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Why trade share CFDs?
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Why trade share CFDs with City Index?
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How to trade share CFDs?
Take advantage of global equity market opportunities with City Index. Trade over 4,500 share CFDs with award-winning platforms, and expert market analysis.
If you believe that a share such as Commonwealth Bank will rise in price, you can place a buy trade. If the prices rises, you will make a profit for every point that Commonwealth Bank moves up. If the market falls, then you will make a loss for every point the share price moves against you. Our trading platform tells you in real-time how much profit or loss you are making.
You can also trade on a falling share price. If you think Commonwealth Bank will fall in price, you sell to open the trade. Your position will stay open as long as you want it to, providing you have enough money in your account to cover the margin required to keep your trade open.
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Trading on share prices with City Index
- City Index allows its customers to trade on the price of over 4500 shares through CFDs
- CFDs allow trading without the costs of owning the actual shares
What are shares?
Owning shares mean that you own a piece of that company and as such, you are entitled to your share of the company's earnings as well as any voting rights attached to the stock.
Companies sell shares because they want to raise money, possibly to expand their business further. They can do this by taking out a loan or issuing bonds, or by selling part of the company - this is known as “issuing stock”.
Shareholders hope that after buying stock in that company, the company’s performance will improve and the shares will be worth more in the future. Because shares provide their owners with a share in a company, they are also referred to as equities, or the equity market. This is to differentiate them from bonds, which are also issued by companies, but do not provide equity.
An Initial Public Offering (IPO) is when a company’s stock is first issued. Markets often get excited by initial public offerings, or IPOs. This represents the first time a stock is listed on the market. shares are sold initially via subscription, where investors can apply for shares. After that, they can be bought and sold on the stock market as usual on a stock exchange.
Shares can be bought or sold on a stock exchange, via a broker. Well known stock exchanges include the New York Stock Exchange (NYSE), London Stock Exchange (LSE) and NASDAQ.
Shares pay out dividends to their owners. This is usually done on a regular basis – e.g. quarterly. It represents a share of the company’s profits being paid back to its ultimate owners, the shareholders. Companies are not obliged to pay dividends, but many do so on a regular basis, which means their stock is also prized because of its income characteristics.
The life of a big company is not a smooth one, and there are a number of important events that affect the price of their shares, which traders/investors need to be aware of:
- Mergers between companies or the acquisition of one company by another
- Directors’ dealings – when directors buy or sell their own shares in the company
- Rights issues – issuing more shares to the market to raise more money
- Share buy-backs – when a company starts buying back its own shares, it will reduce the number of shares available on the market
- Special dividend – a dividend paid out by companies when they are feeling particularly cash-rich, not a regular dividend
- Share split – a company splits shares into smaller ones, frequently because they are becoming too expensive which can limit trading
Who trades shares?
Shares can be bought and sold openly by retail investors through a stock exchange using a broker. However many shares in companies are bought by financial institutions such as banks, pension funds and institutional investors.
What affects the price of a share?
The price of a share can be affected by many things including:
Earnings are the profits a company makes and has to report on a regular basis. Investors look at a company’s earnings to see whether they are better or worse than expectations.
- News about a company
News about new products, changes in management, change in strategy can all affect the share price.
- News on external factors
News regarding the company’s industry, peers and trading conditions can all affect the supply and demand and therefore price of that stock.