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Disclaimer: The products or services discussed in this article may not be offered by Taurex and may only be listed here for educational purposes.

Trading is often considered a profession that’s not easily accessible. Some people call it a high barrier-to-entry job, as you’ll need a great deal of time and patience to break into this world. 

However, if you want to start trading and fully grasp the intricacies of stocks and shares, this article is for you. 

You can start your trading experience by asking these questions: What is share dealing? How do you invest in shares, how does it work, and what are the risks involved in investing your money in shares?

This article offers insight into share dealing and how it works to help beginners understand this type of investment. 

This article also offers a guide for traders with experience working with shares. It discusses the benefits and risks involved in share dealing and share trading.

What Is Share Dealing?

Share dealing is the act of buying and selling shares with a broker. It’s an investment strategy where you purchase shares from a company and sell it when the price is right through a broker.

 As in a marketplace, the buyer and seller must agree on the cost at which a share is sold. 

There are many benefits involved in share dealing; this is what you’ll understand when you continue reading this article. 

What You Need to Know

Before you dive into share dealing, there are things that you need to know. 

Share dealing and trading can be a way to make a return on your investment. It can have high costs due to commissions.

It’s important to understand that trading involves risk. The market fluctuates, prices may fall and rise, and there’s no guarantee that you’ll always make a profit. Therefore, traders are often advised to make long-term investments to deal with  market fluctuations. 

How Does Share Dealing Work?

You’ll first need to have an account in a brokering firm to start share dealing and begin buying and selling shares.  

There are two main ways to buy shares. The first is to buy it directly from the company, and the second is to purchase shares through an exchange. 

After you’ve bought shares, you’ll need to monitor your investment to get an idea of the dividends. 

Furthermore, through monitoring, you can observe the fluctuating price of your shares and find the best time to sell when practical and profitable. 

How Long Does It Take to Withdraw Funds Once You Have Sold Shares?

When you’ve sold your shares, you can withdraw your funds immediately if you have a share dealing account. However, it may vary between the share dealing services you’ve chosen.

In some share dealing platforms, withdrawal requests are made on a first-come, first-served basis.

Is Share Dealing a Trade?

Share dealing is an activity that involves buying and selling shares through a broker or an online share dealing platform.

On the other hand, trading is the buying and selling of shares on an exchange.

Share trading is similar to stock trading as they both trade to benefit through the exchange market. Trading focuses on the rise and fall of prices and the best way to  profit most from the shares. 

What Is a Share?

Shares are a unit of ownership of a company or corporation. When you purchase a share, you buy a part of the company. The value of each share represents the portion of the company that you now own. 

Moreover, depending on the company’s performance and the market, this value may change from time to time. 

The company sells shares to raise money, especially from investors. Share dealing manages the company’s small parts to gain dividends or profit. 

How Can Investing in Shares Drive You To Earn or Lose Funds?

There are two ways you can make money when investing in shares. The first and most direct way is when the value of the shares increases due to various factors and if you sell the shares for a profit. 

The second way of making money from shares is through dividends or your share of the profit gained by the company. You can get this dividend at a regular rate or a lump sum. 

However, you can lose money if you’ve bought shares from a company that doesn’t perform well after your purchase. This scenario can result in a decrease in share value and loss of money for you. 

What Is Share Market and How Does It Work for Beginners?

The share market is where all of the shares are traded. It’s similar to the stock market, but the main difference is that a share market only buys and sells shares. 

On the other hand, the stock market includes everything from shares, stocks, bonds, and other tradable items. 

You can imagine a share market as a place where traders come together to barter their items with each other. 

Nowadays, you can engage in the share or stock market through your computer or a trusted broker. 

Why Should You Think About Investing?

When you think about investing, you’re thinking of how to use your funds to make more money. 

You can quickly deposit your funds in a bank and hope for more considerable interest. However, your money grows at a much slower pace.  

When you invest, you’re using your money to profit more by putting it in a company you trust. You can make this investment through your broker or buy directly from the company.  

Should You Invest in Shares?

It depends on your willingness to place your money on a company. Investing is not guaranteed to make a profit because your success depends on the value of investments through the business’ performance. 

What Can You Invest In?

The first thing you need to look for when investing is a stable and profitable company. There is less risk when dealing with a well-established company than with a start-up. 

You can also search online for companies doing well in their industry and selling shares in which you can invest your money.

How Do You Know What Shares to Buy?

Buying shares that will make a profit can’t be guaranteed as a company’s performance can fluctuate. Making your own investment decisions on what shares to buy is complex, but it’s doable. 

You’ll need to stay updated with the market news and do some market research over a wide range of investments. 

You can start by researching companies, ETF or Exchange Traded Funds, and investment trusts.

