Penny stock trading for beginners (part 2/2)

Eduardo Montero

Author: Eduardo Montero

Last Updated on March 30, 2022

Just What Are Penny Stocks?

You can find options and stocks of all kinds trading at every possible cost per share that you can imagine. One popular kind of stock is called a penny stock. What does this name mean and exactly what are penny stocks?

Penny stocks are generally defined as options and stocks that trade at under $5 a share in the US or under £1 in the United Kingdom. This classification can be applied to a great variety of cheap stock options however a penny stock is notable by more than simply cost.

One fascinating fact concerning penny stocks is they’re unavailable through an exchange. Illustrations of exchanges are the New York Stock Exchange (NYSE), the London Stock Exchange (LSE) as well as the National Exchange (NASDAQ). Instead they’re sold “over the counter”, not via a stock broker. To acquire penny stocks you usually have to proceed through a broker or exchange.

Since of the high-risk tendencies of these stocks and their unpredictable pricing they are typically low price. Large businesses trading on the exchanges are more regulated than newer companies which are just starting to trade, often in penny stocks.

Penny stock pricing is arranged by the seller. This selling price can easily fluctuate extensively from seller to seller. After you purchase a penny stock you could then choose what your bid price is to sell at. After buying a penny stock the next determination is deciding what price you wish to sell your investment at for when the purchase price rises.

There is a totally different group of laws covering the penny stock trade due to the problems that can easily arise with this type of investment. One downside to this kind of stock is because of the price they can easily be procured in large quantities and can have an enhanced incidence of dupery or money making schemes linked to them. Inflating the buying price of these options and stocks using unethical facts makes it easy to market them for a lot more than you bought them and a lot more than they are worth. Then big quantities of stock can easily be sold for a terrific gain. This kind of con is called the “pump and dump”, when the stocks are distributed the value of the stock drops substantially and the buyer will forfeit the majority of their investment value.

When performed correctly and fairly, there is still the opportunity to make some good money. The penny stock investor is looking to utilize the unpredictable penny stock market to short sell their stocks and shares at a gain.

To purchase penny stocks you should go through an on-line broker like E-trade, Iweb, Hargreaves Lansdown or TD Ameritrade. Setting up an account provides you with the opportunity to monitor your stock options which is vital with penny stocks, much more so than in the stock exchange, as their value can differ significantly every day.

Just how can you explain precisely what a penny stock is? They are a high risk, highly unstable form of stock which also provide the potential of substantial benefits in a small amount of time. Penny stocks can easily be a fun short term investment option but it not advised for managing wealth.

Following a prosperous trader is a great way to learn how to become successful in the penny stock industry. Blogposts regarding penny stock options you may see in a chat room or a blog site are something to be suspicious about. Do your homework and don’t leap at any chance until you know what you are getting yourself into. This can help you to make sure you have the very best experience and minimizes your chance of a fraudulent penny stock experience.

Trading brokers comparison: Plus500 vs eToro vs AvaTrade vs XM vs Markets

Eduardo Montero

Author: Eduardo Montero

Last Updated on March 30, 2022

You need to choose your trading platform but you are a little lost with the huge choice offered by the online brokers? Don’t panic! To be sure you make the best choice and use a platform which correspond to all your requirements, This site has completed an objective comparison of the best platforms for you highlighting for each of them the solutions available, the major technical characteristics as well as the general advantages and disadvantages.

You will also find the tools available and learn about the particularities that differentiate each platform from the others. Below trading platforms are recognised by the CysecMIFID and FSA.

Modern and low priced, Plus500 Ltd was created in 2008 in London. Currencies, shares, indices and commodities can all be traded. This platform groups together numerous advantages and has ties to many international banking entities which enables it to offer large transaction volumes, low prices and an optimal rapidity of execution. 

The human quality remains however the major strength of this broker that seeks success through its transparency and honesty.

Your capital may be at risk

Plus500 more details

  • Means of Payment: CC, bank transfer, debit card and Moneybookers
  • Year of creation: 2008
  • Minimum deposit: 100€
  • Regulated by: Plus500UK Ltd is authorised and regulated by the Financial Conduct Authority (FRN 509909). Plus500CY LTD is authorised and regulated by the Cyprus Securities and Exchange Commission (Licence No. 250/14).


  • Spreads determined in advance.
  • Continuous live quotations in real time.
  • Advanced technical analysis tools.
  • A free demonstration account.
  • A leverage effect of up to 1:200.


  • A low graphics interface
  • Withdrawals that take time

General Characteristics

The minimum deposit is €100 with a minimum transaction of 2,500 units. Leverage effects are offered of up to 1:200. 

The demonstration account is free and unlimited. 

19 different currency pairs can be traded as well as CFDs on commodities including precious metals.

Tools and support available

The major trading tools can be found on Plus 500 such as charts and financial analyses that have been added to the demonstration account entirely free of charge and there is a complete guide for learning how to trade, ideal for experienced traders. 

The eToro platform is one of the most affordable and is easily accessible to all. It is doted with a simple yet clean design enabling the investor to find their way around easily. Navigation is intuitive and helped by an accompaniment noting the various stages of trading. This platform is conceived for both beginner and expert traders but does represent an excellent place to start trading as it has such an efficient help system and community  assistance.

eToro more details

  • Means of Payment: Credit card, PayPal, bank transfer, Neteller and Western Union
  • Year of creation: 2006
  • Minimum deposit: $50
  • Regulated by: Banque de France, Cysec, MIFID


  • Simplified usage
  • Demonstration account
  • Complete assistance (telephone, email and chat)
  • Strong leverage effect
  • Transparent spreads and commissions 


  • Commissions from 2 pips

General Characteristics

The minimum deposit required is $50 with a transaction of at least $10,000 including the leverage effect. The leverage effects available are numerous and vary from 1:5 to 1:400. 

Spread only apply as from 2 pips and vary according to the currency pair. 

All major currencies are traded.

Apprenticeship and Training

Concerning trading help we could say that eToro makes a big effort as this broker offers a whole panel of courses and training for the Forex and its trading platform through the bias of different supports. According to the level of your deposit or balance of your account you can benefit from interactive lessons, explanatory videos or written advisory articles. A complete guide to the platform is accessible to all as well as the glossary that explains the details of all the major terms and language particular to the Forex. Everything possible is done to ensure that everyone finds their place.

Tools and support available

We find numerous efficient tools such as the educational software, an online chat, direct training by telephone and a variety of economic information, charts and technical analyses that give you a complete research summary in real time of the market and its trends. 

To enable you to profit even more from trading on the Forex, eToro has implemented a system of weekly competitions. Each week, the trader registered on the platform that makes the most profits is rewarded by the broker. But the following are not negligible either. 

The best wins $1,000, the second wins $750 and the others follow up to places 31 to 50 who each pocket $100. 

A way to combine fun with trading so developing your taste for competition, but, most especially, an excellent means of profiting even more from your investments on the Forex.

Created in 2006 by financial professionals and entirely devised by individual traders and experts, AvaTrade distinguishes itself from its main competitors by its client orientated approach. This trading leader counts more than 100,000 clients at present and records monthly volumes of trading exceeding $20 billion. 

You will find trading tools both advanced and easy to use with software that enables you to benefit from the power of the most important world banks. AvaTrade respects the highest standards of security and integrity.

AvaTrade more details

  • Means of Payment: Credit card (Visa or MasterCard), PayPal and Western Union
  • Year of creation: 2006
  • Minimum deposit: $100
  • Regulated by: MIFID, Banque de France


  • No commissions or fees
  • Demonstration account
  • Technical assistance 24/24
  • Fixed spreads
  • Daily institutional analysis
  • Broker approved by the Banque de France


  • A platform accessible only using a pc (download required with supplementary software for Mac) 

General Characteristics

The minimum required deposit is $100 and it is possible to trade in mini lots of $5000. Leverage effects are offered of up to 1:200. 

Spreads are only used after 2 pips and vary quite a lot according to the currency pair. 

All currencies are covered as well as major metals (CFD).

