Have a bit of spare cash that you’re looking to invest in the financial markets? If so, you might be wondering how to buy and invest in shares in the UK. The good news for you is that the process is now super easy. No longer do you need to contact a traditional stockbroker via the telephone and fill out countless documents.
On the contrary, you can now buy, trade, and sell shares at the click of a button via your desktop or mobile device. Moreover, some online brokers even allow you to purchase shares on a fee-free basis. In a time not so long ago, this would have been unthinkable.
As such, we would suggest reading our in-depth guide on How to Buy and Invest in Shares in the UK. Within it, we’ll show you what you need to do to get your stock portfolio set up today. We’ll also show you what you need to look out for in a broker, as well as how to navigate your way through the Wild West of investment-related jargon.
Table of Contents
What is Shares?
In the financial markets, shares refer to equal units into which a company’s capital is divided. A share is also a unit of ownership or interest in a company, financial asset, mutual fund, or Trust fund that gives you claim to a portion of the company’s distributed profits (dividends).
Ideally, shares are issued by companies seeking to raise funds from the general public. And by buying these shares, you acquire part-ownership of the company. You can also participate in making critical decisions involving the company like voting for its directors, acquisition/expansion/consolidation plans, or whether the company should be sold.
What is Share price?
The share price refers to the value attached to a single company/mutual fund/financial asset share. It is the lowest amount of money that a company share attracts in the stock markets. It may also refer to the highest amount a trader/investor is willing to pay for a particular share.
At the time of going public or listing with a stock exchange, the company/fund/financial asset owners or managers get to set the share price. This price is based on such factors as the company’s current value, goodwill, and prospects for future growth. This share price is, however, not fixed will henceforth be determined by the natural forces of demand and supply.
Some of the key factors acting on the share price of any company, mutual/Trust fund, or financial asset include, the number of issued company shares, share buy-back programs, economic trends at the national level, industry economic trends, expected company news/events like the release of financial reports, companies profitability, investor sentiments about the company, and the liquidity of the share.
Can I Buy Shares Online in the UK?
Yes. There are two primary ways of buying shares online in the UK. The most common is the purchase of actual shares from a stockbroker online who presents you with an electronic share certificate. These shares are similar to paper shares, and the holder gets to enjoy all the rights and privileges, including voting rights and a claim to distributed profits (dividends).
To acquire actual company shares, you only need to create an investment account with your broker or broker agent, fund the account, and initiate the purchase or have the broker buy the shares on your behalf.
Alternatively, you can choose to buy Share CFDs online. The acquisition process is similar to that of acquiring actual shares, save for the fact that these shares are bought from a CFD stock brokerage. This makes CFD shares more of a bet against the broker on the price direction of the share that doesn’t entitle you to any rights or privileges.
You don’t get to vote in company meetings and neither do you get to share in the company profits (dividends). The upside to buying share CFDs is that you don’t need to be an accredited investor to create an account with the CFD broker, you don’t need a significant capital deposit as most brokers allow for fractional share trading, you get to access leverages, and you can short sell virtually any share.
Can I Sell Shares Online in the UK?
Yes, you can sell your shares online in the UK. If you an electronic share certificate, you can dispose of your investment online either through an online stock broker. The process is easy and straightforward and how fast you clear the investment depends on the liquidity of your shares.
Selling share CFDs, on the other hand, is easier and immediate. You don’t have to notify your stock brokerage of your intention to close an open position or have to wait to be matched with a buyer. Share CFD trading gives you more control over your investment as you can automate different the online sale of shares by setting a stop loss, take profit, and trailing stop-loss orders
3 Quick Steps to Buy Shares Online
Don’t have time to read our guide in full? If so, follow the 3 steps outlined below to get your hands on some UK shares in a matter on minutes.
Step 1: Create an Account
Choose an FCA regulated broker that gives you access to hundreds of UK and international shares.
Step 2: Deposit Money
Once you've opened an account, deposit some funds with a debit/credit card, e-wallet, or UK bank account.
Step 3: Buy Shares
Search for the company that you wish you invest in, select the number of shares you want to buy, and confirm the order.
How to Buy Shares In a Company : Beginner-Friendly Tutorial
If you’re still a newbie in the world stocks and shares, knowing how to get started can be challenging. Fortunately for you, we’ve detailed a super-simple step-by-step guide for you follow.
To get the ball rolling, you first need to think about which method you wish to take to get your hands on UK shares.
Irrespective of which method you opt for, it’s absolutely crucial that your chosen platform is regulated by the Financial Conduct Authority (FCA). This will ensure that your funds remain safe at all times.
