Investing in Shares for Beginners - A complete investment guide

February 16, 2021 08:00 Europe/Tallinn
Reading time: 21 minutes

Did you know that at the click of a button you could be buying and selling shares in some of the world's largest publicly traded companies such as Apple, BP or Facebook? Online share trading has never been more accessible to us than today but learning how to start investing in shares for beginners can seem daunting.

How do you find the best online share trading account? How do you choose the best online share trading platform? How do you actually perform an online share trade?

In this article, we answer these questions - and many more - on how to start investing in good shares for beginners online.

We'll point you to one of the best online share trading sites which can help in your trading decisions, as well as provide you with some online share trading tips to get you started and share with you the best tips for how to learn online share trading completely risk-free!

investing in shares for beginners

 

What is online share trading?

Online share trading is the process of buying and selling shares (or stock) 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, regardless of whether we talk about investing in stocks and shares for beginners in the UK, India, Australia or investing in shares for beginners in NZ.

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'.

Nowadays, traders don't need to find an 'investing in shares for beginners' book to learn how to invest in stocks. A great amount of information on investing for beginners is already available online. What's more, traders also do not have to visit a stock exchange and can instead participate in online virtual share trading just by having the right broker account. By opening an online share trading account, the broker acts as an intermediary between the trader and the stock exchange.

In fact, with Admiral Markets UK Ltd you can open an Invest.MT5 account and actually start buying shares and ETFs from 15 of the largest stock exchanges in the world. You can also receive free real-time market data, create a stream of passive income by collecting dividend payouts, trade on MetaTrader (the world's best known online share market trading software and one of the best stock trading software for beginners) and enjoy many other benefits.

Investing in shares can be easy as the minimum deposit amount for opening an account is €1. Investing fees start from $0.01 per share and minimum transaction fees at just $1 on US stocks.

Why trade shares online?

Before we discuss how to start investing in the share market for beginners, first we need to discuss why anyone would start investing in 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, as the example chart of a company's share price shows below:

share price profit loss

An example candlestick chart of a company's share price showing profit and loss areas when buying shares.

In the above example, 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 stocks online. Throughout the rest of the article we will explain how to start online share trading, the factors you need to know about when making decisions on how to invest, which shares to buy and sell and how to actually perform an online share trade in the online share market trading software offered by Admiral Markets.

How to invest in shares online

When it comes to investing in shares for beginners, it's important to have access to the right trading tools and resources. Here's how to start investing in shares for beginners:

1. How to choose the best online share trading 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 trading account with a broker gives you access to their trading platform where they can connect your sell and buy orders with other traders via their connection to the exchange, which manages the stock market and 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, investment firms working under the Admiral Markets trademark operate under the highest regulation of the UK's Financial Conduct Authority, the Cyprus Securities and Exchange Commission, the Estonian Financial Supervisory Authority, and the Australian Securities and Investments Commission.

Admiral Markets offers additional benefits for users, such as:

  • Allowing the use of 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.
  • Offering the ability to open a CFD (Contract for Difference) trading account allowing you to potentially earn profits from both falling and rising markets, and providing access to leverage as high as 1:500 specifically for clients categorized as professional and as high as 1:30 specifically for those classified as retail clients. This enables traders to control a bigger position with a smaller deposit.
  • Offering the ability to trade with a broker offering some of the lowest and transparent brokerage fees in the marketplace.
  • Giving access to the most popular and fastest trading platforms from MetaTrader for PC, Mac, Web, Android and iOS.

If you're feeling inspired to open an account online and start using the best trading platform for beginners, you may be pleased to know that Admiral Markets also provides you with the latest market updates and technical analysis for FREE!

Click the below banner to get started on one of the best stock trading sites for beginners and open a share trading account online today!

etf and stocks with admiral markets

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 Admiral Markets, 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. Admiral Markets 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 Admiral Markets 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.

metatrader 5 apple trading indicators

An example of the Admiral Markets MetaTrader 5 trading platform showing the price chart of Apple shares, the MACD and Stochastic trading indicators, a list of symbols showing the different stock market regions available and an open order ticket.

