Buying and selling shares
You want to start investing in stocks. But how? First we look at where you can invest most profitably and then we give you all the necessary knowledge to get started right away.
Trading in shares is certainly a lot less complicated than it used to be, when you often had to go to a bank. Nowadays, you can easily arrange it online . Via an online broker, you can trade in all well-known shares. With a single mouse click, you can buy or sell your favorite shares. Compareallbrokers.com helps you find the best broker.
There are two methods to buy and sell stocks: physical stock trading (long term) or speculating on stocks (short term). First determine what suits you best.
Buy physical shares (long term)
When you choose to buy shares for the long term, you open a securities account with a traditional broker . If you want to be successful with shares in the long term, check the available figures of the companies in which you invest carefully. Of course, you want to be assured of the profitability of your shares in the long term.
Speculating on shares (short term)
You can also trade in shares in a more active way. You do this by speculating on the rises and falls of shares , for example with a CFD (contract for difference). With CFDs you can respond well to rapid price rises and falls.
An example: buying Unilever shares
The examples below show how to buy stocks for the long and short term.
An example of physical purchasing
Suppose you buy a Unilever share for €50 from a broker. This share is then yours. Over a period of 5 years, the value of your share increases to €75. If you decide to sell at that time, you will achieve a wonderful return of 50% (10% per year).
An example of speculation
Another option is to speculate on a price drop of the Unilever share by means of a CFD. If you speculate on price drops, you go short, if you speculate on a price increase, you go long. In this example, you choose to go short when the price of the Unilever share is €60. Three days later, the value of the share drops to €50. That means a €10 profit per share purchased.
A CFD is a so-called leverage product . Trading is done with a margin and you do not have to finance the entire underlying value of the share. Your return remains the same. Please note: speculating is a riskier way of investing. However, there are potentially higher returns. Make sure you have sufficient knowledge about this form of investing before you start.
Compare brokers and start investing in stocks
Are you excited about investing in stocks after reading this article? Use our comparator and find the broker that suits you best!