Step 1: Select a Platform to Buy Shares
Although we have outlined a number of methods that allow you to buy UK shares, we would suggest opting for an online broker. This will allow you to make an investment via your desktop or mobile device in a matter of minutes. Most importantly, online brokers market their services to everyday retail clients, so you’ll be able to deposit and withdraw funds with ease.
With that being said, there’s are literally hundreds of FCA regulated brokers active in the online space, so you’ll need to spend some time finding a platform that meets your needs. To help you along the way, below we have listed four of the best online brokers that allow you to buy shares.
1. eToro – Best Share Dealing Platform for Beginners
eToro makes our number one list for a number of key reasons. First and foremost, the platform is super-easy to use, so it's ideal if you're just starting out in the world of stocks and shares. The broker allows you to buy and sell over 800 shares from heaps of financial markets. This includes the main markets in the UK and the US, as well as less popular exchanges in Sweden, Spain, and Australia. As such, you can diversify your portfolio with ease.
eToro also stands out in the fees department. You won't be charged anything to deposit funds ($5 withdrawal fee applies), nor will you need to pay any fees or commission to buy shares - as long as you don't apply leverage or short-sell a stock. Instead, eToro makes its money from the spread. This is the difference between the 'bid' and 'ask' price of your chosen share. In Layman's terms, the wider the spread, the more you need to make just to break even.
As such, although it's great that you do not need to pay any share dealing charges at eToro, do keep an eye on the spread. It is also worth noting that eToro uses the US dollar as its primary currency. Although you can still deposit funds in pounds, this will result in conversion charges, and either a positive or negative exchange rate when it comes to cashing your shares out. There is also a very small $5 withdrawal fee.
We also like the fact that eToro offers lots of payment methods. This includes a debit/credit card, e-wallets like PayPal and Skrill, and a UK bank transfer. Minimum deposits amount to $200 (about £160). Finally, eToro offers what is known as 'Copy Trading'. This allows you to copy the portfolio of other traders like-for-like. For example, if you come across a successful stock trader that has made consistent profits all year, copy trading allows you to mirror their trades at an amount you feel comfortable with!
- Supports multiple payment methods including e-wallets
- No trading fees other than the spread
- 800+ shares to choose from
- No phone support
2. Plus500 – Reputable Online Broker for Share CFDs
Launched in 2008 and based in London, Plus500 is an internationally recognized broker. Not only is the platform regulated by the FCA, but its parent company is listed on the London Stock Exchange. It is important to note that Plus500 is a specialist CFD trading platform. For those unaware, this means that you can buy and sell stocks without taking ownership.
As a result, you'll be able to trade stocks on a commission-free basis, as well as apply leverage. Regarding the latter, this means that you can trade with more than you have in your account. In the case of Plus500, the broker permits leverage of up to 5:1 on UK shares. As such, a £200 account balance would allow you to trade £1,000 worth of stocks. An additional advantage of going the CFD route is that you will be able to short-sell a company. For example, if you thought that the value of BT shares was due to go down, a short-selling order would allow you to profit from this.
On the flip side, share CFDs do not entitle you to dividend payments, so do bear this in mind. In terms of the fundamentals, you get started with an account at Plus500 in minutes, and minimum deposits start at £100. You fund your account with a debit/credit card, UK bank account, or Paypal. Once you do, you'll have access to more than 2,000 stocks. This includes the UK and international markets.
- Fast order execution
- No commissions
- Tight spreads
- Stocks only available via CFDs
- Its educational resources are sparse
3. Capital.com – Sophisticated trading platform with a wide range technical tools
Despite being a new entrant into the stock and shares CFD trading niche, Capital.com has gone on to claim a top spot among the best online brokerages in the industry. The fast ascend to the top can be attributed to a number of factors, and key among them include its highly competitive and transparent trading fees, a highly advanced and secure trading platform and access to multiple local and international share and stock markets.
On this platform, traders don’t pay commission for their stocks CFD trades, neither do they pay deposit or withdrawal fees. The trading fees, though variable, are relatively low and highly transparent. Both professional and non-professional traders also have access to attractive leverages of up to 1:200 and 1:30 respectively.
The broker has also dedicated a significant part of its website to educating their traders on stock trading. And all these, plus the rich trading and risk management tools availed makes it an attractive starting ground for most share and stock CFD trading enthusiasts.
