How to Trade Shares

Also known as stocks, shares give you partial ownership of well-established and financially sound companies. They are popular due to the amount of information available from both the companies themselves and news outlets, allowing traders to find opportunities and avoid risk.

You can trade shares as a CFD on easyMarkets innovative and intuitive proprietary trading platform and app.

This type of derivative product lets you take advantage of tools and trading conditions such as free guaranteed stop loss and take profit, leverage and negative balance protection when trading. We are also one of the few brokers to offer CFD shares trading without any slippage.

What are CFD Shares?

CFD is an abbreviation for Contract for Difference. This specific type of financial vehicle allows you to trade the price of a share without the obligation of owning it. The main advantage of trading CFDs (no matter what the nature of the underlying asset) is that you can potentially benefit from both the upwards and downwards movement of the share’s price. If you owned the share, you would only benefit from an increase in price. Here are a few things you should consider before trading CFD shares.

1.
Learn, Then Learn Some More – If you are new to trading, to protect yourself from unfavorable scenarios, it is important to familiarize yourself with the products you are trading and the platform you are using.
2.
Choose Your Shares – Some shares are more volatile than others; depending on your strategy this can be an advantage or a liability.
3.
Decide How You Want To Trade – CFDs allow you trade both positive and negative price movements. You should also decide the duration of your trades; if you will hold them for a longer period of time or intraday.
4.
Risk Management– Make sure you know at what price you need to enter and exit a trade, to ensure you reach your investment goals.
5.
News - You can find news in multiple places including company and executives’ social media. The easyMarkets app features an integrated live news feed, giving you the latest share affecting updates.

CFD Trading vs. Shares

CFD shares, allow you to speculate on market’s price and buy and/or sell the underlying share of the company of your choice, without having to hold the physical product. The value of shares rise and fall in connection to the company’s value, which provides a basis for speculation in stock market. The traditional way of investing in the stock markets, non-CFDs, involve purchasing the shares of the company on a stock exchange and owning the underlying asset.

When trading CFDs there are also multiple powerful trading conditions available to you, which aren’t available when you are trading shares on the stock market. These trading conditions can protect you against temporary volatility and run-away losses. For example, stop-loss, closes your trade at a pre-defined rate to protect your account. Take-profit does the same but instead closes the trade positively, to avoid a sudden reversal in the price.

The easyMarkets online trading platform also features no slippage. Slippage is a disparity between the requested and executed price. easyMarkets is one of the only brokers to guarantee no slippage on shares, giving you price transparency at all times.

CFD Shares

Allows you to use leverage to increase the size of your investment, but can increase risk
Benefit from both upwards and downwards price movements
Less volatile over longer periods of time
Buy and Sell immediately
Use online trading and risk management tools available exclusively when trading CFDs – stop loss, take profit, negative balance protection and leverage (on easyMarkets platform).

Traditional Shares

No leverage available
Benefit only from the upward price movement
Also, less volatile over a longer period
Transactions are dependent on the availability of a buyer or seller
No similar tools available when purchasing and selling traditional shares or stocks

When trading CFDs there are also multiple powerful trading conditions available to you, which aren’t available when you are trading shares on the stock market. These trading conditions can protect you against temporary volatility and run-away losses. For example, stop-loss, closes your trade at a pre-defined rate to protect your account. Take-profit does the same but instead closes the trade positively, to avoid a sudden reversal in the price.

We have also seen shares fluctuate due to scandals involving the companies, their executives or even their founders.

We saw this when Facebook stocks dropped due to the Cambridge Analytica scandal when Elon Musk’s tweets made investors and shareholders nervous (and of course caused Tesla stocks to drop) and the infamous Volkswagen scandal ‘Diesel-Gate’ when the media exposed an attempt to manipulate EPA test results.

Company shares can also experience price fluctuations during the announcement of corporate actions:

Mergers and acquisitions: This when one company buys out another and they merge. If the market perceives this as positive for the company, share prices will increase, if the inverse is true the price will fall.

Dividends: This how much profit will be paid to shareholders.

Company News: Including new products announcements, changes or resignations in a company’s executive branch or board or asset purchases.

The amount of data and news available when trading shares is immense. Most publicly traded companies report their earnings every quarter, many major news outlets cover information related to these large companies.

The dates of earning announcements are publicly available and most financial media (i.e. Bloomberg) feature exhaustive forecasts of the world’s biggest companies’ earnings leading up to the earnings season.

A further benefit of trading stocks or shares compared to other markets is diversification. Stocks offered by easyMarkets span multiple industries: technology, retail, entertainment, e-commerce, automotive and more. Certain events may affect specific industries leaving other unscathed. For example, although the China-U.S. trade war sent shockwaves through multiple industries like the agricultural and automotive, certain industries like aluminum manufacturing actually saw growth as a result.