Apprenticeship and Training

The opportunities to train yourself in the rudiments of Forex are numerous at AvaTrade. The broker offers all traders numerous explanations on the online trading of foreign currencies plus there are webinars enabling you to learn specific functions of the Metatrader platform that is used. You can also learn to trade in VFDs thanks to the educational section to which it is entirely devoted and which was created especially for beginner traders with no particular knowledge of trading. 

Virtual and guided visits of the platform are also proposed in order for you to better understand the uses of the tools available.

Tools and support available

AvaTrade offers traders a demonstration account that enables you to practice in realistic conditions. There is also a guided tour and numerous video tutorials enabling you to gain a good understanding of the software as much for experienced traders as beginners. Support and assistance is available by telephone or email 24/24.

The ‘Mirror Trader’ function offered by AvaTrade enables investors to use the knowledge of experienced traders to develop efficient strategies thanks to real time signals. You can therefore compare the strategies used by the best traders on the platform and use them to your advantage. Thanks to Mirror Trader you only have to copy other’s strategies, using their parameters as stop and limit orders, while keeping the possibility of modifying certain parameters according to your feelings.

XM is a fairly recent broker on the market, launched in 2010 in Cyprus it offers numerous advantages including the surety of being regulated by the Banque de France, CySec and the MiFID. You can trade a variety of assets through XM including currencies, commodities and even stock indices.

XM more details

  • Means of Payment: Bank transfer, credit cards, Moneybookers (Skrill) and Netellers.
  • Year of creation: 2010
  • Minimum deposit: 5$
  • Regulated by: Cysec, MIFID


  • Minimum deposit of $5
  • Tight spreads
  • Free demonstration account
  • Numerous approvals and authorisations
  • Assistance in several languages 24/24 and 7/7.


  • Few training modules

General Characteristics

Truly accessible to all with a minimum deposit of only $5, XM offers numerous advantages including a leverage effect of up to 1:888 plus hedging. You have the opportunity to speculate on no less than 53 currency pairs.

Apprenticeship and Training

XM did not want to leave beginner traders without any real accompaniment during their first steps on the Forex and therefore offers those who need it various online webinars to learn the basics of speculating on the foreign exchange market. They are accessible through a simple registration. Also, a free demonstration account is available for beginner traders so they can learn trading in real market conditions.

Tools and support available

Customer and technical support is directly accessible on the XM website in several languages with a live chat, telephone and email support. This broker also offers various online tools for your assistance including technical analyses and quality daily signals.

One of the particularities of the XM broker concerns the competitions organised among the platform traders. In the form of a poker tournament, these competitions are regularly organised enabling participants who have bought a ticket to make even more money. Once a trader has bought a ticket they can access an interface that displays the performance of other players in real time.  The best traders win lots in the form of financial incentives that they can withdraw or add to their existing trading capital.

Based in Cyprus, Markets.com is operated by Safecap Investments Ltd., which is regulated and authorized by CySEC under license number 092/08 and by the FSB under the number 43906. Geared more towards the experienced traders, this platform combines all the tools necessary for good trading. Beginners also appreciate the ease of use of the different functions as well as the different training modules at their disposal. The site is entirely administered by a English team who also manage the technical support. 

Markets more details

  • Means of Payment: transfer, cheque, credit cards, Moneybookers, Neteller
  • Year of creation: 2009
  • Minimum deposit: 100$
  • Regulated by: Markets.com is operated by Safecap Investments Limited, a regulated investment services firm authorized by the Cyprus Securities and Exchange Commission (CySEC) under license no. 092/08 and by the Financial Services Board (FSB) in South Africa as a Financial Services Provider under license no. 43906.


  • Fixed spreads among the lowest on the market
  • No fees or commissions
  • Free demonstration account
  • Assistance 24/5


  • A site more appropriate for experienced traders

General Characteristics

Markets.com accepts deposits in Euros or Dollars from $100 with a maximum leverage effect of 1:200. The minimum size trading lot is 1,000 units. You can trade all major currencies, commodities, metals and indices. 

The spreads on the major currencies are stable and vary from 2 to 4 depending on the currency pair. The site does not demand any management fees.