- Competitive and highly transparent trading fees
- Easily accessible customer support available online and over the phone
- Supports a wide range of deposit and withdrawal options
- Doesn’t have a demo account for practice trading
- You can only buy stock and share CFDs and not the actual dividend-paying stocks
4. FXCM – Maintains highly transparent trading fee structure
FXCM is arguably one of the most reputable stock and share CFD trading platform in the UK online trading space. Established in 1999, the CFD broker has over the years positioned its trading platforms as the go-to platform for both veteran and slightly experienced online share and stock traders. On the platform, shares are available in the form of CFDs. They are traded commission-free and at a variable but attractively low trading fees.
In addition to these, registering a shares trading account online with FXCM is easy and straightforward. So is opening and closing a share/stock trade position on its easy to use trading platform. Other factors that make FXCM a better brokerage for stock trades include its versatility given that it presents you with a choice of four types of stock trading accounts, accessible via virtually all the conventional trading platforms like the MT4, NinjaTrader, and ZuluTrader.
- You only need a minimum £50 to open a share trading account with FXCM
- Retail traders get to access leverages of up to 1:30
- When trading share and stock CFDs on FXCM you are allowed to short sell, a fete that is hard when dealing with traditional shares
- One may consider the number of stocks and shares hosted by FXCM brokerage limited
- It has limited training, educational and research content
5. FinmaxFX - Trade stock and Share Indexes on MT5 platform
FinmaxFX is an online stockbroker specializing in Share CFDs. The broker provides you with a highly versatile trading platform on which you can access different global markets and over 400 asset classes. These include over 250 stocks drawn different stock exchanges from all over the world. It features such international brands as Amazon, Apple, Alibaba, Barclay, and even Tesla Motors.
Registering for a stock CFD trading account FinmaxFX is relatively easy and starts with furnishing the broker with your personal details, verifying your identity, and making a deposit at least £100. It does not charge deposit or withdrawal fees and the spreads are highly competitive. Its accounts are hosted on the MT5 platform, which is available in web trader, desktop, and mobile apps.
It is rich in educational features plus stock CFD and share indexes traders get access to leverages of up to 1:200, economic calendar, real-time stock market data, financial news, and professional trading/market analysis tools. Risk management features within the platform include limit orders and negative deposit protection.
- Hosts a wide range of stock and share indexes, 250+, including all popular shares for international brands
- The accounts are hosted on a highly versatile MT5 platform that’s available as web trader and desktop/mobile apps
- Trader account registration is easy and straightforward
- Traders get access to attractive leverages, professional trading indicators, and ample risk management tools
- The brokerage is rich in educational content and hosts regular training webinars
- FinmaxFX is not regulated broker
- The maximum trading leverage is not available to retail traders
- One may consider the broker’s product portfolio limited
6. Interactive Brokers – Best for Advanced Traders Looking for Short-Term Gains
Although most investors prefer to buy and hold shares long-term, this isn't the only strategy utilized by traders. On the contrary, some traders like to buy and sell shares on a short-term basis with the view of netting small, but frequent gains.
If this sounds like you, then we would suggest checking out the merits of Interactive Brokers. First and foremost, the platform charges a mere $0.05 (about 4p) per share. For example, if you bought 20 shares at £7 each, you would pay just 40p in fees. Interactive Brokers also has one of the most extensive trading platforms in the space. This gives you access to tens of thousands of shares, as well as other asset classes like mutual funds, metals, indices, and even forex.
The platform has a good regulatory standing in the UK market, including that of an FCA license. Interactive Brokers is also a worthy choice for those of you that want access to state-of-the-art research tools. This includes in-depth stock analysis with suggestions on how to trade a particular company. Finally, if you want to take things to the next level, Interactive Brokers offers a fully-fledged trading platform that allows you to utilize technical indicators and other charting tools.
- Heavily regulated in the UK and has a great reputation
- Buy and sell shares at super-low fees
- Tens of thousands of shares to choose from
- Charges inactivity fees
- Limited acces to educational materials
7. DEGIRO – Best for Diversification and Low Fees
DEGIRO is a Dutch-owned stockbroker platform that now has a huge presence in the UK investment space. The broker literally offers tens of thousands of stocks and shares, so the platform is great for diversifying.
In fact, on top of mainstream exchanges found in the UK, US, and Europe, DEGIRO also gives you access to emerging markets. Although DEGIRO doesn't offer fee-free trading like eToro, commissions are super low. The exact fee will depend on the market that you are trying to access. However, if buying shares in the UK, you shouldn't pay more than a couple of pounds per trade. In order to get started at DEGIRO, you will be required to make a £1 deposit from your UK bank account.
Once you do, you'll be able to buy shares at the click of a button. DEGIRO also has an easy-to-use mobile department. This is useful if you have a tendency to buy and sell shares on the move. Finally, if you want to diversify outside of the shares space, DEGIRO offers heaps of other asset classes. This includes mutual funds, bonds, and indices.
