How to trade in shares
Discover how to trade in shares with our market-leading offering – and take your position today.
Start trading today. Call +44 (20) 7633 5430, or email sales.en@ig.com to talk about opening a trading account. We’re here 24/5.
Contact us: +44 (20) 7633 5430
Start trading today. Call +44 (20) 7633 5430, or email sales.en@ig.com to talk about opening a trading account. We’re here 24/5.
Contact us: +44 (20) 7633 5430
If you’re ready to open a position on a share, here are three steps to follow:
1. Decide which stock to trade in
You can trade via leveraged products such as Contracts for Difference (CFDs).
2. Decide whether you want to go `long´ or`short´
You can use our market screener tool to choose from over 13,000 CFD markets on international stocks and ETFs.
3. Open a live share trading account with IG
Fill in our simple application form and create a CFD trading account to start trading in minutes.
For more info about how to trade in shares, you can discover everything you need to know in this guide.
How to trade or invest in stocks
You can speculate on the price of shares rising or falling with derivatives like CFDs. CFDs have their pros and cons, which we explain later in this guide.
Learn why people trade shares
People trade shares because, just like other financial markets, they can be an opportunity to make money. At a basic level, you can take a position on shares to get exposure to economic growth – and if the health of an economy grows, you might find that companies that are based in that economy also grow.
Company growth is correlated with share price increases, which is what people are hoping for when they buy or invest in shares. As an example, over the past 100 years, UK stocks have generated average returns of around 5% a year over and above inflation, meaning that the real value of an investment would have doubled around every 14 and a half years. Remember, with us you can only trade derivatives via CFDs.
Generally speaking, investors will buy shares to:
- Make a profit from share prices rising
- Receive an income from dividends if the company pays them
- Benefit from the effects of compounding
This last point requires that a share investment be held for a long period of time, and it’s why you’ll sometimes hear the phrase ‘time in the markets is better than timing the markets’ when talking about share investments.
As an example, we can see from the graphic below that the maximum and the minimum annualised returns on the FTSE 100 consolidated around the average returns over time – smoothing out the market volatility to settle at just below 10% per year.
Traders on the other hand, might be seeking to capitalise on short-term share price gains. Rather than investing in the shares, traders speculate on the share’s value. They can speculate on it rising by going long, as well as falling by going short.
This is made possible by trading with derivatives like CFDs.
Leverage is available when you use this product, which gives you full market exposure for an initial deposit – known as margin – to open your position. But, bear in mind that leverage can increase both your profits and your losses as they’ll be based on the full exposure of the trade, not just the margin requirement needed to open it. This means that losses as well as profits could far exceed your margin.
Learn the difference between investing and trading
Investing and trading are similar terms that some people will sometimes use interchangeably – but there are important differences for you to be aware of. We’ll go through what each of these terms means in this section. Remember, with us you can only trade derivatives via CFDs.
Investing in stocks
Investors buy shares outright in the hope that they will increase in price and can be sold at a later date for a profit. They uphold the traditional mantra of buying low and selling high – known as going long. Investors will take positions over a longer period of time, attempting to profit from share price changes as well as dividend payments.
While this means that they might need more initial capital to get started when compared to trading, their losses would be capped at this initial outlay. That said, investors should be aware that they might receive back less than they initially invested.
Trading stocks
Trading stocks means that you’re speculating on a share’s price movements with derivatives like CFDs – without taking direct ownership. CFDs are leveraged products, which means that you won’t need to commit the full value of the position. But, bear in mind that leverage can increase both your profits and your losses.
With CFDs, you can ‘buy’ (go long) the shares if you think the stock’s price will rise, or you can ‘sell’ (go short) if you think the stock’s price will fall. Shorting with derivatives can be an effective way to hedge against downward price movements in your non-leveraged investment portfolio, or it can be a way to generate profits outright from shares that are falling in value. But, when you go short your potential losses are theoretically uncapped because there’s no limit on how high something’s price can rise.
When you create a trading account with us, you’ll be able to:
- ‘Buy’ (go long) or ‘sell’ (go short) 12,000 international shares to speculate on their price rising or falling
- Take a position on our range of ETFs to get exposure to a basket of shares from an entire country, index or sector that could be rising or falling in price
- Trade a host of global indices – including the FTSE 100, the Dow Jones Industrial Average (Wall Street) and the DAX (Germany 40) – to go long or short on the performance of an entire economy with a single trade
1 Best Finance App, Best Multi-Platform Provider and Best Platform for the Active Trader as awarded at the ADVFN International Financial Awards 2024.
Understand the risks and charges
Trading can be seen as more risky than investing, mainly due to the use of leverage. But, investing also carries risk – and there’s no guarantee that your investments would increase in value, so you could receive back less than you initially invested.
Before deciding to trade in shares, you should take steps to manage your risk. We’ve got courses at IG Academy that take you through risk management and how to mitigate your exposure to risk in the financial markets.
Trading costs
Our costs and charges for trading vary depending on the product that you use to take a position.
- Trading shares
- Trading ETFs
- Trading indices
| About | Risk and reward | Costs | With us | |
Speculating on the price movements of individual shares.
