trades.
Conclusion
Share trading offers exciting opportunities for investors to profit from the price movements of company stocks. With IG’s platform, you can access a wide range of global markets and take advantage of both non-leveraged and leveraged trading options. By understanding the basics of share trading and utilizing the resources available on IG’s platform, you can enhance your trading skills and increase your chances of success.
