Equity trading is centered on the stock value of a company, something which can be greatly impacted by a company's perceived performance. For example, if a trader thinks it likely that a company's shares will increase in price, they may decide to buy shares in that company. If the price of those shares does increase, the investors will earn a profit. However, if the trader's prediction was incorrect, and share prices for that company decrease in value; if the trader decides to close the trade as a result, they will have made a loss on that position. Conversely, if a trader predicts that a company's share price will decline, they may decide to sell their stock in order to buy it back at a later date for a lower price. However, if the stock price appreciates, rather than depreciating, they may be forced to buy the stock back at a higher price than that which they sold it for and incur a loss as a result.
TRADING EQUITIES: TRADING HOURS
For those just starting to trade equities, it is worth noting that traders can only buy or sell a stock when the index listing that stock is open. This is more common when trading stocks that are only listed on a single index. For example, if you wanted to open a trade on M&S shares, you could only do so during the FTSE100 trading hours, from 08:30 to 16:30. Nonetheless, traders can still place buy or sell orders outside of these time periods to be activated after the opening of the markets.
TRADING EQUITIES: KEEPING ON TOP OF INDUSTRY EVENTS
In attempt to gain an insight into the future movement of a certain company's stock price, experienced equity traders will research and closely monitor the industries and businesses related to the stock that they have positions in. This is important, as news updates within a sector can quickly cause significant movement in the stock market, and may help a trader with future predictions of what and when to buy and sell.
However, a stock may not always move according to the trader's expectations based on one piece of industry news. For example, if a company's earning reports indicate a tough quarter with a dramatic fall in profits, a trader might assume that the stock price of that company would fall in sync with this news.
However, if soon after, that same company announced its plans to carry out a sizeable share buy-back, there's a fair chance that its stock price would soar, despite a bad quarter. Traders who only took the first piece of news into account could incur losses if the stock price moved in the direction opposite to the trader's prediction.
Your Advantages at a glance:
- Attractive trading segments with outstanding liquidity
- World-class trading technology
- Quick admission and flexible connectivity options
- Ideal trading conditions thanks to self-regulation
- Access to extensive network and expert knowledge
CONTRACTS FOR DIFFERENCE
CFD trading lets you speculate on rising and falling markets. Leverage gives you full exposure to over 10,000 global markets. It is a flexible way to trade the markets. Rather than buying stock, you speculate on live price movements. Going short when prices are falling or going long when they're rising. Please be aware that this is high risk. Tax advantages can change and their value to you will depend on your individual circumstances. Trade on leverage, get full market exposure for only a fraction of an asset's price, yet any profit or loss you make will be based on its full value. React quickly to opportunities with 24-hour prices on global shares, indices, currencies and more. Trade commodities: access to a full range of commodities including gold, silver and oil. Even trade in volatile markets. If you think prices will rise, you can go long and buy. If you think they will fall, you can go short and sell Margins from just 1% You could potentially take a £10,000 position with only a £100 deposit - adding flexibility to your original investment capital. No Stamp Duty: save up to 0.5% on the value of each trade. Tax laws may change in the future and depend on your individual circumstances.
CFD TRADE VS SHARE DEAL:
CFD trading works a little differently to traditional share dealing. Instead of taking an ownership stake of an underlying asset, for example ABC Plc shares, in the hope that it will increase in value, you are simply speculating that the price of the particular asset will move - either rising or falling. If the price moves in the direction you have backed it to, you'll make a profit. If it moves against you, you'll make a loss. This is an example of a successful trade that requires a 10% deposit. Remember that any losses would be magnified in exactly the same way as profits.
THINGS TO CONSIDER:
Leverage - remember that leverage magnifies returns and losses in exactly the same way. So you could lose more than your initial deposit. Deposit requirements - to hold a CFD position, you need to have enough funds in your account to cover the margin requirement. If your position starts losing money, your broker may ask you to deposit additional funds (margin call). If you don't, your position may be closed. Price movements - if prices move against you, you will lose money unless you are able to close or amend your position straight away. We offer a range of flexible orders to help you minimise your risk. No shareholder privileges - because you don't own the underlying asset, you won't receive voting rights, invitations to AGMs or other shareholder benefits. Dividends - Open CFD trades receive dividends (90% of net value) on long positions. Conversely, with open short positions your account will be debited for 90% of the net value of dividends. Tax advantages: CFD trading is currently free from Stamp Duty, but tax laws may change in the future. Any benefits depend on your individual circumstances.
RISKS AND DISADVANTAGES:
CFD trading can offer a flexible alternative to traditional share dealing. At the same time higher risk and you could lose more than you deposit. You should only deal with money you can afford to lose. The value of investments can fall as well as rise and you may lose significantly more than your initial margin payment. Trading in these products is not suitable for all types of investors. We recommend that you consult an independent financial advisor if you are uncertain whether they are right for you. Find the right investment products to meet your individual needs and goals.