How to trade Barclays shares

How to trade Barclays shares

Trading Barclays shares can be done via derivatives such as contracts for difference (CFDs). When you trade, you can profit from rising or falling share prices because you don’t take ownership of the underlying shares. If you think Barclays’s share price will rise, you buy (go long) and If you think they will fall, you sell (go short).

Many traders prefer trading derivatives because they can trade on leverage. This means you only need to put down a deposit – called margin – to get exposure to the full value of your trade. In this case, your profit or loss will be based on the full size of your position, not your deposit.

Barclays shares CFD trading

CFD trading is a method you can use to speculate on whether Barclays’s share price will go up or down. With CFDs, you exchange the difference in the share price from when you placed the trade to when you close your position.

Learn more about CFD trading

Understanding Barclays: a brief history

Today, Barclays is the UK’s largest bank – it is also the holdings company of several investment units, asset management groups and retail banks in the UK, Europe, Africa and the Caribbean. John Freame and Thomas Gould started the business in 1690, but it wasn’t until 1736 when James Barclay joined the duo that the name ‘Barclays’ was associated with the establishment.

Due to the many mergers, acquisitions and fundamental business developments over the decades, several name changes occurred between 1776 and 1982, but the Barclay identity remained.

• 1776: Barclay, Bevan and Bening
• 1785: Barclay, Bevan, Bening and Tritton
• 1896: Barclays and Co.
• 1917: Barclays Bank Limited
• 1925: Barclays DCO
• 1971: Barclays Bank International
• 1982: Barclays Bank PLC

In November 1953, Barclays listed on the London Stock Exchange (LSE) at just below 200p. It is also a constituent stock on the FTSE 100 and cross-listed on the New York Stock Exchange (NYSE). Barclays stock generally moves with economic booms and busts. Its share price started declining soon after listing, but many banking milestones paved the way for its incline. The bank introduced several firsts – the automated cash machine (ATM) in 1967, private bankers in 1977 and the UK’s first debit card in 1987.

The dot-com bubble and higher volatility in the market lead to an impressive rally from mid-1990, finally peaking at £7.32 in February 2007. This was before the 2008 financial crisis caused the share price to drop drastically, causing it to hit a low of 47p in January 2009. Since then, the highest price was 351p (August 2009), and the stock price has stayed above 135p. At the end of May 2019, Barclays had a market cap of £25.98 billion and shares were trading at 149p.

Barclays shares: the basics

Barclays shares are listed on the LSE under the ticker BARC. If you want to trade or invest in Barclays shares, you need to understand how it has performed against the backdrop of thousands of technical advances, financial crises and international conflicts over the years. All these factors heavily affect the Barclays share price.

The business does believe, however, that its multi-faceted business model makes it resilient in the face of global economic challenges. One of the factors to be aware of in the next few years include Barclays’s plans to reduce operational costs to improve profitability and return more cash to shareholders.

Barclays key personnel: who manages the company?

There are 12 members on Barclays’s executive team:

Barclays also has a board of directors that sets the company’s strategic direction and oversees its implementation by the executive team.

What is Barclays’s business model?

In May 2014, Barclays announced that it was revamping its business model and strategy to simplify and rebalance the business. The new Barclays business model is based on five diversified yet connected divisions that focus on producing consistent returns.

Barclays’s business divisions include personal and corporate banking, Barclaycard (its credit card offering), Africa banking, its investment bank, and Barclays Non-Core – a model established to reduce risk-weighted assets and businesses that do not form part of Barclays’s future.

The Barclays share price jumped by 7.5% when the new business model was revealed.

Barclays fundamental analysis: how to analyse Barclays

To analyse Barclays, you must conduct a very thorough fundamental analysis of the company. Fundamental analysis is based on external influences, as well as financial statements and industry trends. Because there are so many elements of the Barclays business to consider, a good starting point is to use ratios to assess the share price value. Important ratios include the price-to-earnings (P/E) ratio, the return on equity (ROE) and the relative dividend yield.

Barclays’s price-to-earnings (P/E) ratio

By calculating Barclays’s P/E ratio, you can establish how much money you’d have to spend on shares to make £1 in profit ($1 in profit for Barclays shares listed on the NYSE). The P/E ratio is calculated by dividing the market value per share by the earnings per share (EPS). EPS is calculated by dividing company profit by the number of outstanding shares.

Once you’ve established Barclays’s P/E ratio, compare it to the ratios of its competitors. A low P/E ratio could be an indication that Barclays shares are overvalued, while a high P/E ratio could imply otherwise.

Barclays’s return on equity (ROE)

Return on equity (ROE) is a ratio, expressed as a percentage, that measures how much Barclays will make on its assets. Another way to look at it is income generated relative to shareholder investments. To calculate ROE, divide Barclays’s net income by its stakeholder equity. A low percentage could mean the shares are overvalued, and vice versa.

Barclays’s relative dividend yield

Barclays’s relative dividend yield helps you to determine its dividend yield compared to that of the index it’s listed on – the LSE. To calculate relative dividend yield, divide Barclays’s dividend yield by the average yield for the LSE. A low number could mean that Barclays shares are overvalued compared to its competitors.

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