- Access to global stock exchanges
- Simple to deposit funds via a UK bank account
- Super-low trading fees
- Doesn't support card deposits and withdrawals
- No forex trading
Step 2: Open an Account and Purchase a Share
Once you have found an online broker that you like the look of, you will then need to open an account. We are going to show you the steps with our top-rated FCA broker eToro, albeit, the process remains largely the same regardless of which platform you choose.
In order to open an account, you’ll need to provide some personal information. This will include the following:
- Full Legal Name
- Home Address
- Date of Birth
- National Insurance Number
- Telephone Number
- Email Address
You’ll also need to choose a username and a strong password.
Verify Your Identity
As eToro is regulated by the FCA, the platform must comply with all relevant UK laws on anti-money laundering. This means that you will need to pass a basic KYC (Know Your Customer) process in order to verify your identity.
Upload the following two documents:
- Government-Issued ID: Passport or Driver’s License
- Proof of Address: Utility Bill or Bank Account Statement
Once you have opened an account and verified your identity, you are then ready to buy some shares. But first, you’ll need to fund your account. In the vast majority of cases, online stockbrokers will give you a number of payment methods to choose from.
At eToro, this includes:
- Bank Account Transfer
- Debit Card
- Credit Card
- e-Wallets like PayPal & Skrill
If you’re looking to deposit funds instantly, then you are best off using a traditional debit/credit card.
Choose Which Shares you Want to buy
Once you have funded your account, you can then buy your chosen shares. eToro gives you access to more than 800 companies – both in the UK and abroad. As such, the easiest way to find your chosen stock is to search for it.
As you can see from the example below, we are looking to buy shares in Barclays.
Complete Your Purchase
Once you’ve chosen the company that you wish to invest in, you are now ready to complete your purchase. First and foremost, you will need to decide how much you want to invest. The good news for you is that eToro does not require you to purchase whole shares. Instead, you can buy as much or as little as you like, as eToro can split your investment with other members of the site.
Next, you then need to decide what your entry point is. You’ll have two options – a market order or a limit order.
- Market Order: The easiest way to purchase your chosen shares is to opt for a market order. This is where you instruct the stockbroker to purchase your shares at the next available price.
- Limit Order: If you opt for a limit order, this means that you get to choose the share price that you wish to make a purchase. For example, if Barclays shares are priced at 88.89p, but you want to purchase them at a slight discount, you can set your limit order at 88.00p. You would then need to wait for the order to be filled by the market.
To complete your purchase, click on the ‘buy’ button.
Best Shares to Buy in 2020
There can be no denying that the coronavirus pandemic has turned the financial markets on its head. In fact, the wider stock markets lost anywhere between 20-50% in March 2020, which is huge. With that being said, some within the industry argue that this could be an excellent time to buy, not least because you stand the chance of getting your hands on blue-chip stocks at a major discount.
As such, below you will find a number of UK shares that could be worth a further look.
If you’re happy to put a line through its early 2020 coronavirus-related stock downfall, Nike could be a notable addition to your share portfolio. The globally recognized sports brand had a remarkable 2019, with the company growing by just over 27%. Much of this was down to the company’s better than expected growth in the Asian markets. China, in particular, saw growth of 20% in 2019.
Although RBS shares are worth just a fraction of their 2007 heights, there are still some positives in backing the UK bank. Notably, with the PPI scandal concluding in August last year, alongside its recent launch of digital bank Bo, RBS shares can potentially be bought on the cheap.
Amazon was one of the few publicly-listed companies to benefit from the coronavirus pandemic, at least in terms of its ever-growing share price. At the forefront of this is the company’s ability to deliver key goods and services to those stuck in lockdown. With no knowing how long the pandemic will keep people locked indoors, Amazon will likely continue to reap the rewards.
Launched in 2007, Brewdog is a craft beer manufacturer with its headquarters in Scotland. The company has grown at rapid heights in recent years – fully in-line with increased consumer appetite for craft beer products. Crucially, Brewdog’s international expansion has generated excellent sales, and there is no reason to believe that this will stop anytime soon.
BT is still the market leader in the UK internet and telecommunications space. However, it’s the company’s generous double-digit dividend policy that stands out for us. This amounted to a yield of 12.6% in its most recent distribution, and just over 10% before that. Although some argue that a dividend policy as juicy as this is somewhat unsustainable, BT as a group continues to thrive.
Although not ‘technically’ a share pick, the FTSE 100 allows you to invest in the wider UK stock markets. In fact, a single investment will mean you are effectively buying shares in 100 different UK companies. This includes everything from BT, British American Tobacco, Tesco, Barclays, and HSBC. The great thing about a FTSE 100 index is that you will still be entitled to dividend payments.
