Share trading is essentially the buying and selling of portions of a company. It is a form of investing. In the internet age, it is something anyone can do, quickly and easily, online. For those who are well-informed, share trading can bring better returns than putting your money in the bank. But it can also be unpredictable and volatile. Share trading is a risky endeavour. So it is important to be as well-informed as you possibly can be at every stage.
You can set up an online trading account with a registered stockbroker and start trading almost immediately. You’ll need a few hundred pounds to get started and there’s a small admin fee for each trade. But to do it well, you need to get educated and stay continuously educated about how to maximise opportunities, choose trades and understand the sectors and companies that you invest in. There are also trading apps and platforms like the tesler app that monitor international financial and trading markets providing intelligence and spotting patterns. With experience and dedication share trading can be anything from a way to invest your spare funds, to a full-time entrepreneurial opportunity.
So how do you chose companies to start investing in? Here are some tips to get started:
The net worth of the company
The net worth of a company is its value, taking into account the balance between assets and liabilities. In other words, if you had to close the business tomorrow and pay all debts and outstanding costs, what would you be left with; that’s the net worth.
The net worth is a key indicator of how healthy and resilient a company is. If it was hit by a crisis or significant business loss, would it be able to withstand it? The trend is also important; a healthy company’s net worth will be rising over time and show a more positive upward trend than their competitors.
The authenticity of the company
Authenticity is about trust and reputation. Is it what it says it is, can it meet its brand promise? In many sectors those elements are essential to the company’s success.
One of the UK’s most successful jewellery and gift-ware chains was devastated after comments from its Chairman undermined trust in the brand. In an after-dinner speech, Gerald Ratner, of the Ratners chain said: “People say, ‘How can you sell this for such a low price?’ I say, ‘Because it’s total crap.’” He added that Ratners’ earrings were “cheaper than an M&S prawn sandwich but probably wouldn’t last as long”. £500 million was wiped from the company’s stock and all 320 stores closed down a few years later.
Not surprisingly customers lost trust in Ratners. If there is a disconnect between what a company says and what it does; or how it presents itself publicly compared to privately, chances are it will be found out and lose the confidence of its customers, with a resulting impact on its share price.
Company research and share performance
There are a number of free tools, that provide a rich array of information about listed companies. Those tools will help you to make a more informed decision about where to buy shares and then to keep on top of internal and external changes that could impact on the share price. For example live lloyds share price, tracks Lloyds company share performance, literally on a minute by minute basis as well as longer-term trends. With tools like this you can have instant access to company news, indepth research, key people and competitors.
There is no certain formula or short-cut to success in share trading, but you can improve your odds by doing your research and using the best online tools. That won’t eliminate risk but can reduce it by a considerable amount. The rest is down to putting the time in and, the hopeful appearance of your friend, lady luck!