You can go long or short with leveraged derivatives like CFDs. |
Your risks when trading are higher than share dealing due to the use of leverage – which can increase your losses as well as your profits.
Attaching stops to your positions can help to mitigate your exposure to risk. |
CFDs have a minimum 0.10% commission fee when you open and close a position.
Spot trading has overnight fees, while forwards do not. |
You’ll be able to trade over 12,000 international shares with CFDs.
|
| About | Risk and reward | Costs | With us | |
Speculating on the price movements of an ETF.
You can go long or short with leveraged derivatives like CFDs. |
Your risks when trading are higher than share dealing due to the use of leverage – which can increase your losses as well as your profits.
Attaching stops to your positions can help to mitigate your exposure to risk. |
CFDs have a minimum 0.10% commission fee when you open and close a position.
Spot trading has overnight fees, while forwards do not. |
You’ll be able to trade over 6000 ETFs including different indices, sectors, currencies and commodities with CFDs.
|
| About | Risk and reward | Costs | With us | |
Speculating on the price movements of an index – which is a collection of many different companies’ shares, giving you exposure to an entire sector or economy at once.
You can go long or short with leveraged derivatives like CFDs. |
Your risks when trading are higher than share dealing due to the use of leverage – which can increase your losses as well as your profits.
Attaching stops to your positions can help to mitigate your exposure to risk. |
CFD spreads start from 1 on the FTSE 100, 1.2 on the Germany 40 and 2.4 on Wall Street. |
You’ll be able to trade a range of global indices like the Dow Jones Industrial Average (Wall Street), the FTSE 100, and the DAX (Germany 40) with CFDs.
|
Open a share trading account
We’ve got a truly market-leading shares offering for traders – with over 13,000 international shares and almost 6 000 ETFs and a host of global indices.
With us, you’ll also benefit from our out-of-hours All Session stocks offering. This lets you take a position on over 80 leading US shares when you otherwise wouldn’t be able to.
So, if you want to take a position on shares, you’ve come to the right place. We offer CFDs to retail traders who are looking to seize their next opportunity.
Discover what moves the price of shares
Before it goes public through an IPO, a company’s shares will have a set price range – often determined by the underwriter of the IPO (normally a large bank). This range will be set according to the anticipated interest in the listing, as well as the company’s fundamentals – including its revenues, its products, and its existing popularity.
Once the IPO has completed, fluctuations in the share price are caused by changes in the supply of and demand for the stock. If supply is higher than demand, the share price could fall; if demand is higher than supply, the share price could rise.
In the long-term, there are a range of reasons that the demand for a share can fluctuate over time. These reasons include:
- Earnings reports: companies usually release interim reports on their financial performance once every quarter and a full report once a year. These reports can influence a company’s share price as traders and investors use figures including revenue, profit, and earnings per share (EPS) as part of their fundamental analysis
- Macroeconomic data: the state of the economy a company operates in will affect its growth. Data releases such as gross domestic product (GDP) and retail sales can have a significant influence on company share prices – strong data can cause them to rise, while weak data can cause them to fall
- Market sentiment: share price movements aren’t always based on fundamental analysis. The view that the public, as well as market participants, have on a particular stock can cause demand to fluctuate. This is how some speculative bubbles are formed
- Interest rates: if interest rates are low, the stock market might see increased activity – despite the previous factors mentioned here. That’s because more people could turn to stocks and shares to achieve greater returns than they might otherwise be able to if they saved their money in a bank account
Pick a stock or ETF
We’ve got over 13,000 international stocks and ETFs for you to choose from. If you’re looking for inspiration for a stock to take a position on, consider using our stocks screener tool.
When you’re choosing a stock, it’s important that you carry out your own due diligence on a company. You should use both fundamental and technical analysis when assessing a company’s financials and potential future share price performance.
- Technical analysis is concerned with chart patterns, technical indicators and historical price action
- Fundamental analysis is based on a company’s financial metrics, including its net revenue, earnings calls, or profit and loss statements
Choose your timeframe and open your position
Timeframes are important considerations when you’re deciding how to take a position on stocks. Here are the differences between investing and trading:
- Trading tends to focus on the on the short- to medium-term, with traders taking positions over a number of hours, days or weeks – although it can be longer in some cases
- Investing focuses on the long-term, with investors buying and holding stocks for a number of weeks, months or years
The different timeframes that traders and investors favour are a result of the inherent nature of trading or investing.
When you trade with CFDs at spot prices (‘cash’ in our platform), you’ll find that the spreads are tighter, but you’ll incur overnight funding charges. We also offer trading on futures or forwards for shares, ETFs and indices. With futures or forwards prices, you’ll find that the spreads are wider, but you won’t incur overnight funding charges.2
When investing, people would be taking direct ownership of the shares – making the shares theirs to hold for as long as they want. That’s why investing would be favoured by people looking to spend time in the market, and trading is favoured by people who’re looking to attempt to time the market. But, that’s not always the case – and some people might choose to invest over the short-term, while others might choose to trade over the long-term.