How do I Make Money From a Shares Investment?
So, you’ve successfully purchased shares from a UK broker. Now what? Well, the overarching aim is to make a long-term profit on your investment. You will be able to achieve this in two ways – capital gains and/or dividends. Let’s break down how each revenue stream works.
Regardless of what company you invest in, you will want to make capital gains. In its most basic form, this means that the price of the shares goes up in value. As such, you’ll be hoping to sell your shares at a higher price than what you paid for them. In order to calculate your capital gains, you will need to work out the difference between the buy and sell price, and then multiply this by the number of shares you hold.
Here’s an example of how to calculate your capital gains.
- You purchase shares in British American Tobacco, which is listed on the London Stock Exchange
- When you bought them in 2017, they were priced at £25 per share.
- You purchased 100 shares, which amounted to a total investment of £2,500.
- In 2020, the price of British Amount Tobacco shares is £40.
- This means that your profit per share is £15 (£40 – £25).
- As you hold 100 shares, we then need to multiply £15 by 100.
- This means that were you to sell your shares, you would make capital gains of £1,500.
The second way that you can make money when investing in shares is through dividends. For those unaware, dividends allow companies to distribute some of its profits to shareholders. If the company does pay dividends, and you hold at least one share, you will have a legal right to a dividend payment.
Not all companies pay dividends. Some well-known examples of non-dividend-paying companies includes Facebook, Alphabet, and Monster Beverage. Dividends are typically paid on a quarterly basis, meaning that you’ll receive a payment every 3 months. The exact amount is determined by the board of the company, and it can vary depending on how successful the business is at the time of the dividend announcement.
Here’s an example of how a dividend payment works.
- You hold shares in Microsoft, which is a dividend-paying company
- Dividends are paid once every 3 months
- Microsoft announces strong quarterly sales, so it decides to pay a dividend of $0.51 per share
- This amounts to an annualized yield of 1.4% of the company’s total value
- As you hold 100 shares, you will be entitled to $0.51 x 100
- This means that you’ll receive $51 in dividends
- Once Microsoft distributes the dividends, they will be paid into your stockbroker account
How Long Should I Hold on to Shares?
There is no one-size-fits-all answer to this question, not least because no two investments are the same. The general rule of thumb is that you should hold on to shares for at least 5 years. This will allow you to ride out the ups and downs of the stock markets. However, you should never hold on to shares indefinitely with the assumption that the price will ‘eventually recover’. There are plenty of examples where this hasn’t been the case.
Let’s take MoneyGram as a case in point. Had you purchased 100 shares in 2007 at $240 per share, you would have invested a total of $24,000 (about £18,000). Fast forward to 2020 and the very same shares are worth $2.20. This means that your 100 shares are now worth $220. As such, although you paid £18,000 13 years ago, the shares are now worth just £167! Will MoneyGram shares ever recover to its previous highs? Probably not.
How do I Reduce the Risks of Buying Shares?
Regardless of what asset class you decide to invest in, installing a sensible risk mitigation plan is crucial. In the investment space this is known as ‘diversification’. The importance of diversification should not be understated, as this will ensure that you are never over-exposed to a single company. If you were, and the company subsequently went out of business, you could lose your entire investment.
What is Diversification?
In its most basic form, diversification simply means to hold a portfolio with multiple companies. Moreover, your portfolio should consist of companies that operate in multiple industries. In doing so, you will reduce the risks of holding too many shares in a single industry.
- For example, let’s say that 80% of your portfolio consisted of tech shares. This would include the likes of Apple, Facebook, IBM, Netflix, and Amazon. If the tech industry went through a prolonged period of decline, 80% of your portfolio would be heavily affected.
- A shrewd investor would never hold 80% of their portfolio in a single industry. Instead, they might distribute their holdings into 10 or more industries. This could include companies operating in the finance, agriculture, entertainment, travel, telecommunication, tobacco, retail, and automobile sectors.
- Moreover, a shrewd investor would not only hold shares in multiple industries, but they would have heaps of companies within each field. For example, you could buy shares in 10 companies for each industry.
Diversifying With a Single Trade
Although the above example illustrates how a shrewd investor might seek to diversify their holdings, manually purchasing hundreds of companies would not only be a logistical nightmare, but it would likely cost you an arm and a leg. This is especially true if you are using a stockbroker platform that charges fees on a share-by-share basis. The good news for you is that there is a way to diversify across hundreds of companies by placing just a single trade – investing in a stock market index.
As we briefly noted earlier in our guide, an index allows you to invest in the wider stock markets, as opposed to purchasing individual shares. Each index tracks a particular stock market, such as the London Stock Exchange or NASDAQ.
Below we have listed some of the most popular indexes currently active in the stock markets.
- FTSE 100
If you want access to the wider London Stock Exchange, then it might be worth considering the FTSE 100. This is an index that tracks the prices of the 100 largest companies publically listed in the UK. The index will be weighted to ensure that your investment is diversified as best as possible. This means that the FTSE will have a single price attached to it, which will go up and down just like an individual share.
- NASDAQ 100
The NASDAQ 100 tracks the 100 largest companies traded on the NASDAQ. This particular index is dominated by big tech firms like Apple, Amazon, and Facebook.
- Dow Jones
The Dow Jones is arguably the most famous stock market index in the world. “The Dow closed 100 points up today” is something that we have all likely heard at some point. But what exactly is the Dow Jones? Well, the Dow is an index that consists of 30 listed US companies. These are not necessarily the largest companies in the world, but they will have a major influence on the wider US economy.
- S&P 500
The S&P 500 is one of the easiest ways to diversify your share dealing portfolio. This particular index tracks the largest 500 companies listed in the US. The index covers firms from both the New York Stock Exchange and NASDAQ.
How to Choose a Platform to Buy and Invest in Shares?
Although we have listed our top UK stockbroker picks of 2020, it is crucial that you find a platform that best meets your needs. With hundreds, if not thousands of online brokers now operating in the space, knowing which site to go with can be challenging.
However, by reading through the guidelines below, you’ll be able to ensure that the platform is right for you prior to signing up.
- Regulatory – Is it FCA Regulated?
First and foremost, you should only join an online stockbroker that is regulated by the FCA. If it isn’t, then the platform is operating illegally.
You can check the FCA register to ensure that your chosen platform is regulated.
- Deposits and Withdrawals
You need to explore what payment methods the share dealing platform supports. In an ideal world, the platform will allow you to choose from a debit/credit card, bank transfer, or e-wallet. You also need to assess whether the broker charges any deposit/withdrawal fees, and whether or not any account minimums are in place.
You must assess the fee structure employed by your chosen stockbroker. This will either come as a flat-fee for each trade that you make, or a percentage of the total investment amount. Some UK brokers allow you to trade on a commission-free basis, meaning you’ll only pay a fee indirectly via the spread.
- Tradeable Shares
Once you’ve covered the fundamentals, you then need to see what shares the platform actually lists. The best share dealing platforms will list thousands of stocks across heaps of markets. At the very least, this should include popular stock markets like the London Stock Exchange, NASDAQ, and the New York Stock Exchange.
- Customer Support
Don’t forget about customer support, as there might come a time where you need assistance. We prefer brokers that offer a 24/7 customer support service, although this won’t always be the case. Crucially, the best platforms will offer support via multiple channels, such as live chat, email, and telephone.
Finally, if you’re still a newbie in the share dealing space, you’ll want to stick with brokers that cater to beginners. As such, your chosen platform should make it a seamless process to buy and sell shares, as well as deposit and withdraw funds.
If you’ve read our guide on How to Buy and Invest in Shares in the UK, you should now have a really good idea of how the space works. Notably, not only should you now know how to buy shares, but you should also have the required tools to choose a stockbroker that meets your needs.
We have also explained the different ways in which your shares can make you money, as well as how to best diversify your investments. Ultimately, while the stocks and shares industry is an excellent way to grow your money long-term, you still need to ensure that you have a firm grasp of the underlying risks before parting with your money.
eToro - Invest in shares with 0% commission
- 0% commission on stocks
- No markup, ticketing fees, management fees
- Fractional shares available
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Glossary of stocks/shares terms
A stock is a representation of a company’s equity. When a company wants to raise capital, it issues stocks to the public. It is the aggregation of the total stocks owned by one individual that inform their shareholding of the company.
A share is an indivisible unit of capital that expresses the ownership relationship between a shareholder and a particular company, mutual fund, REITs or limited partnership. A share indicates a portion of ownership (claim) that one has on a company or fund.
Dividend refers to the portion of the company’s profits that is distributed to its stockholders. It can be on a quarterly or annual basis.
A bull market is an economic condition where the stock markets are in an extended period of consistent increase in stock prices.
A stock market is said to be bearish if it is involved in extended periods of continuous price decrease of the stock prices.
A stock exchange is an institution or a platform where shares and stocks and a host of other money market instruments are traded.
The return on investment is the profit you make from trading in or investing in shares and stocks of a particular company. It often comes from selling the investment at a higher price than was originally bought or benefiting from dividends and other profit-sharing schemes as a result of owning and holding onto a particular investment.
A broker may be a person or entity that engages in the buying and selling of different types of investments on behalf of other individuals or entities at a fee (or commission).
Day Trading is the practice of buying a money market investment product and selling it as soon it reports price increase or loss, within the same day. Traders engaged in day trading are referred to as “day traders” or “active traders”
Arbitrage is the act of buying and selling security at different stock exchanges or markets with varying prices. If, for instance, stock ABC sells at $11 on one exchange and $11.75 on the other, arbitraging involves buying from at the low price exchange and profiting by selling it at the higher-priced exchange.
A stock index is a statistical measure of the change in the stock and securities market. It comprises a hypothetical portfolio of different companies whose change in prices is calculated to determine market performance.
The Initial Public Offering refers to the sale of company stock to the public for the first time. It is the act of taking a company public and is highly regulated by such financial regulators like the SEC in the USA and FCA in the UK.
Options are derivative financial instruments whose price is based on the value of their underlying tradable security like shares and stocks. They are contracts that give the holder an option to buy or sell the underlying asset at a later date. Unlike futures, an options contract holder has the choice to buy/sell or not.
This is an options contract that gives the holder an option to buy the underlying asset before the expiry date.
This option gives its holder the choice of selling the underlying asset before its expiry date
A mutual fund refers to a company that pools funds from different investors and invests these funds in stocks, bonds, and other financial market securities. They then distribute the capital gains from these invests to their members.
The process through which stocks for companies that are not listed with accredited stock exchanges like the NYSE are traded. It is a broker-dealer network for unlisted stocks for companies that do not meet listing requirements set by the organized exchanges.
A stock is said to be overbought if it is traded excessively over a short period of time and at unjustifiably high prices.
In the stock trading context, Volume refers to the number of shares that change hands within a given period of time, be it a day, month or annually. It is trading/investment indicator where rising trade volumes point to a healthy stock while dwindling volumes are indicators of investor pessimism towards a stock.
Bid price refers to the maximum price that a buyer is willing to pay for a stock.
Also referred to as the offer or asking price, this refers to the lowest price that the seller will take for a stock.
A stock is said to be oversold if it is consistently traded below its true value.
Refers to the statistical measure of the change in price of a stock over a given period of time. It is a measure of the rate and the time it takes for a stock price to move from high to low and how long it remains within a certain price range. The higher the volatility, the higher the risk.
This refers to the highest closing price recorded by a given stock in the last 52 weeks.
This refers to the lowest closing price that a particular stock recorded in the last 52 weeks.
The bid-ask spread refers to the difference between the lowest price that a seller is willing to take for their stock and the highest price that a buyer is willing pay for the stock. It is the difference between the quoted ask and bid prices.
A market order is an instruction by an investor to the broker or brokerage platform asking them to buy/sell a stock or any other security at the best price available at that moment. It is often issued when an investor wishes to enter or exit the market quickly and at the prevailing rates.
A limit order is an order that triggers a sale or buy when a predetermined or better price is met. For a buy limit order, the buy order is executed once the set limit price or a better price is triggered. The sell limit order on the hand triggers the sale of stocks if the limit price or better price is hit.
Also referred to as a stop loss order, it is an order that triggers a buy or sell action once a predetermined price level is hit. It is designed to help you minimize possible loss on a given trade should the markets move against your bet.
Take profit is a type of limit order dictating the price level at which the broker or brokerage platform is to close a trade for profit.
Capital gain refers to the value rise of a tradable financial instrument that makes its selling price higher than the buying price. It can also be referred to as the profit realized from liquidating a capital investment like stocks.
An ETF is a collection of many tradable instruments like bonds, stocks, and commodities. These are listed on the exchanges and traded like ordinary stocks.
The debt-to-equity (D/E) ratio is a financial ration tool used to measure the financial health of a company by gauging value of its equity in relation to debt. It is achieved by dividing the company’s total liabilities in relation to its shareholder’s equity.
This is an investment strategy where the investor only buy shares that have consistently paid out high dividends in the past or others with the fastest dividend rates. Dividend investing strategy advocates are more interested in how much a shares pays in dividends than its price fluctuations.
Growth stocks refers to the stocks of companies that are expected to grow at a faster rate than the industry average and report consistent and sustainable cashflows. The company sales and revenues are also expected to increase at a faster than that of an average company in the same industry.
These are also referred to as micro-cap or nano-cap stocks and refers to the stocks of relatively small companies valued less than $5 and only trade via the Over-The-Counter markets.
