How to Buy Shares UK and Pay 0% Commission 🥇Guide for November 2024

Published date: January 8, 2020 | 11:38 am

Have a bit of spare cash that you’re looking to buy shares in the financial markets? If so, you might be wondering how buying and selling 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 stock 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 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.

In This Guide

Note: Although the alternative investment market has a historical track-record of making long-term gains, there is never any guarantee that you will make any money. As such, ensure that you have a firm grasp of the risks of investing in shares prior to parting with your cash.

How to Buy Shares: The Basics

What are 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 if you buy 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.

Ways to Buy Shares Online in the UK

There are two primary ways of buying shares online in the UK. The most common is to buy shares from a traditional stockbroker online who presents you with an electronic share dealing certificate. These shares are similar to paper shares, and the holder may get 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 Shares 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 open an account with the CFD broker, you don’t need a significant capital deposit as most brokers allow for fractional share trading, you may get to access leverages, and you can short sell virtually any share.

How to Sell Shares

It’s just as easy to sell shares online in the UK as it is to buy shares. If you have an electronic share dealing 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 shares/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 journey as you can automate different the online sale of shares by setting a stop loss, take profit, and trailing stop-loss orders.

Why Do People Invest in Shares?

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 ideas. You will be able to achieve this in two ways – capital gains and/or dividends. Let’s break down how each revenue stream works.

Capital Gains

Regardless of what company you buy shares 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 share price, and then multiply this by the number of shares you hold.

Here’s an example of how to calculate your capital gains.

You buy 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 2021, 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.

Note: There will always come a time when a shares investment goes against you. If it does, you would then need to calculate your losses. Simply follow the above instructions but in reverse.

Dividends

The second way that you can make money when you buy 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 a dividend income. Some well-known examples of non-dividend-paying companies include Facebook/Twitter, 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 buy 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

Note: Even if a company has historically paid dividends to its shareholders, there is never any guarantee that it will continue to do so each quarter. This is especially true if the company is experiencing cash flow problems, or it needs its cash reserves to fund an investment opportunity.

Holding 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 and share markets. However, you should never hold on to shares indefinitely with the assumption that the share prices 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 2021 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.

Risks When Buying Shares

Regardless of what 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 Inc, Facebook, Twitter, 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 Shares

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 dealing 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 shares and the stock market index.

As we briefly noted earlier in our guide, an index allows you to invest in the wider stock market, 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 market.

FTSE 100

If you want to buy shares with the wider London Stock Exchange, then it might be worth considering the FTSE 100. This is an index that tracks the share prices of the 100 largest companies publicly listed in the UK. The index will be weighted to ensure that your investment journey is diversified. 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 Inc, Amazon, and Facebook/Twitter.

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 Buy Shares for Beginners

Now you have a better understanding of the basics of how to buy shares, we’re going to walk you through the process of buying shares with a popular broker. Whether you want to buy penny shares, dividend stocks, or blue chip stocks, you’ll find them all.

1. Open an Investment Account

In order to open an investment account, you’ll need to provide some personal information. This will include the following:

Full Legal Name
Home Address
Date of Birth
Nationality
National Insurance Number
Telephone Number
Email Address

You’ll also need to choose a username and a strong password.

2. Verify Your Identity

As these popular brokers are authorised and regulated by the Financial Conduct Authority, 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.

You can verify your identity by uploading government-issued ID, such as a passport or driver’s license, and proof of address, such as a utility bill or bank statement.

3. Deposit Funds

Once you have opened an investment 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.

This can include debit/credit cards, bank account transfers, and e-wallets like PayPal and Skrill.

4. Choose Which Shares you Want to buy

Once you have funded your investment account, you can then buy your chosen shares. These platforms give 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.

Note: If you’re unsure which companies you should be investing in shares, it might be worth considering a stock market index. This is where you invest in the wider stock market through a single trade. For example, if you invested in the FTSE 100, you would be purchasing shares in the 100 largest companies listed on the London Stock Exchange.

5. Buy Shares

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.

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 could 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 shares’ button.

Shares to Buy in 2022

There can be no denying that the coronavirus pandemic has turned the financial markets on its head. In fact, the wider stock market lost anywhere between 20-50% in March 2021, 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 may get your hands on blue-chip stocks at a major discount.

As such, in the comparison table below you will find our some popular shares to buy in 2022

Name	Symbol	Last Price	Market Cap (£)
Amazon	AMZN	3,084.00	1529.28 Billion
BT	BT.A	112.20	11.122 Billion
Disney	DIS	115.63	209.058 Billion
Lloyds	FB	28.45	20.128 Billion
Netflix	NFLX	524.88	230.84 Billion
Pfizer	NFLX	38.54	214.038 Billion
Royal Mail	RMG.L	176.64	1.75 Billion
Samsung	SMSN.L	1238.50	1395.695 Billion
Standard Life	SLA	260.90	5.889 Billion
Saga	SAGA	15.50	175.646 Billion
Tesco	TSCO.L	213.91	20.87 Billion
Tesla	TSLA	1499.12	278.385 Billion
Vodafone	VOD	122.80	32.913 Billion

Platforms to Buy Shares in the UK

Although we have outlined a number of methods that allow you to buy UK stocks and shares, we would suggest opting for an online broker. This will allow you to make investment decisions 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 Financial Conduct Authority authorised and 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 popular online brokers that allow you to buy shares.