Disclaimer: Charts for the financial instruments in this published article are only for illustrative purposes and don't constitute trading advice nor solicitation to purchase or sell any of the financial instruments offered by Admiral Markets (ETFs, CFDs, Shares). Past performance does not necessarily guarantee future performance.

So far, you have learnt what online share trading is, how to choose the best online share trading 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. Basics of investing in shares for beginners: Choosing a strategy

A trading strategy assists traders in analyzing 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 Strategies

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 Admiral Markets, traders can choose the 15 minute, 5 minute, 1 minute chart and many other timeframes.

ii. Swing Trading Strategies

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 Strategies

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.

To perform technical analysis of share prices, you only need a trading platform like the free MetaTrader platform offered by Admiral Markets.

Did you know that you can access the Admiral Markets MetaTrader 5 trading platform completely FREE? Just click on the below banner and download the platform for free in just a few simple steps!

Trade With MetaTrader 5

However, to perform fundamental analysis traders need to use different websites to source their information.

4. How to choose the best online share trading site

As many different websites offer different services to traders, there may not be one best stock trading site for beginners. What is best for one trader may not be the same for another. On the Admiral Markets website, you may find a variety of pages that could help you when share trading online. One such site is the Premium Analytics page.

To access the Admiral Markets Premium Analytics page, simply login to your account via the homepage and select Premium Analytics from the Analytics tab, as seen below:

admiral markets premium analytics

Once logged in you can search for your instrument or select it from the drop-down menus on the left. In the example below we have selected AAPL which is the symbol for Apple shares:

apple admiral markets premium analytics

A screenshot of viewing Apple on the Admiral Markets Premium Analytics research site.

From here we can view market news, instrument news, access a corporate calendar, as well as technical insight and a research terminal showing newswire sentiment. There are also a lot more features on the Admiral Markets homepage under Analytics that can help you with your trading. These sections include Fundamental Analysis, Technical Analysis, a Trader's Blog, Market Heatmap and more.

Now you know more about the different types of strategies used when online share trading, let's look at how to start trading in the share market in your trading platform. If you haven't yet downloaded the MetaTrader platform offered by Admiral Markets you can do so here, as it may prove useful to download it first to follow along with the next examples.

Placing a trade

Once you've opened your live or demo trading account and have downloaded your free trading platform, you are in a position to learn how to buy shares using the following steps:

  1. Open the MetaTrader trading platform.
  2. Open the Market Watch window by clicking View from the top menu of the platform or by pressing Ctrl+M on the keyboard. This will reveal a directory of tradable symbols on the left side of your chart.
  3. Right-click on the Market Watch window and select Symbols or press Ctrl+U on your keyboard.
  4. This will then open the window shown below which details all the markets available for you to trade on. From here you can add a wide variety of shares to your Market Watch window by selecting the relevant share or country and clicking Show Symbol.

MetaTrader 5 Symbols

An example of the Admiral Markets MetaTrader 5 trading platform showing the Symbols window.

Disclaimer: Charts for the financial instruments in this published article are only for illustrative purposes and don't constitute trading advice nor a solicitation to purchase or sell any of the financial instruments offered by Admiral Markets (ETFs, CFDs, Shares). Past performance does not necessarily guarantee future performance.

After clicking the OK button in the Symbols window you can now view the different instruments in the Market Watch window. To view a price chart of a company's share price, simply left-click on one of the stock symbols in the Market Watch window and drag it onto the chart area. From here you can now open up a trading ticket:

  1. Right-click on the chart.
  2. Select Trading.
  3. Select New Order, or press F9 on your keyboard.
  4. A trading ticket will open for you to input your entry price, stop loss and take profit levels and your share trading size (volume).

MetaTrader 5 trading ticket

An example of the Admiral Markets MetaTrader 5 trading platform showing a trading ticket.

Disclaimer: Charts for the financial instruments in this published article are only for illustrative purposes and don't constitute trading advice nor a solicitation to purchase or sell any of the financial instruments offered by Admiral Markets (ETFs, CFDs, Shares). Past performance does not necessarily guarantee future performance.

Pending orders

Did you know that with an Admiral Markets account you can also place pending orders when share trading online? This means you can instruct the broker to enter you into a position if and when the market price reaches a certain price level of your choosing.

