To trade shares you can either use a traditional stock brokerage firm (such as IG) or you can use a CFD service, such as AvaTrade We'll explore the pros and cons of both approaches in a moment.
Currently, IG charge a minimum of £5* per trade for buying and selling shares online, while AvaTrade charge 0.2 above the spreadThe spread is the difference (in pips) between the buy price and the sell price.
Example: If the current buy price of EURUSD is 1.0004 and the sell price is 1.0003, there is a 1 pip spread. for stocks such as TSCO
Pros & Cons of Trading Tesco shares (TSCO) as a CFD
A CFD (or 'contract for difference') is a way of trading instruments like shares without having to own the shares. Here are some of the pros and cons of CFD trading compared to using a traditional stock brokerage.
- The main advantage of a CFD broker is the leverage they offer their clients. This means that a trader would require a much smaller account sizes relative to the size of a trade in comparison to a traditional share dealing broker.
For example, offer leverage of 1:10 on Tesco shares. This means that at the current price of £187.09 per share, to buy 1,000 Tesco shares with no leverage, it would cost a total of £187,090. However, using leverage of 1:10 , a trader would only require an account size of £18,709 to place the trade with a CFD broker like AvaTrade
- CFD brokers allow traders to go long or short, which means a trader could benefit from rising and falling markets.
- CFD brokers usually do not charge a commission and instead have their fees included in the spread.
- CFD brokers like AvaTrade that offer the MT4 platform, allow clients to use expert advisors to automate their trading strategies.
- UK shares that are purchased as a CFD are not liable for the usual 0.5% stamp duty payable with a traditional share purchase (please note that tax laws can change and are subject to individual circumstances).
- Unlike traditional brokerages that only offer stock trading, CFD brokers like AvaTrade give access to a wide variety of instruments like stocks, commodities and currencies.
- As mentioned, leverage is a double-edged sword that can magnify both gains and losses. And as with all trading, traders are at the risk of the markets moving against them.
- CFD brokers typically charge an overnight fee for holding a long position overnight. This is essentially the cost of borrowing the money from the broker to purchase the shares on margin. There would be no overnight fee if you closed the position on the same trading day. Therefore, this would only be a disadvantage if you are not a day trader or intraday trader.
For example, AvaTrade currently charge an overnight financing fee of 2.50% for individual equities. This means that for the example trade above, it would cost a trader £12.81 every day the position was open.
For further information on trading stocks as a CFD, visit out "trading stocks as a CFD page". It is important to remember leverage can work both ways and magnify gains and losses.
*All information collected from http://www.avatrade.co.uk/, see website for full terms and conditions. Your capital is at risk. Last updated on 20th March, 2017.
Tesco: Key Stats & Background Information
Tescoshares are currently priced at
£187.09, after opening the day at
£186.30. As of
8,190 million shares available, bringing their market capMarketing capitalisation is the value of a publicly traded company, calculated by multiplying the current share price by the total number of shares available. to
This market cap makes Tesco the 35th largest stock on the FTSE 100 index by market capitalisation. In the past 30 days, the Tesco share price has increased by 1.76%, from £183.85. In the past 90 days, it has ' ; increased by 6.66%, from £175.40 to the current price of £187.09.
In terms of trading activity Tesco is the 12th most actively traded stock in the FTSE100, with an average of 13,636,046 shares being traded per day.
Tesco had a profitafter tax for the financial year ending 31/03/2016of £216 million, an increase from a loss of -£5,664 million for the financial year ending 31/03/2015, an overall 104% change in profit after tax.
Tesco was listed on the London Stock Exchange on
December 23, 1947, and can be traded on Monday-Friday between 8am and 4.30pm GMT (UK time).
Tesco paid a dividend of 0.00p in 2016, a decerease from 11.29p in 2015.
Top 10 FTSE 100 Companies by Trading Volume
|Lloyds Banking Group PLC||130,902,000|
|Vodafone Group plc||39,531,850|
|Merlin Entertainments PLC||19,446,379|
|Taylor Wimpey plc||17,749,913|
|International Consolidated Airlns Grp SA||16,241,190|
|HSBC Holdings plc||15,824,103|
Top 10 FTSE 100 Companies by Market Cap
|Royal Dutch Shell Plc||£204,563,655,294|
|HSBC Holdings plc||£150,694,136,584|
|British American Tobacco plc||£111,513,353,057|
|BHP Billiton plc||£80,806,259,623|
|Rio Tinto plc||£69,035,652,242|
Comparison of Tesco's EPS & P/E Ratio with other Food & Drug Retail companies
Tesco has a price/earnings ratio of 53.85. For comparison, J Sainsbury's P/E ratio is 11.29 and WM Morrison Supermarkets's P/E ratio is 22.46. Tesco's basic earning per share from continuing operations for the 31/03/2016 financial year was 2.77p, which was a decrease from the previous financial year of 18.16p.
|Company||Basic - EPS||P/E Ratio||Market Cap (Million)|
|Tesco ( LON:TSCO)||2.77p||53.85||£15,323|
|J Sainsbury ( LON:SBRY)||23.90||11.29||£5,394|
|WM Morrison Supermarkets ( LON:MRW)||9.51||22.46||£5,510|
*Information is provided "as is" and solely for informational purposes, not for trading purposes or advice, and may be delayed.
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