How to Buy Shares Online in 2023
Did you know that at the click of a button you can buy shares online in some of the world's largest publicly traded companies such as HSBC, BP and Shell? Online share trading has never been more accessible but learning how to buy shares for beginners can seem daunting.
How do you find the best share dealing account? How do you choose the best online share trading platform? How do you actually buy shares online?
In this 'How to Buy Shares Online,' we answer these questions and more. Let's get started.
Table of Contents
What is Online Share Dealing?
Online share dealing is the process of buying and selling shares in a publicly listed company from your computer, laptop or phone, in the hope of making a profit. Online investing is available to anyone with access to the internet.
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 what was called the 'trading pit'.
However, nowadays to buy shares UK you just need an online share dealing account. By opening one, your broker acts as an intermediary between yourself and the stock exchange by routing your orders to the exchange.
Why Buy Shares UK Online?
Before we discuss how to buy shares online why would anyone want to in the first place? The aim of online share trading is to try and turn a profit form the movement in a company's share price. Traders aim to buy shares at a low price and then sell them at a high price and pocket the difference in between, as the example chart of a company's share price shows below:
Let's say a trader buys one share of a company which is valued at £100. If the market goes to £200 the trader has made a £100 gross profit. The net profit will be a little lower as the trader still needs to deduct the cost of trading such as the brokerage fee.
If the value of the shares declined and moved down to £50 then the trader's investment would be in a loss. This is a very simplified example, but it shows what most traders aim to do when trading shares online.
Buy Shares Online Checklist
Once you've opened your live or demo trading account and have downloaded your free online share trading platform, you are in a position to learn how to buy shares using the following steps:
- Login in to the Admirals Dashboard and click Trade next to your account name.
- Search the company's name you want to trade on from the market watch window on the left.
- Drag the name of the share onto the chart to view live prices.
- Right-click on the chart and select New Trade. A trading ticket will open to input your entry, stop loss, take profit levels and position size.
How to Buy Shares Online
When it comes to buying shares online it is important to have access to the right trading tools, platforms and software. Here is how to get started.
1. How to choose an online share dealing account
Your trading account is your connection to all the other individuals in the world who want to buy and sell shares. If you would like to purchase shares in a certain company such as oil-giant BP, then you have to find a person who both owns shares in BP and would sell those shares to you. Essentially, this is the service your broker provides for you - connects you to the market with other stock or shareholders, hence the term 'stock market'.
Having an online share dealing account with a broker gives you access to their online share trading platform where they can connect your buy and sell orders with other traders via their connection to the stock exchange where the shares you are trading are listed.
Because your broker will be holding your trading or investing capital it is essential to choose one that works under the highest regulation, thus offering security and safety.
For instance, Admiral Markets UK Ltd is authorised and regulated by the UK Financial Conduct Authority (FCA) and also has other entities authorised and regulated in different jurisdictions.
The Invest.MT5 account provides the following share dealing features:
- Invest in stocks, shares and ETFs (exchange traded funds) from 15 of the world's largest stock exchanges.
- Collect dividend payments from dividend stocks to build an income stream.
- Access cross-device share dealing platforms over desktop, web and mobile and receive free real-time price data.
- Use fractional shares to invest in 1/100th of a share.
- Invest in UK shares with a low commission of 0.1% of trade value with a low minimum commission of £1.
- Invest in US shares with a low commission of $0.02 per share with a low minimum commission of $1.
2. How to choose the best online share trading platforms
Your online share trading platform is how you place your entry and exit levels on the company of your choosing. Knowing how to choose the best online share trading platforms is important as it is your access to important information and tools such as the live market price of the company you are trading, the historical price chart of the stock, the different trading tools and technical indicators that can help in making trading decisions and more.
With Admirals, users have access to the online share market trading software from MetaTrader. This platform allows traders to view price charts of a company's share price and access order tickets from it to place buy and sell trades and view how they are performing. Admirals currently offers these options for online trading software:
- MetaTrader Supreme Edition (this is a customized plugin compatible with MetaTrader 5 and MetaTrader 4, created by both Admirals along with a group of professional experts in trading)
The MetaTrader 5 desktop, web and mobile platform offers certain advantages when buying and selling shares. For instance, traders can access multiple types of trading accounts from it - such as an Invest.MT5 investing account or the Trade.MT5 account for CFD trading - as well as access to multiple asset classes.