How to Buy and Sell Shares

Buying and selling shares is simple, especially if you’ve created a trading account with brokers or with independent advice from financial experts. The basics of buying and selling shares are the following:  

How to Buy Shares

When buying shares, you can easily choose the ones you want to buy through a  broker. You can start purchasing shares after you’ve created an account with a brokerage firm. 

You’ll also need to understand how the market works, and you can get that from expert advice. 

When you purchase a share, you’ll get share certificates and proof of ownership of those you’ve bought.

What Charges Do You Need to Pay?

Aside from the buying price of the shares when you’ve purchased it through brokering services, in most cases, you’ll be paying the following fees:

  • Platform fee: This is the recurring fee you pay monthly or annually for using the brokering service platform in your transactions. 
  • Stamp duty: There is a 0.5% stamp duty charge for U.K. shares. If the transaction is above £10,000, you’ll have to pay an extra £1.
  • Trading fees: You’ll need to pay fees whenever you buy shares. The cost can vary from broker to broker.

How to Sell Shares

You can sell shares by contacting a broker or placing a trade online. When you contact a broker, you’ll need to pay their service fee and commission whenever you make a trade.

You sell trades by exchanging ownership of your share with the buyer. It’ll take a few days for the transaction to complete, but you’ll get the payment reflected in your bank account when it goes through.  

When Should You Sell Shares?

Buying low and selling high is the easiest way to earn in trading. However, even for experts, knowing when the prices will rise or fall requires effort. 

The safest way is to research and assess companies whose shares you’ve bought. 

Determine if the company is growing or in an economic downturn or if you can still profit from the dividends. Assess whether you’ll earn more if you sell your shares.  

Remember that once you’ve successfully sold your shares and made a profit, you’ll need to pay a capital gains tax (CGT). You will get a CGT-free allowance for every tax year. 

A Choice of Ways to Trade

Most brokerage firms offer many ways to trade. The two primary methods are 1. trading “at quote” and 2. trading “on exchange.”

Trading “at quote” means you decide on the number of shares you want to buy or sell. 

Trading “on exchange” means you buy or sell shares directly from investors. 

What Do You Pay?

Payments for share purchases are based on standard brokerage fees, ranging from 1% to 2% of the total purchase price. 

However, trade commission and other transaction fees may constitute the bulk of the cost whenever you buy or sell shares. 

The Market at Your Fingertips

The use of mobile banking apps enables you to make transact wherever you go. You can also access and check trading in areas like the London Stock Exchange through the internet. 

Start Trading in Minutes

You can start trading immediately if you have a savings account and an investment account. You need to link your account to our platform and start trading in minutes. 

You can also connect to several market research centres to get up-to-date information on everything in the trading industry, including England’s stock market. 

Powerful Tools to Help You Make More of Your Shares

Modern technology allows you to be up-to-date with market information from different trading areas. 

You can quickly decide whether to buy shares, sell off shares or look for prospects for trading. 

Share Dealing FAQs

  1. Can you make money share dealing?

Yes, you can make money in share dealing. However, risks can also be equally high alongside the prospect of making a considerable profit.

  1. What happens to my shares once I’ve bought them?

After buying shares, you’ll be issued with a share certification and become part of the company as a shareholder. You can sell your shares when you deem it necessary.

  1. I want my name on the share register. What do I do?

When you own a share from a company, your personal information is entered into the share registry. Once listed, you’ll be part of the company and have a vote when needed. 

  1. Can I get shareholder perks?

Yes. When you own a share of a particular company, you can access various perks provided by that company for shareholders. Dividends are not to be confused with shareholder perks. 

  1. How do I move my shares into stocks and shares ISA or SIPP?

To move your shares to an individual savings account (ISA), you’ll need to sell them and buy them again using your ISA allowance.

ISA allowance is a set quantity that you can put into ISAs each tax year. With an ISA, you won’t need to pay tax on any funds your accounts create.

You can use your shares as contributions for transferring shares to self-invested personal pension funds (SIPP). 

  1. Can I convert old paper shares online?

Yes, you can. This process is called dematerialisation. You’ll need to talk to your local broker to dematerialise your physical shares. 

  1. I inherited shares. What do I do with them?

You’ll need to provide a death certificate, identification, and a probate court order to legally transfer the inherited shares into your account or sell them and make a profit.  

  1. How are dividends paid to my account?

Dividends are usually paid through checks or additional shares or stock, called dividend reinvestment.

References

  1. What Is the Cost of a Share Purchase?

https://www.investopedia.com/ask/answers/061815/what-cost-share-purchase.asp

  1. Inherited Stock: Definition, How It Works, and Example

https://www.investopedia.com/terms/i/inherited-stock.asp

  1. How and When Are Stock Dividends Paid Out?

https://www.investopedia.com/ask/answers/102714/how-and-when-are-stock-dividends-paid-out.asp

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