Tools and support available

Markets.com provides many tools for traders to take advantage of:

  • Intuitive web and mobile platforms
  • Advanced charts and studies for analysis
  • Stop Loss, Take Profit, and other strategic risk management tools
  • Exceptional 24/5 customer support in over 20 languages

To trade while minimising risks it is important to pinpoint the sell and buy signals on the Forex. With Markets you no longer need to pass long hours analysing charts and other data as this broker supplies you with pertinent signals every day, for free, in order to help you better manage your positions on the Forex. 

Please note, the free trading signals supplied by Markets are only available to traders with an account showing a balance of above $2,000. 

These signals are in fact easily identifiable as they are here represented by arrows pointing up or down.

Photo by bruce mars on Unsplash

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DISCLAIMER: All of 5bestproprietarytradingfirms.com contents posted on this page are based on “My” and “Our” opinions alone and are only for entertainment purposes. You should not take any of this information as guidance for buying or selling any type of investment or security. “I”,”We” and “Us” are not a financial advisor and anything that have been posted here on this site should not be seen as financial advice. “I”,”We” and “Us” are only sharing biased opinion based off of speculation and personal experience. An individual trader’s results may not be typical and may vary from person to person. It is important to keep in mind that there are risks associated with investing in the stock/forex market and that one can lose all of their investment. Thus, trades should not be based on the opinions and information of others that are put on the internet such as this page, but by your own research and due diligence. Any financial losses incurred will be at your own risks and the people behind this site will not be held responsible.

Choosing the right stock broker

Eduardo Montero

Author: Eduardo Montero

Last Updated on March 30, 2022

By this time after reading lots of articles about stock trading, you might have realised that you need a stock broker to execute your orders. But this doesn’t mean you must be at the disposal of the stock broker. You can still make your own analysis in selecting a good stock to invest. But the point is these have better knowledge about whats happening in the stock market. During the intial days of the stock market, people didn’t have much choice in selecting a stock broker of their likes.

1. Only one type of broker was available with whom all the share dealing has to be done. These stock brokers had tight grip on the share markets and stock exchange, sometimes even controlled the rise and fall of the share price. Their brokerage cost was just too expensive that it was considered stock trading is only for rich and not for the average salaried people.

2. Then with the innovation of the internet, the stock trading world became smaller. Once unreachable, stock trading became a money making strategy of every household. The information regarding stock market which were almost a secret, became open and people were able to trade sitting before their computer

3. With the expansion of the stock trading world, the need for different type of stock brokers has also increased. As for now, there are four types of brokers. These are:

  • Discount/online broker
  • Discount broker that provides advice
  • The full service broker
  • The money manager.

4. The discount/online broker is meant only to take order placed by you. You cannot expect any advice regarding your investment choices or about the stocks you have chosen . You might be provided with the reasearch tools and some widgets like charts, but decision of stock will be left to you.

5. The next category of brokers are just like discount brokers but the difference between the previous broker with them is that they provide with advanced tools, newsletter and some essential tips which would make you more comfortable in choosing the stock. Still they don’t stress any share in particular to invest. It would be upto you to make you decision.

6. The next category are the full service brokers, who have good knowledge about the movements of the share and the markets, and they also recommend stocks which they consider as a good investment. But try to be cautious, as these stock brokers also have good ties with the companies and they might divert you just to increase the investment in a particular share.

7. The final one is Money manager, who take care of your investment from top to bottom (ie) all you have to do is give the money. Choosing the right stock, investing, analysis and profit making will be taken care by the stock broker. But you must exercise caution by keeping track of the money. This is suitable for those investors who think they dont have enough time to concentrate in the markets.

Penny stock trading for beginners (part 1/2)

Eduardo Montero

Author: Eduardo Montero

Last Updated on March 30, 2022

Penny stock and penny share trading

Stocks which is valued at GBP 1 or USD 1 or less can be called as penny stock. Standing outside the circle, penny stock trading might sound very simple. All you need is a small amount of money with which you can buy a significant amount of shares and when you see the prices rising, sell the shares and take the profit.

Hang on, Unfortunately most of the penny stock don’t work this way.