To place a Pending Order, you can simply open a trading ticket and select Pending Order instead of Market Execution:

MetaTrader 5 order ticket

An example of the Admiral Markets MetaTrader 5 trading platform showing an order ticket.

Disclaimer: Charts for the financial instruments in this published article are only for illustrative purposes and don't constitute trading advice nor a solicitation to purchase or sell any of the financial instruments offered by Admiral Markets (ETFs, CFDs, Shares). Past performance does not necessarily guarantee future performance.

You can also attach stop loss and take profit orders if and when your trade triggers into a live trade by reaching your entry price. One of the best online share trading tips for investing in shares for beginners and advanced traders is to always use a stop loss which gets you out of a losing trade at a price level of your choosing. This can help to minimise losses.

Once you've added in your stop loss and take profit price levels, you can view your order levels on the chart as shown below by the dotted horizontal lines:

MetaTrader 5 order price

An example of the Admiral Markets MetaTrader 5 trading platform showing a trader's order price levels on the chart.

Disclaimer: Charts for the financial instruments in this published article are only for illustrative purposes and don't constitute trading advice nor a solicitation to purchase or sell any of the financial instruments offered by Admiral Markets (ETFs, CFDs, Shares). Past performance does not necessarily guarantee future performance.

To learn more on investing in shares for beginners, specifically how to trade on the Admiral Markets MetaTrader 4 and MetaTrader 5 trading platform, feel free to watch the video below:

Investing with little money

How do I start investing with little money? What should a beginner invest in?

Most of the time, your broker is going to charge you a commission each time you make a trade on a stock, buying it or selling it. These fees can range from $2 to as high as $10 per trade, for some brokers. However, some brokers don't charge trade commissions, but will make up for it in other ways. In short, invest your money wisely, because there aren't any charitable organizations that offer broker services.

Trading on the stock market for beginners and advanced traders, alike, can be quite costly. If you move in and out of positions multiple times a day, or even per week, if you are operating with a small amount of money, these fees can add up quickly and cut into your profits.

Investing smart in shares for beginners can be challenging. You'll need to do homework to learn about the minimum deposits required by different brokers and compare them with other brokers. It's highly likely that, with a small amount of money, it will be difficult to cost-effectively buy individual stocks while remaining diversified.

One smart way to approach investing in shares for beginners is through mutual funds. Besides sometimes being an easy way to reach a diversified position with your investment right from the start, mutual funds can also be an affordable way to begin investing. Mutual funds are pools of investors' funds that are managed by a professional who invests it in a specific manner, such as in large-cap US stocks.

With mutual funds, the fees can be an advantage to the commissions on stocks. This is because the fees are all the same, regardless of the size of your investment. As such, if you meet the minimum required investment to open an account, you start with as low as $50 or $100 a month to put into a mutual fund. Investors call this dollar cost averaging (DCA). It is a great way for some new investors to get started.

However, even when you are investing in mutual funds, any sound investment strategy includes a thorough understanding of the commission and fee regime of any specific broker you are considering working with, to be sure you understand how much money you could potentially lose on each trade.

Why start online share trading with Admiral Markets?

Here are just a few reasons why you should consider Admiral Markets when it comes to investing in stocks online:

  • Trade with a highly regulated, well-established company that operates under regulation by the UK's Financial Conduct Authority.
  • Benefit from a negative balance protection policy to protect you from harmful market movements.
  • 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. It provides access to leverage as high as 1:500, specifically for clients categorized as professional, and as high as 1:30 specifically for those classified as retail clients. This enables traders to control a bigger position with a smaller deposit.
  • Trade with a broker offering some of the lowest and transparent brokerage fees in the marketplace so you can hold on to more of any profits you make.

Did you know that you can test drive some of these features by opening a FREE Admiral Marketsonline share trading demo account? This type of account will allow you to trade in a risk-free environment until you are ready for a live trading account.

To open your free online share trading demo account, simply click on the below banner:

Trade With A FREE Demo Trading Account

Learn to trade:

About Admiral Markets

Admiral Markets 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.

Jitanchandra Solanki
Jitanchandra Solanki
Financial Markets Author, Admirals London

Jitanchandra is a financial markets author with more than 15 years experience trading currencies, indices and US equities. He is an accredited Market Technician with a BA Hons degree.