A blue chip refers to a nationally recognized and financially sound company with a long and stable record of consistent growth. It is company whose financial might and nature of operation make it well suited to face turmoil and remain profitable in the uncertain economic conditions..
Short selling is a trade/investment strategy where the investor is banking on the decline of the shares of a particular company. They therefore borrows these shares, sells them at the current market price and buys them back after they lose value, effectively profiting from the price difference.
Yield refers to the profit/earnings generated from investing in a particular stock or market instrument over a given period of time and is expressed a percentage of the stock’s market value, face value or as percentage of invested amounts.
Capital stock, also referred to outstanding shares, refers to all the regular shares issued by a company and held by all its shareholders including the restricted/locked-in shares held by company insiders, executives, and institutional investors. The number of capital stock is used in calculating key metrics including cash-flow per-share and earnings per share.
EPS refers to the monetary value, the profit or earnings attributable to each outstanding shares held by a company. It is a financial ratio that is arrived at by dividing the company’s profit by its outstanding shares of the common stock.
Also referred to as Price-to-earnings ratio, PER is a financial metrics tools used to check if a company’s shares are over/undervalued by dividing the shares current market price with its earnings-per-share.
A company’s flat refers to the number of regular shares issued to investors that are available for trading. The float shares figure is arrived at by subtracting the locked-in shares held by company insiders and executives from its capital stock.
Gap down stocks refers to company stocks that open the day trading at relatively lower prices that the previous day’s closing price. For instance if a company stock closes the day trading at $50 but opens the following day trading at $45, it is said to have a 5-point gap down.
Gap up stocks refer to company stocks that open the day trading at relatively higher prices than their previous day’s closing price. This is often attributed to the after-market trading activity.
Stock buyback, also referred to as share repurchase, occurs when a publicly listed corporation uses a part of its revenues to buy back its shares from the marketplace. The move effectively reduces the number of company shares in circulation, which translates to an increased share price.
HOLD is a financial recommendation issued by a qualified financial institutions or financial analyst advising investors/traders not to buy or sell a particular stock. It is a no-action situation where long position traders are advised not to sell and others investors advised not to buy into the stock.
This refers to the upper-most price level that a particular stock or any other security reaches but doesn’t exceed due to dwindling number of buyers and an increasing number of sellers.
Is a branch of economics that’s concerned with the study of how the economy and different large-scale markets are structured, how they behave, and how they perform.
Relative Strength Index is a technical momentum indicator used in market analysis to determine if a stock is overbought or oversold by measuring the magnitude of a recent bullish or bearish price run. It has a scale of 0-100 where RSI readings of 70+ indicate a stock is overbought while an RSI reading below 30 is an indicator of an oversold security.
Moving Averages is a statistical calculation that is specially designed to identify the arithmetic mean of a given number of data sets or range of prices calculated over a given period of time. Each of these data set or price range is created by the average/mean price for that subset. For instance, a single data point on a moving averages scale may represent the average stock price for a day or trading session.
Bollinger Bands are a technical indicator tool characterized by two statistical carts that run alongside each other indicating the changes in prices and volatility of a financial instrument like stock or commodity over a given period of time.
Fibonacci retracements refer to two horizontal lines that use the Fibonacci numbers to measure the percentage of price retracement in a bid to indicate where the resistance and support are most likely to occur.
What is the difference between stocks and shares?
Although the two terms are often used interchangeably, they actually refer to two different things. While 'stocks' refers to the actual asset, 'shares' determines how much of the stock you own.
Can I buy US shares if I am based in the UK?
You certainly can. The New York Stock Exchange and NASDAQ are the two largest markets in the world, so it makes sense that UK brokers provide seamless access.
Do UK stockbrokers need a license?
If an online stockbroker wishes to facilitate trades for UK investors, it will need to be regulated by the FCA. You can check the regulatory standing of a broker by visiting the FCA's website.
Will I need to provide ID when I join a UK share dealing site?
All stockbroker sites will need to verify your identity as per FCA regulations. This means that you will need to provide a copy of your passport or driver's license.
What is the minimum amount that I need to buy shares?
This will depend on the share dealing platform in question. While some platforms allow you to get started with just £10, others will ask for more.
Do I have to buy an entire share?
New-age investment platforms based in the UK now allow you to purchase partial shares. For example, even if a share costs £90, you can buy just £30 worth. The remaining balance will be sold to another investor on the site.
How to buy shares online without broker?
If you're wondering how to buy shares in a company without a broker, this won't be possible. Crucially, brokers have direct access to the stock markets, which you won't as a retail client.