How does stock trading work in London?

Stock trading works by buying and selling stocks using money from your account. 

A stock is a kind of investment you buy into to be part owner of a company that gives you dividends (money) each year based on how much profit the company makes. 

You hope that the shares’ value goes up over time, allowing you to sell them at a higher price than what they were when you first bought them, meaning that there was an appreciation in their value.

When you sell your stock, any dividends (money) gained as part of those stocks are paid out to the shareholders (investors like yourself), and this forms what is called “the yield” or “dividend yield”.

It’s important to remember that not every company pays dividends and that dividends fluctuate from year to year.

Choose a broker

Choose a broker (a company like London Stock Exchange) with which you will open an account and link to your checking account (your money). 

Fund this brokerage account

Fund this brokerage account with as much money as you want to trade with actively. Fund it more if you want less risky investments or if you can’t absorb huge losses if one of your stocks doesn’t appreciate or gets meagre value.

Buying a stock

Anytime you want to buy a stock, fund the purchase using your brokerage account, and for every stock that goes up in value after being bought, sell them at a later date for a higher price than what they were worth when bought initially. 

You can also profit from a technical sale if you buy the right stocks at the correct market price. You made money on those equities as long as you didn’t wait so long to sell them that the value fell again.

To buy a stock, type in the name of the company you want to buy and how much money you want to spend on those stocks (1 share, 100 shares). 

It should show up as an active purchase in your account along with its current market value, which can go up or down depending on what other people are doing with that particular stock at any given time.

Keep buying

As time goes by and your stock keeps going up in value, keep buying more and more of it until you feel comfortable holding onto all of those stocks. 

Even if their price dips slightly, they will likely go back up again unless they earn no profit or become illegal. 

Selling a stock

To sell a stock, click on the balance of that particular stock in your account and to the right, it should say something like “sell 15 shares”, where 15 is how many stocks you want to sell. 

If you don’t want to sell anything, type in 0 (zero), and it should automatically cancel out all open orders to sell any of those stocks.

If done correctly, they should sell every one of those stocks at their current market value. It can go up or down based on demand over time, but this will also mean that the dividends (money gained as part of owning those stocks) are immediately paid out into your brokerage account, meaning there is no yield (no more money coming from them).

Alternatively, suppose you leave the order to sell your stock open at 15 shares (so you’re waiting for them to go up in value before selling them). 

Capital gains tax

Also, don’t forget there is Capital Gains Tax which you pay on any profits (e.g. money made) if and when and how long you hold onto those stocks even if their prices drop again after initially buying them, meaning it can be a high-risk but high-reward kind of deal.

In conclusion

Stock trading is a way to invest money into capital or companies willing to sell their stocks of ownership. On the New York Stock Exchange, investors trade with different stocks by giving buy-and-sell offers. 

The London Stock Exchange’s trading works otherwise because it does not have trading floors due to technological advancements.
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