Traditionally, trading shares and stocks are one of the best investments for traders the world over. Shares and stock trading span across different industries, sectors, and countries. Before now, the market was predominately dominated by hedge funds managers, major financial institutions, and private investors; thus, blocking entry-level traders from accessing the market due to the relatively high cost of managing a portfolio and the huge funds it required.
With that in mind, we will take a look at the benefits of trading shares and also offer some tips and strategies to leverage in order to successfully manage your portfolio. But before we dive deeper, let’s quickly take a look at what shares trading means.
What is Shares trading?
During the launch of a company, shares are issued basically to raise capital for expansion. If you buy the shares of a company, you indirectly own a certain percentage of that company and also have voting rights. Plus, a dividend would be paid to you from the company’s earnings and profits.
Shares trading can also be referred to as equity trading since owners of shares in a company have direct equity in the same company. The prices of shares are usually influenced by the following market events:
- Corporate Action: This event can be described as company takeovers, acquisitions, mergers, and special dividends.
- Company News: Company news like change in management, the launch of a new product or service, big campaigns, and rebranding can influence the prices of shares.
- Earnings: A company’s earning can affect the prices of shares.
- Wider market events: Wider market events include supply chain disruption, change in government policies, trade tariffs, as well as an economic date.
Benefits of trading shares
- Portfolio diversification: Trading in shares would enable you to diversify your portfolio. Plus, you would also be able to take a short or long position for your stock of interest.
- Low entry requirement: As we mentioned earlier, shares market was predominately dominated by big financial intuitions, private investors, and hedge funds managers. But today, the situation is no longer the same. With as little as $50, you can hit the shares market and start making waves.
- Online Trading: You can trade the shares of big companies like Google, Apple, and Lloyds right from the comfort of your house or office.
- Speculate on falling markets: As a shares trader, you would have the opportunity to speculate on rising and falling markets.
- Offset potential losses: If you have an existing portfolio and you suffer any loss, you can use shares trading to offset the losses.
Which Shares Is Perfect For me?
There are hundreds of shares on the market for you to choose from. To get an idea of the type of shares that is perfect for you, we have listed some shares from major countries of the world.
If you are interested in trading the shares of UK-based companies, the following are some of the major shares to consider:
- Rio Tinto
- Anglo American
- BHP Biliton
- Lloyds Banking Group
- BP Plc
The US market is one of the best in the world. The market boasts of heavily traded shares, with lots of money-making opportunities for newbie traders. Some of the major US shares are:
- Pfizer Inc
- Tesla Motors
- Google Inc
The following are some of the best European shares to consider:
- BNP Paribas
- Societe General
- Deutsche Bank
- Volkswagen AG
- Banco Santander
As you can see, it is highly profitable to trade in shares both for short and long term basis. There are a lot of shares out there for you to take advantage of. Whichever share you decide to trade, ensure you have full knowledge of the industry before committing your resources.