2 Share and ETF forwards are not available on a CFD trading account.
How to make a shares trade
Trading shares means you’ll be speculating on prices rising or falling with derivatives like CFDs. You can do this from within our award-winning trading platform1 – which has in-built charting tools, technical indicators and in-platform news and analysis from our expert team.
To trade shares, follow these steps:
- Create an account or log in
- Decide which stock to trade with CFDs
- Pick a company from within our trading platform
- Assess whether you want to go long or short and take steps to manage your risk
- Open and monitor your position
1Best Finance App, Best Multi-Platform Provider and Best Platform for the Active Trader as awarded at the ADVFN International Financial Awards 2024.
Stock market trading: the other things to know
Here are some other things to know about stock market trading, before you get started.
How does the stock market work?
The stock market works by facilitating the buying and selling of different companies’ shares between institutional and retail investors. Companies are in control of the number of shares that they’d like to be released – and the level of interest that a company’s shares draws in has a large impact on the share price.
How and why do companies go public?
The ‘traditional’ way to go public is through an IPO, in which an underwriter will sponsor a company’s public listing, setting a target share price. In this IPO process, a company’s financials will be heavily scrutinised before the listing, which helps to eliminate certain risks for institutional and retail investors because they’re able to make a more-informed decision.
Other ways that companies can go public include direct listings and SPACs. Direct listings enable a company to go public directly through a stock exchange. The company’s current employees and stakeholders will be able to convert their equity in the company into tradeable shares, which can then be issued through a stock exchange to the general public.
SPACs (special purpose acquisition companies) – sometimes known as reverse takeovers – are a more unorthodox way to go public, but there have been some high-profile examples in recent years. In basic terms, a SPAC is a shell company that’s set up with the sole purpose of carrying out an IPO, and then merging with a private company – taking the private company public in the process. Virgin Galactic is perhaps the most well-known company to have gone public through a SPAC.
As for why companies go public, there are several reasons. Most importantly – it’s a way to raise capital, which can help to fund expansion and further growth. Going public also carries a certain amount of prestige, especially if the company becomes a ‘blue chip’ – generally seen as the most stable companies in their sector.
Stability brings increased shareholder confidence, which will help to increase the company’s share price and subsequent market capitalisation. Eventually, a publicly listed company may start to look at acquiring other companies in its sector, and this can help to boost its own talent base – facilitating still further expansion.
How to decide to trade in shares
Choosing between trading and investing is a decision for you as an individual – depending on your unique style and what you’re looking to get out of the markets. If it’s the possibility of slow and steady returns with lower risk, then investing might be preferable. If it’s the possibility of quick gains with higher risk, then you might prefer trading.
How do I find a share opportunity?
Every trader will have a different preference for the share opportunities they choose. For example, some people prefer the lower risk and potentially high reward opportunities that blue-chip stocks bring. Others might prefer the volatility of penny stocks.
You should carry out analysis – both technical and fundamental – when you’re trying to find a company to take a position on.
How to trade in stocks out of hours
We’ve got a market-leading out-of-hours trading offering. You’ll be able to speculate on the price movements of over 90 key US shares when you might not otherwise be able to. Volatility doesn’t wait for the main market session – so we’ve made it so you can trade the pre-market open and post-market close.
How to trade shares with DMA and data from L2 Dealer
DMA is direct market access, and it’s available with CFD trading. DMA lets you open a position directly through the order book of an exchange, giving you deep liquidity, full market visibility and advanced execution.
Our DMA platform is called L2 Dealer, and it enables you to trade share and forex CFDs with DMA. You’ll get access to Level 1 and Level 2 pricing data. Level 1 data will give you the pricing direct from an exchange, while Level 2 will also show the exchange’s order book.
What is liquidity and why does it matter in share trading?
Liquidity determines how easily something can be bought and sold. High liquidity makes it easier to quickly buy or sell, low liquidity makes buying and selling quickly more difficult. In share trading, you might want to pick shares with high liquidity if you’re planning on opening and closing a lot of positions in a short period of time.
In a market with high liquidity, you might find that bid-ask spreads are tighter – which would help to bring your total costs down when trading. On the other hand, in a market with low liquidity, spreads could widen and increase the cost of your trade.
What is execution and why does it matter when trading stocks?
Execution is the ease with which your trades are placed and filled. Our execution has been built to ensure that your trades are filled how you want, when you want – every time.
Free share trading tools and resources
Before you start trading in shares, you should consider using the educational resources we offer like IG Academy or a demo trading account. IG Academy has lots of courses for you to choose from, and they all tackle a different financial concept or process – like the basics of analyses – to help you to become a better trader.
Our demo account is a great place for you to learn more about leveraged trading, and you’ll be able to get an intimate understanding of how CFDs work – as well as what it’s like to trade with leverage – before risking real capital. For this reason, a demo account with us is a great tool for investors who are looking to make a transition to leveraged trading.
Try these next
Start trading over 90 US markets out of hours with IG
Take a position on over 13,000 shares and ETFs with IG
Learn how to make the most of IPOs and grey markets with IG
Try these next
Start trading over 90 US markets out of hours with IG
Take a position on over 13,000 shares and ETFs with IG
Learn how to make the most of IPOs and grey markets with IG
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