Diversifying a portfolio can average out volatility and help manage risk. This is a strategy used frequently by institutional investors called “hedging”, which is basically the practice of “protecting” one trade with another.

Most investors trade a diverse set of instruments depending on their strategy, risk appetite, and financial goals. Let’s not be coy though, most investors seek to create the highest returns for the lowest level of risk in the shortest amount of time.

Although the motivation or goal may be simple, the process is not – there is an entire field of economics dedicated to this exact topic called Modern Portfolio Theory.

There is no perfect solution or silver bullet of success when it comes to investing, a balance of risk to reward can prove effective.

When diversifying you need enough shares to average volatility, but not so many that you can’t monitor individual stock performance. If you hold too many it requires a lot of work to ensure you’re up to date. You also need to consider how long you will hold the shares, as frequently changing your portfolio can quickly rack up charges.

Another disadvantage of shorter-term shares trading is you lose the benefit of volatility being normalized (or averaged out) over a longer period.

Stock markets can also be day traded. Much like other instruments, shares or stocks are volatile during the market openings and overlaps.

Volatility may present more opportunities, but it also carries more risk. Rapid movements not only go up but also go down. This can be a precarious situation for inexperienced traders.

Of course, shares (or stocks) aren’t immune to the classic trading strategies – like buy low and sell high or finding a company that outperforms the market consistently. And although it’s possible to only trade shares, most traders and investors use shares as part of a more diversified portfolio.

When trading, a great way to manage risk is through knowledge – share or stock traders have access to immense amounts of data – both fundamental and technical. Shares are some of the most popular ways to invest. Market news websites such as Bloomberg, The Wall Street Journal and more cover stocks exhaustively, and some even give recommendations for public companies to watch.

How To Trade Stocks With easyMarkets

We offer multiple shares, in various industries including automotive, technology, banking, telecommunication, cosmetics, pharmaceutical apparel, and hospitality. Each industry and company is different and moves in a different way; make sure you have knowledge of the company and its industry before you trade.

1.

Decide What and When to Trade

First decide which company's shares you would like to trade. Different industries and even companies within the same industry can have vastly different performance. All markets have moments when volatility is high. Some traders trade during these periods, while others prefer to trade during more predictable periods.

3.

Monitor Your Position

Markets are always moving so keeping tabs on your positions is crucial. This is even more important when you are trading short term – because shares are generally considered to be less volatile over the long term.

2.

Initiate Your Trade

easyMarkets platform is both powerful and intuitive, so you can place your trade in just a few steps. Decide your amount to trade, the amount to risk (taking into consideration the leverage) and whether you think the price will increase or decrease. If you think it will increase you will “buy”, and if you think it will drop you will “sell”.

4.

Exit

Once you have your strategy set up and have calculated your risk appetite, potential profit/loss, and entry point, you have to close your trade. A significant movement can cost you potential profits or even worse.

1.

Decide What and When to Trade

First decide which company's shares you would like to trade. Different industries and even companies within the same industry can have vastly different performance. All markets have moments when volatility is high. Some traders trade during these periods, while others prefer to trade during more predictable periods.

2.

Initiate Your Trade

easyMarkets platform is both powerful and intuitive, so you can place your trade in just a few steps. Decide your amount to trade, the amount to risk (taking into consideration the leverage) and whether you think the price will increase or decrease. If you think it will increase you will “buy”, and if you think it will drop you will “sell”.

3.

Monitor Your Position

Markets are always moving so keeping tabs on your positions is crucial. This is even more important when you are trading short term – because shares are generally considered to be less volatile over the long term.

4.

Exit

Once you have your strategy set up and have calculated your risk appetite, potential profit/loss, and entry point, you have to close your trade. A significant movement can cost you potential profits or even worse.

Shares by easyMarkets

easyMarkets has curated a selected list of the market’s most exciting, interesting and dynamic shares. You can choose from automotive, energy and fuel, technology, e-commerce and hospitality industry shares – ensuring that you can create an optimal portfolio to achieve your goals.

US Shares

Description

BAB / USD Alibaba
AMZ / USD Amazon
FBK / USD Facebook
NFX / USD Netflix
TSL / USD Tesla
CCA / USD Coca-cola
INT / USD Intel
JNJ / USD Johnson & Johnson
MCD / USD McDonald’s
MSF / USD Microsoft
FRD / USD Ford
CVX / USD Chevron
VSA / USD Visa
ATT / USD AT&T
CSC / USD Cisco
EXO / USD Exxon

EU Shares

Description

ADS / EUR Adidas
ALV / EUR Allianz
BAY / EUR Bayer
BNP / EUR BNP Paribas
CBK / EUR Commerzbank
DAI / EUR Daimler
IBE / EUR Iberdrola
LVT / EUR L.V.M.H.
SIE / EUR Siemens
VOW / EUR Volkswagen

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