1. In my honest opinion, It is always to better to keep yourself away from the penny stocks. But wait, if you think this is the best way to make profit or you are not financially stable to invest in big companies, then there is a strategy to follow for investments in penny shares. In today’s world, there are lots of new corporation emerging everyday and many decide to go public.

2. The decision made by the companies to go public is mainly to increase their investment and share value. No matter what is the intention of the companies, investors must be vigilant in making their decision. These companies are mostly unstable as they are brand new in the market.

3. Annual and quarterly statments won’t be availble due to the new emergence of the company and so this itself is a big as you are going for a stock about which you have no idea.

4. Next best thing would be to get some reputation from shareholders. If you find some shareholder desperate to sell off the share, that would be a clear indication that the company is not doing well. Or sometimes the existing shareholders might simply encourage you to buy the share just to increase the share value and sell off their share at the right time. You might end up being dumped with useless shares.

5. Most the companies with penny stocks lose money through incompetence in management. So its very important analyze who is managing the company and the way it is done. One more thing is to monitor the way the investor’s money is spent.

6. Read the newsletter published by the company. Important thing to note is “How the distribute the profit”. As cash or shares. You must ask yourself whether is it really worth to take profit in the form of shares? Sometimes it is and sometimes its not. It depends on the situation and the market. Sometimes distribution of shares is just to dump the shares on investors.

7. Make a careful analysis whether the company is paying IR professional money to get listed in the exchange. If it is listed by paying, then you must exercise caution. Sometimes its good to avoid this factor by considering IR professional money as advertisement if company is reputed.

8. So don’t just give up the stock just for the above mentioned reason as you might be missing the best stock of your lifetime. Pay attention the movement of the share.

9. If you are considering being a part of a company by buying shares, then make a careful note of the recent news and its improvement, otherwise you might end up as the last one to hold the share whilst other have left the company.

10. Next thing to consider is the performance of the company. Were they really efficient in bringing the product to the market on time. Did they make right decisions on right time? Did they win the investors confidence?

11. The most attractive concept of penny share is that you need a very small capital. Imagine how many shares can you buy with GBP 3000 which is worth GBP 0.10 per share. Even a small increase in price will increase your profit. But you must remember, loss happens the same way. So its necessary to more vigilant while trading penny stocks.

12. Once you had started making profit, naturally your next step will be to increase your investment. You must go through the cycle once again. If you think the profit you earned has earned some reputation for the company, its better to increase the investment because nothing matches the experience. But from now on you must have an exit strategy as you know the movement of the stock and the behaviour of the shares with annnouncement of news.

13. Penny stocks are available in all the industries like oil and gas, mining and banks. Choose the one which suits you. Its always better to choose the industry about which you know well, which would make your trading experience smooth.

Basics of day trading

Eduardo Montero

Author: Eduardo Montero

Last Updated on March 30, 2022

UK is considered to be one of the world’s strongest economies but the 2008 recession proved that its not immune from the economic ups and downs. No matter what the condition of economy is, people are ready to take risk and one of them is day trading online.

Daytrading is just like stock and share trading but here the trade is done within a short period of time and it is considered to be one of the fastest way to make money in the share market. But remember, with lots of money comes lots of risk. Its been also reported that many traders have lost money is quick succession, so it is advisable to know all the risk and process of trading before even thinking about investing in daytrading.

But thats not where the story ends. If you have a good trading strategy and a strong guidance, making money in stock market is not a big deal at all. Follow the steps to have a better experience in daytrading.

1. Choose a few stocks in any industry or combined. (For eg. Oil and gas, Mining, Bank etc.)
2. Now, please be patient and analyze the stocks you have chosen
3. Analysis includes having a look at the RNS (Regulatory news service), company’s management, and share holders.
4. The next step would be getting inside the chat room, where you can talk to other buyers and sellers.
5. This is a good way to find out what the next big time company might be, but you have to know if the people with whom you are chatting are “share ramping,” which is the process of taking up the shares artificially.
6. These people who are called as “rampers” get inside the chat room, and convince all the other members to invest in a particular stock in which they might have invested already.
7. So you have to take the risk of guessing if this person is correct or not and if the information he provides is authorized or not. With the latest techologies and innovations, daytrading can also be a big trouble because of the nature of trading and could be potentially dangerous. But with your trading knowledge and professionalism in selling and buying shares, making profit from daytrading will be easy in no time.
8. The day trading should not be used by beginners, as the risk of losing money is too high. So start with normal trading stocks where you wait and see the results and get used to profits and losses.

