All investing should be regarded as longer term. The value of your investments can go up and down, and you may get back less than you invest. Capital is at risk.
With so many share dealing platforms within the UK, find one that isn’t going to hit you hard with admin or dealing costs, but will meet your specifications and allow you to find value in the market.
You can compare online share dealing accounts in this guide, plus learn how to choose one that’s right for your investment needs.
Getting started dealing shares
The goal of share dealing is to generate wealth in one of the following ways:
Take advantage of capital gains when the price of the shares you own rises over time
Receive an income from dividends a company pays to you (to give shareholders a portion of its profits)
A combination of the above
Once you’ve found a share dealing platform and you’re ready to start investing, it’s actually quite easy to get started buying and selling shares; with some brokers only requiring a £10 per month deposit. However, ensuring that you make successful trades is where it can get more difficult.
It’s also worth pointing out that, just like any other investment, shares carry a degree of risk. There is the chance that you could lose the money you invest, so be sure you know what you’re getting into before you start trading.
How to find a share dealing platform
Before you can start buying and selling shares, you’ll need to find an online share dealing platform. However, with a wide variety of options available, choosing the right share dealing account can be a tricky task.
Some people opt for the share dealing platform offered by their bank. For example, Barclays customers can open a Barclays Smart Investor account to access the stock market, while Halifax customers can trade shares with Halifax Online Share Dealing.
However, just because your bank has a share dealing platform doesn’t mean it’s the best platform for you, as others may offer lower fees and a wide range of features that better suit your requirements. With this in mind, it’s a good idea to hunt around for other platforms to see what’s available.
How to compare share dealing platforms
Consider the following features when comparing the features of competing online share brokers:
Fees. Every online dealing platform will charge you a fee for every buy or sell transaction, with many fees around the £10 mark. However, fees may be calculated as a percentage of the transaction amount for larger trades. Some providers will also charge an ongoing annual or monthly fee on top of this, especially with the more feature-dense platforms.
What can you trade? Most dealing platforms will give you access not only to UK but also international shares, allowing you to trade large well-known companies from around the world. Some platforms will also allow you to trade CFDs, forex, indices, currencies and much more, so look for this functionality if it’s important to you.
Ease of use. Share market dealing can be complicated and often requires you to respond quickly to market changes. With this in mind, look for a platform that allows you to make fast and precise trades with minimum fuss.
Your needs. If you’re just a casual investor, do you really need a share dealing platform that offers a whole lot of complicated bells and whistles? Similarly, some platforms targeted at entry-level traders may not have all the features an experienced investor needs.
Access to market data. Your trading decisions will be partly based on what is happening in the market at any given time, so the information your platform provides about changes in share prices is very important. Does it deliver dynamic, real-time or delayed market updates?
Research. Successful traders are usually well-informed traders, so you may be able to benefit from the research and expert analysis offered by an online dealing platform. Daily market reports, buy and sell recommendations and company financial reports can all provide useful information.
Trade methods. Can trades only be placed online or can you also buy and sell over the phone? How accessible is the broker’s dealing platform?
Trade options. Consider the options available when you are buying or selling shares. Can you place orders at market and/or at limit, and are stop loss orders an option to add more flexibility to your trading?
Reporting. Check what reporting tools each platform offers to help you track your trades, record dividends and pass on any relevant information to the HMRC at tax time.
Margin loans. A margin loan lets you borrow money to invest and uses your shares as security. If you’re looking to borrow money to build your portfolio, check to see whether the platform provider offers margin loans.
Customer support. What support will be provided when you need help placing a trade? Look for online help centres as well as phone, email and live online chat support. Do they offer customer service 24/7?
Education. Does the platform also feature a range of educational tools and resources, such as how-to guides and webinars, to help you get more out of your trading account?
Security. How secure is the platform and what measures are in place to ensure the safety of your funds? What processes does the provider implement to deal with fraud?
Premium service. If you require high-level service, does the platform provide a dedicated service manager to oversee your account and trades?
By taking all the above factors into account, you’ll be able to narrow your choices down to the share dealing platforms that suit your needs.
All investing should be regarded as longer term. The value of your investments can go up and down, and you may get back less than you invest. Capital is at risk.
