Online stock trading
All you need to know about trading stocks and stock CFDs with FXTM
* Trading is risky. Your capital is at risk.
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.
Key takeaways
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.
Online stock trading
Getting started in online stock trading has never been simpler, with regulated trading platforms available at your fingertips.
Want to own some of the world’s most well-known companies?
Our new stock trading service gives you access to directly invest in, and therefore own a piece of, huge household brands including Apple, Facebook, Nike, Netflix, Zoom and Tesla.
Online stock trading with FXTM is also your opportunity to trade the brands you love directly and own the moving stocks.
Stock brokerage
In the past, a traditional ‘stock broker’ would refer to the person who facilitated the buying and selling of stocks. Think of them as a middleman between the trader and the actual stock exchange.
There are different types of stock trading brokers. Some, known as execution brokers, will follow your instructions without offering any investment advice. Others take complete control by deciding what stocks to buy and sell on your behalf. These are known as discretionary brokers.
When you trade stocks with FXTM, you can buy, sell and hold company shares from global brands – commission free! As soon as your account is created, you’ll have access to real time pricing on hundreds of the most commonly traded US stocks. And if you want to trade a stock you don’t see listed, give us a call and we can add it for you!
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
Analysis tools
Interactive, live charting offers numerous technical indicators which can be applied to various timeframes. The options are now light years ahead of anything seen just a few years ago, and caters for all types of online stock trading.
Order types
To help and improve risk management, both trading platforms have different modes of trade execution. A combination of more advanced stop and limit orders can also be accessed in the newer MT5 trading platform.
Automated trading
Do you want to write your own trading program? Or develop custom management signals? Comprehensive back testing and even a marketplace to buy or rent signal services is possible.
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.
Trade stocks with MT4 and MT5
FXTM offer stock trading on MT5, while those interested in stock CFDs can do so on the MT4 platform. Both platforms are innovative, user friendly and can be customised to suit your individual trading needs and strategies.
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.
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!