Basics of spreadbetting

Eduardo Montero

Author: Eduardo Montero

Last Updated on March 30, 2022

1. Spread-betting is gambling, not a kind of formal investing. All you have to do is to gamble upon the movement of price (may be rise or fall) of the stocks, index or a commodity. You must note that if you are lucky enough, spreadbetting company might end up grabbing all your money and you might face unlimited losses.

2. One thing about spreadbetting that would make you smile is that its free of capital tax. Well, it might sound like a huge advantage but you must never forget to remember before analyzing the losses you might encounter.

3. Now coming to the process of trading, imagine a stock which has (selling) and offer (buying) price for the FTSE 100, with 1,012 and 1,016 respectively. Let the opening price of the stock be 1,016 and the closing price be 1,050. So now the difference between the two prices is what you trade on. To be more precise, the difference between 1,050 and 1,016 is 34. This difference is called spread. Say you have betted GBP 10 for every spread, then the profit you earn is GBP 340. Remember if the market goes the other way, you might end up losing the same amount.

4. In my honest opinion, it is always better to start with a demo instead of going for live trade right away. With lots of investors eager to do spreadbetting, companies are now offering virtual trading platform where you can trade using virtual money and get an idea how this really works.

5. Stop loss, one of the most beneficial features of any trading is available in spreadbetting as well. Stop loss always minimises you losses and reduces the risk of losing your entire investment.

6. You can also use spreadbetting as a long term trading instead of playing it as a short time gamble by betting with small values so that the reduction in prices doesn’t make a huge impact on you investment.

7. When you start to think to go for live spreadbetting, try to gather some past datas about the stock you are going to invest by analyzing its past behaviour as the risk involved in spreadbetting is too high.

8. In some instance, the spreadbetting trading use hedge to keep themselves immune from market ups and downs. For example, if you have invested GBP10,000 in a FTSE 100 tracker fund and if you are concerned that the market would fall, then what you can do is to hedge your position by selling the index on spreadbet. If the close of index is at 5386 then you can sell at GBP 1.86 which is nothing but (GBP 10000/5386). Now for every point the market falls, you can earn GBP 1.86 in order to cover all your losses while hedging.

What is CFD trading?

Eduardo Montero

Author: Eduardo Montero

Last Updated on March 30, 2022

CFD trading basics for beginners

CFD represents Contracts For Difference, that means it is a derivative product, where your profit depends on the difference in the price of stocks and shares. Imagine you are buying a share for GBP 10 and the price of the share raises to GBP 10.50, then you gain from the difference of price.
Which means if you had bought 2000 CFDs, then the profit you will make is GBP 1000. Now it must be clear that your profit depends totally on the difference of the share price, you profit with the rise in price.
With the risks involved, still cfd has lots of advantages:

1. Leverage is the top most factor what makes cfds so attractive to investors. Generally a leverage of 1 in 10 is offered but a leverage of upto 1 in 20 is offered by some brokers to attract investors. When you have such a big leverage, it is easy for the investors to trade with a small investment and make considerable profit. You might be trading stocks with 30 % return in profit per year which means with an investment of GBP 3000, you maintain a profit of GBP 1000. But in cfds, since you use a big leverage, you can maintain a profit of 300% with is GBP 10000.

2. Second reason why investors prefer cfd because unlike stocks and shares, you can profit even when the share price falls. As i said earlier, the cfd trading is done based on the difference in share price. So it doesn’t matter whether the market is bearish or bullish, you still make the profit.

3. Considering the costs and expenses in the cfd trading, it is very low compared to stocks and share trading because of the big leverage offered in the cfd trading. Interest and leverage are the 2 main expenses in the cfd trading.