An alternative option
A stocks and shares ISA can be another good option for investors. Legal & General’s award-winning stocks and shares ISA lets you choose from three investment options. You can let them do it for you, use index-tracking funds to build your own portfolio, or pick your own funds.
Open your stocks and shares ISA with Moneyfarm
Capital at risk
Invest your savings for potentially higher returns than cash
Contribute up to £20,000 for tax-free growth
Choose from diverse portfolios managed by experts
Single account management fee across whole account
How can you choose a share dealing platform that’s right for you? Ask yourself the following questions:
What type of trader am I? Are you a casual trader, an active trader or an expert investor? This will heavily influence the features you’re looking for in an online broker and their dealing platform. From the ease of use of the system through to the market research information available, it’s critical that the dealing platform complements your trading needs.
How often will I trade? If you buy or sell shares once or twice a month (or even less), you’re most likely a casual investor. The more you trade each month, the more likely you are to need a share dealing platform that offers an extensive range of features and expert analysis.
What will I be trading? While shares are the most commonly traded security, you can also trade a wide range of other securities through online brokers. Also, consider whether you want access to international shares as well as UK stocks.
How much does it cost? As well as ongoing fees, consider the brokerage fees that apply to your transactions and whether they may be waived or reduced if you satisfy certain criteria, such as placing a specified number of trades each month.
What fees will I pay for a share dealing platform?
There are two fees that commonly apply when you use online share dealing platforms:
Brokerage fees.Brokerage fees are the charges that apply to each buy and sell transaction, and they usually vary depending on the size of your buy or sell order. These can come in the form of flat rates or percentage based fees depending on the broker.
Ongoing fees.These apply monthly or annually, but not all providers will charge ongoing fees.
Brokerage fees vary greatly between providers but typically start at around the £8 to £15 range. For large transactions, fees of around 0.1% and up usually apply. If you’re planning on making lots of trades, you’ll want to keep an eye out for a platform that offers low per-trade fees.
Some providers will not charge any monthly fees at all. However, more advanced dealing platforms and those that offer premium services will often charge a monthly fee that could be as high as around £125 per month if you have a sizeable portfolio. A number of brokers will waive this fee if you perform more than a certain number of trades each month.
Benefits of using share dealing platforms
Control your investments.Online brokers give you the ability to take charge of your finances and invest your money in a range of local and global financial instruments.
Convenient.You can trade shares and boost your investment balance all from the comfort of your own home. Trading shares online can require much less legwork than, for example, investing in property.
Affordable.The online share dealing sector is becoming increasingly competitive, which is great news for consumers because it means better features and lower fees. The cost of buying and selling shares online has dropped markedly over the past couple of decades.
Information at your fingertips. Many share dealing platforms give you access to a wealth of market news and company information to help you make informed trading decisions.
Risks of using share dealing platforms
Lack of knowledge.The fact that you get to take full control of your investments can be a double-edged sword. While it allows you to take charge of your finances, it also means that you must rely on your own know-how to buy and sell shares. If you don’t know what you’re doing you can lose a significant amount of money.
Temptation to take risks.When you’re able to buy and sell shares in just a few quick clicks, it can be easy to forget that you’re dealing with real money and not just playing a game. Remember, these are serious financial decisions you are making and all trading carries a degree of risk.
Error.A simple typo and a failure to proof-read any buy or sell orders before you place them could cost you a lot of money. Review your orders closely before you submit them.
How do I apply for a share dealing platform?
Once you’ve found the right online share dealing platform, it’s quick and easy to apply for an account. If the platform is run by your bank and you already have an internet banking account, there’s often very little you have to do except deposit funds into your share dealing account and start placing orders.
If you’re signing up for an account with a new provider, however, you’ll generally need to provide the following details:
Your name, address and contact details
Proof that you are over the age of 18
Whether you have any financial trading experience
Your linked bank account details
Once you’ve deposited funds into your account – a minimum deposit amount may apply – you’re ready to start trading.
Share dealing glossary
FTSE: Also known as the Financial Times Stock Exchange is where the top ranking shares within the UK sit. This includes the FTSE 100, for the top 100 companies, the FTSE 250, the FTSE 350 and the FTSE All share.
Bear market:This term refers to when prices on the market are falling and further falls are expected to occur.