So far, you have learnt what online share trading is, how to choose the best online share dealing account and online share trading platform. But how do you decide which shares to buy and sell and when?
There are a variety of different methods and strategies to choose from. Knowing which ones are suitable for investing in shares for beginners may prove to be very helpful in building consistency and experience in online share trading.
3. How to choose a strategy to buy shares online
A trading or investing strategy assists traders in analysing shares in a consistent, methodical way for clues on which direction the market might go next. To identify these 'clues' traders use different analysis methods such as fundamental analysis and technical analysis:
- Fundamental Analysis. This entails studying generalized economic data and company-specific data. The data connected to the company will include announcements on earnings per share, profits, sales, launches of new products and other meaningful events and metrics. With this, traders are attempting to find out whether or not the company will earn a larger profit in the days, months or years to come. As the company's value rises, its share price may rise as well.
- Technical Analysis. This is the examination of prices to attempt to find patterns in the selling and buying activity. By identifying such patterns, traders can sometimes predict wise entry and exit points for their trades. Studying share prices mostly entails examining chart patterns, technical and price action trading indicators such as moving averages, MACD and many others.
There are six types of strategies to choose from when trading and each have a different weighting in how much fundamental or technical analysis it uses. Four of these strategies are most commonly used in online share trading. These include:
i. Day Trading Shares UK
This is a style in which traders sell and buy shares within one trading day and leave all of their positions by the day's end. They usually do not hold any trades open overnight when the market is closed. Typically, traders use the smaller timeframes as they make decisions. With the MetaTrader platform, provided by Admirals, traders can choose the 15 minute, 5 minute, 1 minute chart and many other timeframes.
ii. Swing Trading Shares
Swing trading is a type of strategy which involves traders holding shares for several days and in some cases weeks. Most swing traders will use a combination of fundamental and technical analysis to make their trading decisions but more weight will be placed on technical analysis and the use of technical indicators such as moving averages (a commonly used trading indicator when share trading online).
iii. Position Trading Shares
Position trading is a style which involves traders holding shares for several weeks or months. Typically, position traders would use the higher timeframes such as the daily, weekly and monthly chart to make their trading decisions. While position traders will use technical analysis to help time and exit trades they would also use more fundamental analysis than swing traders as they are trying to hold onto shares for a much longer period of time.
iv. Investing Strategies
Investing strategies have a lot of similarities to trading strategies. The biggest difference is the holding period. Investors typically look to hold shares for many months or years and try to capitalise on the capital gain as well as dividend payouts which are cash payments some companies provide to shareholders.
Why Buy Shares Online with Admirals?
- Invest with a highly regulated, well-established company that operates under regulation by the UK's Financial Conduct Authority among other regulators.
- Access the most popular and fastest online share market trading software known as MetaTrader. It's compatible with Mac, PC, Web, iOS and Android systems.
- Open multiple types of trading and investing accounts such as Invest.MT5 where you can buy shares in publicly listed companies from 15 of the world's stock exchanges and create an income stream by collecting dividend payouts.
- Open an account for CFD (Contract for Difference) trading, which allows you to potentially earn profits from both falling and rising markets.
Start with a free online share trading demo account to practice in a virtual environment until you are ready to go live.
FAQs on How to Buy Shares Online
How do I buy shares?
To buy shares you need to open an online share dealing account with a regulated broker who will route your order to the stock exchange your shares are listed on for a fee.
How to buy shares for beginners?
As buying shares can be scary for a beginner it is wise to start with a demo practice account first. This allows you to buy shares in a virtual environment until you are ready to buy shares live.
Admirals is a multi-award winning, globally regulated Forex and CFD broker, offering trading on over 8,000 financial instruments via the world's most popular trading platforms: MetaTrader 4 and MetaTrader 5. Start trading today!
This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or recommendation for any transactions in financial instruments. Please note that such trading analysis is not a reliable indicator for any current or future performance, as circumstances may change over time. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks.