Online share trading is a method of buying and selling shares of a publicly-traded companies from your computer, laptop, or mobile device in the hope of making a profit. Online trading is open to those with access to the Internet, whether we talk about investing in stocks or bonds.
The buying and selling of shares in public companies is controlled and managed by a stock exchange such as the London Stock Exchange or New York Stock Exchange. Historically, traders would turn up to these exchanges to buy and sell shares with other traders in the 'trading pit.'
The main difference between trading contracts for difference and share trading is that when you trade a CFD, you speculate on a market's price without taking ownership of the underlying asset. In contrast, when you trade shares, you need to take ownership of the underlying stocks.
Advantages of trading shares:
One implication of this is that you can take advantage of leverage when trading CFDs, meaning you'll only need to put up a fraction of the trade's full value – the 'margin' – to gain maximum exposure. This will amplify any profits but also means that losses can exceed deposits. On the other hand, when you trade shares, you'll need to pay the full cost of your position upfront so you cannot lose more than you invest.
Generally speaking, everyone can trade CFDs. People who trade CFDs are looking to profit from all five major financial markets without relying on an actual financial institution, such as a bank or an investment company, or buy existing shares and bonds.
Why Trade Shares Online?
Individuals from all walks of life participate in online share trading for different reasons. However, in nearly all cases, it comes down to the possibility of making a profit. Traders aim to buy shares at a low price and then sell them at a high price and pocket the difference in between.