How Does It Work?

Share trading involves buying and acquiring ownership of a company's shares and subsequently selling them for a profit. Typically, you would establish a 'nominee' account for this purpose, and a stockbroker can execute trades on your behalf for a nominal fee. Most stock trading occurs on exchanges that list publicly traded companies, with trades conducted through spot or forward contracts. This strategy encompasses the direct purchase and sale of shares.

Investments are not limited to stock market indices and individual stocks. You can also invest in exchange-traded funds (ETFs) and mutual funds, or further diversify your portfolio by purchasing stocks and bonds. Alternatively, you may trade stocks using derivatives such as spread bets and contracts for difference (CFDs). This approach allows you to profit from both rising and falling share prices by taking long or short positions. When trading through spread betting or CFDs, you do not acquire ownership of the underlying shares; instead, you speculate on whether prices will rise or fall and position yourself accordingly.