FXI Online Stock Trading GuideFXI Online Stock Trading Guide

GUIDE | TRADING BASICS | BEGINNER

Online Stock Trading

All you need to know about trading stocks and stock CFDs with FXTM

Trading is risky.

Stock Trading

This financial market is now more accessible than ever, as technology allows traders to buy and sell stocks anytime, anywhere. Taking trading positions may involve ownership of the underlying share, or using leveraged products such as CFDs to sell stocks the trader doesn’t actually own.

Stocks and Shares

Historically, ‘shares’ suggested a more specific meaning – referring to the ownership of a certain company. A trader might tell their broker to buy 100 shares of Facebook.

Shares correspond to a unit of stock, with one share being the smallest denomination of a company’s stock.

‘Stocks’ refer more exclusively to securities traded on a stock exchange. This implies companies which are publicly traded e.g. ‘blue-chip’ stocks or ‘small-cap’ stocks.

Digging deeper into this, owning a ‘stock’ will commonly signify ‘common stock’ which are the shares of ownership in a company. They will confer a claim on profits as dividends, and also voting rights.

Online trading

Advances in technology now make it possible for anyone with a smartphone or internet connection to access the financial markets and start online stock trading.

With some trading capital and a basic understanding of how the market works, you can participate in equity trading along with investment banks, hedge funds and other traders.

The growth and size of online share trading

To appreciate the growth and size of online share trading, we only have to look at the largest online trading platforms in the US. For example, the top two who merged a few years ago hold over $5 trillion in client assets, more than 24 million brokerage accounts and execute nearly two million trades on a daily basis.

The size of online market trading has grown hugely in recent years, yet it is not surprising

When you consider how convenient it is now to get started and the range of different contracts you can trade.

As well as stock market trading, our traders now have access to CFD trading in foreign exchange, commodities and crypto currencies. Check out FXTM’s online offering and all the contracts you can trade with them.

What are the best characteristics of an online broker?

Low costs

Let’s be clear here — the more a broker charges in commissions, the less you will have in your pocket.

Administration fees and overnight charges may impact your profits, while having a low account minimum also lets you start trading earlier.

Ease of use

The ability to trade anytime, anywhere on a platform with an up-to-date interface is crucial. The ability to customise and personalise also helps to build confidence.

Trading Tools

Access to free technical analysis and live charting packages could help you to make swift and effective trading decisions on the type of shares to buy.

Research

In-depth daily market analysis can help you to keep track of market moves and further develop your understanding of stock trading.

Education

Insights from experiences in-house analysts and online training courses are a great way to learn and improve your long-term skills.

What can FXTM offer me?

At FXTM, we offer the resources every trader needs, no matter your experience level. For those that are brand-new to trading, we offer a wide-range of free educational resources to get you started.

Already at home in the markets? Check out FXTM Trading Signals, an assortment of technical analysis tools designed to help you spot trading opportunities as they arise.

Our knowledgeable market research team also provide Daily Market Analysis, designed to help our traders understand the price movements of the global markets and plot their next move.

Online Trading Platforms

Powerful platforms and tools have transformed how traders interact with the financial markets. These platforms act as a user interface, connecting traders with an online broker where they can view live prices, place buy and sell orders or monitor existing positions – all in real time.

FXTM offer the most popular platforms in the industry — MetaTrader 4 and its updated sequel, MetaTrader 5. These intuitive platforms allow traders to seamlessly connect to the markets from a wide variety of devices, on-the-go or from your desk.

Both MT4 and the MT5 offer a hugely enriching trading experience with a multitude of features, for both beginners and more experienced traders alike.

Main features of online trading platforms

Invest in the brands that you love

With FXTM stock trading, you can choose from some of the best-known brand names on the NYSE and Nasdaq. You’ll also receive free access to real time price data, and real-time trade execution to help you make the most of your investments.

CFDs

The rise of simple financial derivatives based on an underlying market have opened up financial markets to a huge mass of people who may not have accessed them before. The two key points of these instruments, or CFDs (Contracts for Difference) are:

  • You buy or sell contracts which represent an amount per point in that market
  • You can make profits without actually owning the underlying asset. Trading and dealing ‘physical’ stocks mean you need to take ownership of the underlying stocks.

Rising and falling markets

CFDs let you trade either side of the market. You can sell (go short) if you think prices will fall, or you can buy (go long) if you think prices will rise. In effect, you are buying or selling a number of units of your chosen financial instrument, depending on your prediction. You are not selling or buying the actual share.

Leverage

CFDs allow you to open positions with a degree of leverage. Essentially, you gain exposure to financial markets without having to put up the full cost of a position at the outset.

For example, you might only have to fund 20% of the cost by using a CFD. Remember, of course, that with reward comes risk. Both your profits and losses can be magnified compared to your initial outlay.

Share Dealing vs Share Trading

Traditional share dealing has existed for centuries. The first joint-stock company was formed in 1602 when the Dutch East India company began trading. A shareholder owned a proportion of the business depending on how many shares they purchased, and were issued with a certificate of ownership.

The first actual stock exchange was formed in London in 1773, with the NYSE founded 19 years later.

The amount of business flowing in and out of the US led to multiple companies trading, and the NYSE gaining a dominance it has usually maintained.

Share dealing

This means the trader will buy shares in a company and hope for an increase in the share value, in the hope of making a profit. The shares in the company are purchased, meaning that the trader now holds stock and therefore has partial ownership of that company.

The holder might also benefit from dividend income, even if the stock has lost value and fallen in price compared to when the holder purchased it. Generally, shares rise and fall in value and it can take some time to make a profit, which means share dealing is more of a long-term investment strategy.

Share trading

Often referred to as CFD trading, this means the trader does not own the actual share, nor have any right to ownership. The trader is simply speculating on whether the stock price will rise or fall.

This type of trading mirrors the underlying assets, but also gives the trader the ability to go long and crucially, short in expectation that prices will fall. The use of leverage when trading CFDs also frees up a trader’s capital.

Register to trade stocks

Open your account or get back into trading right now.

How to Trade Stocks with FXTM

The task of choosing what stocks to buy and sell is one of the most exciting elements of online trading. With an FXTM stocks account, you’ll have access to hundreds of the most commonly traded US stocks. If there’s a US stock you want to trade that you don’t see listed, just give us a call and we’ll add it for you!

Get started in just 3 simple steps

Start by completing the simple registration form. It just takes a minute and you only need to provide a few details. Once you’ve entered your information, click ‘Send PIN’ to receive your individual access code by email and SMS. You can then enter your PIN into the relevant field in the form.

Click ‘Register Now’ and you’re good to go!

You’ll also receive your login details to MyFXTM, which is your own personal portal within FXTM where you can choose your account type and manage your trading. To start trading, you’ll need to visit MyFXTM to verify your profile.

To verify your profile, we’ll need a clear colour copy of both an Identification document (such as your passport) and a Proof of Residence document (e.g. bank statement or utility bill). We’ll need to see copies of the front and the back of these documents.

To trade US stocks, we’ll also need you to give us your consent to send a W-8Ben form in your name, in accordance with the US Internal Revenue Service (IRS).

To access your MetaTrader 5 platform, you’ll need to make a minimum deposit of just $500. Once you’ve done that, you’re ready to choose your stocks and start trading!