Getting started with trading basics
Ensuring that you have a solid grasp of trading basics is important – not only to heighten your chances of making a profit, but also to build on that knowledge effectively with related concepts.
Share dealing vs trading using leverage
You can buy shares and funds outright (invest) using a share dealing account. This is where you buy these assets in the hopes that the price will rise over time so that you can sell your holdings for a profit. You could also get returns from dividends, if offered. When investing, you need to put down the full value of the position upfront.
More experienced individuals may want to trade using leverage. With us, you can do this using leveraged derivatives like spread bets and contracts for difference (CFDs).
You’ll have access to assets such as stocks, indices, foreign exchange (forex), commodities, exchange-traded funds (ETFs) and bonds.
Trading using leverage enables you to get amplified exposure – you’d pay an initial deposit upfront, called margin, to open a position of a higher value. Both your potential profits and possible losses are magnified to the full value of the trade. The use of leverage could lead to rapid losses, which can even exceed the deposit paid to open your position.
Ways to trade and invest
To speculate on the price direction of financial markets without outright ownership with us, you’d open a spread betting or CFD trading position. To buy and own shares or funds, you’d use share dealing.
Spread betting: staking a certain amount of money per point of price movement in the underlying asset. Free from tax1
CFD trading: exchanging the price difference of the underlying asset between the time of opening the trade and when you close it. Potential profits can be offset against losses for tax purposes1
Learn more about the differences between spread betting and CFD trading
Share dealing: investing in assets outright; holding them with the intention to sell them for a higher price at a later date. You can only make a profit if you sell your shares or funds for more than the original buy price. Plus, you could earn dividends (if offered)
Markets to trade
You can choose from over 17,000 assets across a selection of markets that are available to trade on our platform. Below are some of these markets. Some of the main drivers of price movements they have in common are supply and demand as well as market sentiment, geopolitical events and economic conditions. Others are more specific to a given market, eg company financial results in the stock market.
Stocks: represent units of ownership in a single-name stock. Share prices vary based on factors such as company news and performance, and industry trends
Indices: reflect the performance of a stock market or sector by measuring the aggregated prices of various stocks. For example, the FTSE 100 includes the 100 largest companies that are listed on the London Stock Exchange (LSE)
Forex: involves exchanging one currency for another based on the prevailing relative value. Some factors that influence forex rates are macroeconomic indicators like inflation, interest rates as well as imports and exports
Commodities: raw metal, energy and agricultural assets such as gold, oil and wheat. Natural resources that are mined or extracted from the earth are called hard commodities; ones that are grown and harvested are referred to as soft commodities
ETFs: funds that are listed and traded stock exchanges in the way that single-name stocks are. There are different types of ETFs, depending on which assets’ prices they track, eg sector and industries, indices, commodities and currency pairs
