How to Trade
Provided that you understand the risks involved in online dealing and want to set up a trading account, you have a choice to make between the brokers and their services. It is fairly standard to be required to deposit funds into a trading account. These cash funds will earn interest at a stipulated rate while you are deciding what shares to buy.
It is broadly commonplace to be offered a share quote with a time-out countdown. That is to say, when you decide to buy a share, you will be shown a real time live price but you will have a limited window of opportunity within which to make your purchase at that price. The same holds true when you come to sell your shares, you will be quoted a price and will have a short period of time in which to decide whether to accept the price or decide not to sell. Once you make a sale, the proceeds will be transferred into your trading account.
Some brokers offer you the opportunity to invest in more than just main market UK shares but may charge higher fees. You need to decide what kind of investments you are likely to make as this will have some bearing on which broker is right for you. Your decision may also be affected by the other services that your chosen brokerage may offer; for example, some may offer the option of advice-based trading over the phone for a fee on a case-by-case basis while others offer no such support.
In addition to shares on one or more stock exchanges, various options contracts and financial derivatives are available for the more experienced investor. Some brokers also offer contracts for difference (CFDs) while others offer spread betting. You should steer clear of financial spread betting unless you have received comprehensive training in the risks involved.
You may access the same trading screens as the professionals via Direct Market Access (DMA), also known as Level II access. You'll be able to see the numbers of buyers and sellers and at what price they're willing to trade. You may also take part in the pre-market and post-market auctions where the highest or lowest price often occurs. Of course, you’ll have to pay extra for DMA - around £25-£40 per month on top of dealing charges is not unusual. Paying for DMA may make sense if you’re a regular trader who is sufficiently experienced in share trading to make best use of this kind of service.
Cost and Taxation
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