Whether you have already decided to start trading shares online or are still undecided, you have to know where and how to get started.
These are not the only questions you will have, I’m sure. How much money do you need? Which broker should you use? There are hundreds of queries that you will want answers for before you start.
This article aims to answer a few of those queries. Hopefully, answering them will encourage you to initiate your online share-trading career. Here are the steps to take to get you started:
Step 1. Select An Online Share Trading Platform
Online platforms provide the cheapest and easiest way to trade stocks and shares. You will be able to buy and sell shares from the LSE (London Stock Exchange) and other international stock markets.
Before you get started trading on a particular platform, you should make a comparison of several you are considering, and choose the one that best suits your needs.
When you are making your comparison, you should consider the following:
- Trading Fees. These are the fees you get charged for buying and selling shares. The fees generally depend on which platform you use, and the size of the trade. Fees can be in the form of a percentage of the total trade value or a flat rate. You may have to pay monthly or yearly fees to use the platform in addition to individual trading fees.
- What Markets You Can Trade. Some platforms will offer you access to stock exchanges all over the world. Some will restrict you to just the LSE. It depends upon which shares you want to trade, whether or not this is an issue.
- How Easy The Platform Is To Use. Being new to online share trading, you will want a platform that is easy to use and offers a good user experience. Select one that provides a free demonstration account, so that you can practice your trading strategies before risking your money.
- Audience the Platform Caters For. Some platforms are designed for beginners or casual investors, while others cater to the more experienced and serious end of the market. Before jumping in, find out which platform best suits your needs and aspirations.
- Customer Service & Support. Being new to share trading, and being new to the platform, the chances are that you are going to need some level of assistance in the early stages. Even when you have found your feet, if you have an issue with a trade, you want it sorted out as soon as possible, ideally by a real person and not a library of FAQs.
- Education and Research Facilities. As an inexperienced investor, you might want to consider a platform with plenty of educational facilities and research capabilities. As you grow in experience, your preference might change to a research-heavy platform. If you choose shares to trade yourself, rather than to rely on tips or expert advice, you will need to conduct extensive research on the companies you are buying.
Step 2. Create An Account On Your Chosen Platform
When you have chosen your preferred online share-trading platform, it is time to create an account. You can do this online, and all you need to provide are proof of identification and your bank details. Bank details are required so you can deposit and withdraw funds from your trading account.
Your identification documents can be scanned and uploaded to the platform for verification. You will also be required to make a minimum deposit amount into your account. When your documents have been verified and you have deposited funds into your account, you are ready for trading.
Step 3. Select the Shares You Want to Trade
Now is the time when the action starts, and you buy your first shares. You might already know which companies you are going to invest in, or you might have a shortlist of several potential shares. If you are not in this position, you need to research the companies you invest in. Your chosen platform should have enough research facilities to do enough research to find a company that matches your investment goals.
Your platform might also provide you with analysis and even offer recommendations as to whether you should buy. If the research provided by the platform on a company is not in-depth enough for you, then you may have to do some off-platform research. The company’s website is an excellent place to start and look for announcements and financial statements to help you decide if you want to buy.
Once you’ve decided on the company, determine the number of shares you want to buy. The amount will be determined by your budget and what your investment goals are. If you are trading on the LSE, there are no minimum order requirements. However, most platforms do require a minimum spending amount on each trade.
One thing that you should remain mindful of is the trading fee. Generally, the smaller amount of shares you buy, the more substantial proportion the fees make up of that parcel. This higher percentage means that your shares will need to increase considerably, merely to cover the fees. For instance, if your trading fees are £10 per trade and you buy £200, the fees make up 5% of the trade. However, if you were to buy £1,000 worth of shares, the same fees only account for 1% of the trade.
Getting started with online share-trading is relatively straightforward. If you follow these three necessary steps, you should have a smooth start to your trading journey.