1. Plus500

Launched in 2008 and based in London, Plus500 is an internationally recognized broker. Not only is the platform authorised and regulated by the Financial Conduct Authority, but its parent company is listed on the London Stock Exchange. It is important to note that Plus500 is a specialist CFD platform. For those unaware, this means that you can buy and sell stocks and shares without taking ownership.

As a result, you'll be able to trade stocks and shares 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 investment 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, short-selling shares would allow you to profit from this.

On the flip side, share dealing CFDs do not entitle you to dividend payments, so do bear this in mind. In terms of the fundamentals, you may get started with an account at Plus500 in minutes, and minimum deposits start at £100. You fund your investment 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.

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2. FXCM

FXCM is arguably one of the most reputable stock and share CFD 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 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.

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3. Interactive Brokers

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 a Financial Conduct Authority 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.

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4. DEGIRO

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. 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.

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How to Choose a Platform

Although we have listed some popular UK stockbrokers of 2022, it is crucial that you find a platform that 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 Financial Conduct Authority. 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.

Fees

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 popular share dealing platforms will list thousands of stocks across heaps of markets. At the very least, this should include popular stock market 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 popular platforms will offer support via multiple channels, such as live chat, email, and telephone.

User-Friendliness

Finally, if you’re still new to investing 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.

Conclusion

If you’ve read our guide on How to Buy Shares in the UK, you should now have a really good idea of how the space works. Notably, not only should you nowe 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 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.

You could also take a further look into the popular investment apps for the UK!

Glossary of stocks And shares terms

Stock

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

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.

Bull market

A bull market is an economic condition where the stock markets are in an extended period of consistent increase in stock prices.

Bear Market

A stock market is said to be bearish if it is involved in extended periods of continuous price decrease of the stock prices.

Stock Exchange

A stock exchange is an institution or a platform where shares and stocks and a host of other money market instruments are traded.

Return On Investment (ROI)

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.

Broker

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

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

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.

Index

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.

Initial Public Offering (IPO)

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

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.

Call options

This is an options contract that gives the holder an option to buy the underlying asset before the expiry date.

Sell options

This option gives its holder the choice of selling the underlying asset before its expiry date

Mutual Funds

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.

Over-the-Counter

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.

Overbought

A stock is said to be overbought if it is traded excessively over a short period of time and at unjustifiably high prices.

Volume

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

Bid price refers to the maximum price that a buyer is willing to pay for a stock.

Ask Price

Also referred to as the offer or asking price, this refers to the lowest price that the seller will take for a stock.

Oversold

A stock is said to be oversold if it is consistently traded below its true value.

Volatility

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.

52-Week High

This refers to the highest closing price recorded by a given stock in the last 52 weeks.

52-Week Low

This refers to the lowest closing price that a particular stock recorded in the last 52 weeks.

Bid-Ask Spread

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.

Market Order

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.

Limit Order

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.

Stop Order

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

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 Gains

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.

ETFs

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.

Debt-to-Equity Ratio

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.

Dividend Investing

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

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.

Penny Stocks

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.

Blue Chip

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

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

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

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.

Earnings Per Share (EPS)

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.

Price Earning Ratio (PER)

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.

Float

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

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

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

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

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.

Resistance Levels

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.

Macroeconomic

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.

RSI

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 Average

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

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

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.

FAQs

What is the difference between stocks and shares?

Can I buy US shares if I am based in the UK?

Do UK stockbrokers need a license?

Will I need to provide ID when I join a UK share dealing site?

What is the minimum amount that I need to buy shares?

Do I have to buy an entire share?

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Kane Pepi

Kane holds academic qualifications in the finance and financial investigation fields. With a passion for all-things finance, he currently writes for a number of online publications.

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How to Buy Shares UK | Beginners Guide to Buying Shares Online

How to Buy Shares: The Basics

What are Shares?

Ways to Buy Shares Online in the UK

How to Sell Shares

Why Do People Invest in Shares?

Capital Gains

Dividends

Holding Shares

Risks When Buying Shares

What is Diversification?

Diversifying With a Single Trade Shares

How to Buy Shares for Beginners

1. Open an Investment Account

2. Verify Your Identity

3. Deposit Funds

4. Choose Which Shares you Want to buy

5. Buy Shares

Shares to Buy in 2022

Platforms to Buy Shares in the UK

1. Plus500

2. FXCM

3. Interactive Brokers

4. DEGIRO

How to Choose a Platform

Conclusion

Glossary of stocks And shares terms

FAQs

What is the difference between stocks and shares?

Can I buy US shares if I am based in the UK?

Do UK stockbrokers need a license?

Will I need to provide ID when I join a UK share dealing site?

What is the minimum amount that I need to buy shares?

Do I have to buy an entire share?

See Our Full Range Of Review Resources

Kane Pepi

Kane Pepi

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