Brokerage fee:This is the fee you must pay to a share dealing platform when you use the platform to buy or sell shares
Bull market:This term applies when share market prices are rising and expected to continue to rise
Contract note:This confirms a buy or sell transaction and includes details such as the type of share, the price paid and the quantity traded
Dividend:Companies can distribute their profits or earnings to shareholders in the form of dividends. A dividend is calculated as a number of pence for each share you own
Float:The initial raising of capital through public subscription to a security
Fundamental analysis:This involves analysing the financial statements of a business to determine its overall financial standing.
Futures:Futures are contracts to buy or sell an asset at a specified future date
Limit order:A limit order specifies the maximum (when buying) or minimum (when selling) price you are willing to accept for a share transaction
Listed company:Listed companies have shares that are purchased and sold through the FTSE
Live price:This is the price of a share at a precise moment in time
Market order:A market order is an order to buy or sell a share at its current market price
Short selling:This is when you borrow a security and subsequently sell it, with the obligation to buy it back in future at a much lower price
Volatility:This reflects the amount of fluctuation in share prices
Warrant:This gives its holder the right to purchase a security at within a certain timeframe and at a specific price
Yield:This is your return on an investment and is expressed as a percentage
The most important questions about share dealing you were too afraid to ask
When you place a buy or sell order, you will need to select whether you want to place it ‘at market’ or ‘at limit’. Market orders will be executed at the best available price on the market at the time the order is lodged, while limit orders allow you to set a maximum (when buying) or minimum (when selling) price limit for your transaction. If your limit price is never reached on the market, your order will not be executed.
Yes, some providers will allow you to open a demo account which allows you to trade dummy shares and get a feel for how the system works. This can be a great way to determine whether a certain platform is right for you.
Many FTSE companies will pay dividends to their shareholders biannually, or, twice a year. Dividends are your share of the company’s profits or earnings and are usually paid as a number of cents per share you own. However, it is not compulsory for companies to pay dividends from their earnings and they may choose to reinvest those earnings back into the company.
There are a couple of ways in which you can generate wealth through shares:
Through a rise in the price of the shares you own, allowing you to sell them for profit
Through a company’s profits and earnings which they pay out as dividends to shareholders
Diversifying your share portfolio basically means spreading your share purchases across a wide range of business and industries to minimise your risk. For example, if you only have shares in a few companies that all operate in the manufacturing sector, you could be risking significant losses if the manufacturing industry suffers a downturn. But if you purchase shares in businesses across a wide range of industries, this spreads your risk out across different market sectors and can help safeguard your money.
When compared to the cost of investing in property, for example, shares are relatively cheap. They’re flexible, allowing you to buy and sell whenever it suits you and potentially make quick profits, plus they can be sold quickly and easily if you need quick access to funds. Finally, you don’t need a large amount of money to get started in shares, with several brokers allowing you to start trading with a small number of funds invested.
Not particularly. Buying or selling is simply a matter of indicating how many shares you wish to purchase or sell and specifying whether you want to place a market order or a limit order.
Yes, depending on the share dealing platform you choose and possibly on the level of membership you choose, you may very well be able to access expert stock recommendations.
Every online share dealing platform will need to detail the fees that apply to members and transactions, both in terms of ongoing fees and brokerage fees per transaction. Read the fine print of your chosen platform to make sure you’re aware of all fees and charges that may apply to your trades.
Yes, most online share dealing platforms will also allow you to trade international shares.
You’ll have to check the terms and conditions of your chosen online broker, but in most cases it is no problem to establish a joint account and start trading.
You can, as long as the order is still open and has not been executed. However, keep in mind that market orders are placed instantly, so this really only applies to limit orders.
The best approach to improve your trading skills is to research, research and research. From trading strategies to financial news, company announcements and market activity, staying up to date with anything and everything related to your planned trades and the share market in general could help increase your levels of success. There are also plenty of courses you can take to learn the ins and outs of online trading. Make sure you only study with a trusted education or training organisation.
Yes, there are two main approaches to borrowing money to purchase shares:
Margin lending. This is offered by some banks and large stockbroking firms and involves using your existing, shares or managed funds as security.
Using the equity in your home to take out a loan for investment purposes.
Unsecured loans, although these will have high-interest charges.
However, remember that there are many risks associated with borrowing money for an investment on which returns are far from guaranteed.
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