TRADING STOCKS & SHARES

Trading stocks and shares is not always easy. However, if you are looking to trade then it is worth having a look at some of the easiest ways to access the global stocks and shares markets.
Many investors are turning to spread trading. With spread trading it should be noted that, as with all forms of speculation, there is a downside and you can lose more than your initial investment.

Having said that, spread trading, also known as financial spread betting, offers tax efficiency as well as quick and simple access to access to World markets.

You can generally trade US, UK, German and French stocks from the same account. In addition, investors are normally able trade a range of stock market indices, currencies and commodities markets.

All of this is tax free*. You are not actually buying and selling any assets or rights or stocks. With spread trading you are merely speculating on the future price of a financial market.

A further benefit in the volatile currency markets is the fact that financial spread betting lets you trade a market in both directions. You do not have to bet on markets to go up. If you think the price of Microsoft shares will go up you can bet on it to go up. If you think the price of Vodafone shares will go down you can bet on the future price to go down.

Yes, there are a good number of positives to this form of trading but you need to remember the downsides. Familiarise yourself with the risks. Please ensure that spread trading matches your investment requirements. Spread betting carries a high level of risk. Seek independent advice where necessary.

What other aspects should you consider? Most traders and investors have their own rules and tips to guide their investments. Here are a few of the more common ideas.

Put a plan together before you trade. I include the markets I am going trade, how much I am prepared to risk and, naturally, the profit level I am aiming for. With most spread bets I also plan my Stop Loss level to protect my downside. I prefer to plan my Limit Orders level to help lock in profits.

Spread bet on the companies and markets that you are most familiar with. If you have little experience of the French equities markets but have a good appreciation for the UK shares market then you are probably better off trading UK shares.

If you do decide to trade, note that your emotions can make trading difficult, especially after you lose a trade. Using orders like Stop Losses and Limit Orders can help control trading decisions even when things go wrong. Having a trading plan and sticking to it will naturally help. And remember that ‘revenge trading’ or ‘chasing losses’, ie trading after you have just lost in order to recoup your investment, will often result in two losing trades.

* Based on current UK tax law, if you pay tax in another jurisdiction then tax law may vary.

A leading financial author writing from the heart of London’s Canary Wharf. Thomas Bainbridge is a respected commentator on the UK spreads and stocks and share trading markets.