4. One more advantage of trading cfd is setting up the option of stop loss. Stop loss is mainly to reduce your loss, because its a normal tendency of human to gamble further even if they feel the loss. So cfd gives the option of stop which automatically triggers the stopping of the cfd trading.

5. Unlike stock trading, in cfd trading there is an option of placing trade in the evenings. Which means you can set the trading amount and volume the previous day and prepare yourself for the next day. It is also very advantageous for the people who work and there are automatic systems available to trade cfds even if you are not before you personal computer.
There you go, we have analyzed the pros of cfd trading, and now to look at some expenses as i mentioned earlier.


When you using cfd for long position, which means holding the cfds overnight, interest is charged. Conversely interest is paid to you if you hold a short position. Normally the interest charged would be the rate plus 2%, and the interest paid would be rate minus 2%. Here the rate refers to the banks prescribed overnight interest rate. For instance the interest rate of a major bank could be 5% or in other words .05 per year. Now to calculate the interest, all we have to do is divide .05 by 365 and then multiply it by the number of days involved in trade, adn then multiply by the size of the trade. So imagine, your trade size is GBP 10,000, which you had been holding for 14 days, then the interest would be GBP 15. Not a big expense in my opinion. In long stand, cfd traders would not be even bothered about these small expenditures.


There is actually no concept of commission in cfd trading which makes even more advantageous to trade cfd. But there might be some situations where some brokers charge a small commission because of their years of experience and reputation. It might be as low as 0.15%. When you are trading at a leverage of 10 in 1, these small expenses doesn’t make much of impact.

What is stock trading? A quick guide.

Eduardo Montero

Author: Eduardo Montero

Last Updated on March 30, 2022

Stock trading for beginners.

Stock or share represents ones ownership of a company or a corporation. Depending upon the number or percentage of shares you hold, your role will be determined inside the company. When you have shares in small number, your role will be limited to an investor. If you hold a higher percentage of share, then you might be invited for a higher position.

As far as the stock trading is concerned, almost all the company trade their shares using online platforms and exchanges. In olden days, when these shares were traded, the practise was to give a certificate as a proof of ownership.

What is the point in trading stocks?

As I previously said, stock represents ownership of a company, so whenever the company makes profit, you will be awarded a part of profit depending upon the number or percentage of stocks you hold. Sometimes the profit is fixed as a certain percentage which is called dividend.

But you must remember that its upto company to share the profit as it is a general practise of most of the corporates to reinvest the profit and increase the share value instead of paying the dividend. This increase in share value is to further increase the confidence of the share holder and new investor.
The process involved in stock trading is quite simple. If you are buying a 1000 shares of a company for GBP1 and imagine it raises to GBP2, the amount you get back is GBP2000. So the profit you made is GBP1000. Remember, there will be some deductions for brokerage and when you use different currency while investing.

What is the way to trade stocks?

Most of the share traders use portfolio, which is nothing but the list of shares of different companies that you think is good to invest. It might not be something new. You must have watched a screen where you see the share price going green and red every second.

Next thing you must know is the ticker. Ticker is the shortform of a company, which is a unique identification of a company’s share in a particular stock exchange. Other thing you would see are three value against the share. The top price denotes the buying price of the share, the middle one indicates the average price of share and the bottom price indicates the selling price of the share.

Next thing to identify in the listing is the high price which means the highest price reached by the share on that day and low price which indicates low price. Some listing also indicates 52 week high price and low price which is an extra indication of the share’s performance.
You will also find some huge numbers like 250000 which indicates the volume bought and sold. If you carefully analyse you will be able find the close relationship between the volumes of stocks traded and the investors confidence.

Also you can find the previous day close price of the stock and the day’s opening price of the stock. These two price gives a clear indication of how the investors behaviour has changed and if you see a huge difference between these two prices, you must be aware that there is a potential release of news which might have a huge impact in the future of the share price.

You must also learn to follow the stock charts as you can grasp the past datas (upto 5 years) about a share and its behaviour. Also one important thing in stock trading is to be upto date with news. News like floods, riots can terribly alter the share price, depending upon the industry of the share. So vigilance is a better part of share trading.