Shares are priced by the market and reflect the current market value for a share at any given moment. As a share is bought, the price of those shares rises incrementally. Similarly, as a share is sold, the price of the share and the share market fall by the increment of the sale, thus the share price at any particular time is reflective of the intersection between shares being bought and shares being sold. This is the definition of market price, and given the liquidity of the share markets, traders can be satisfied that the price produced by the market is reflective of the going market rate – whether or not that price is in fact over or underestimating the true inherent value of the share.
Stock market trading is wildly popular across the globe, with billions traded in company securities and assets across many millions of investors. For the businesses selling their securities, stock market trading provides a key mechanism for raising finance, while also giving life to pensions, savings funds, and individual investment portfolios. But like any activity, stock market trading has both advantages and disadvantages that must be weighed up in determining whether it’s a worthwhile pursuit for the individual would-be investor.
What is Shares Trading?
Shares in a company are typically issued to raise capital at launch or for the planned expansion of a business and reflect proportionate ownership of a company or enterprise. By buying shares in a company, an investor legally owns a certain percentage of that company and may be eligible to exercise voting rights and receive a percentage of profits, called a dividend, from the company’s earnings. Share trading is sometimes referred to as Equity trading, as the owner of Shares has direct equity in the company they have chosen to invest in.
When you trade Shares at ETX you are speculating on the underlying Share price movement rather than owning any shares yourself. This means that you can trade on price movements using a Spread betting or CFD trading account and can open both Buy and Sell positions on a stock, for greater trading opportunities. Share trading is a diverse, exciting market with plenty of trading opportunities across a wide variety of sectors. Share prices can be influenced by a number of market events such as:
Mergers, acquisitions, take-overs, and special dividends – these events are largely grouped together as “Corporate actions”
Company news – For example, the launch of a new product, change in management, rebrands, and big campaigns
Earnings – These are the earnings a company reports each year which give the market insight into how profitable the business is and its health relative to competitors in the same space
Wider market events – These can include things like big news events concerning competitors, disruptions to supply chains, economic data, legislation changes, and trade tariffs
There is a huge selection of sectors to choose from when you trade Shares including heavily traded industries like mining, banking, tech, pharmaceuticals, retail, and telecommunications. Whichever Shares you choose to trade it is important that you have a strong knowledge of the industry you’re trading on and understand the issues that can move market prices.