Archive for the ‘Day Trading’ Category

The Top UK Brokers for Trading US Stocks Online

ETX Capital Trading US Equities

There are many advantages involved with trading equities out of the United States. Not only can the exchange rates be more favourable, trading hours could also benefit those who already have full-time employment. It is always important to evaluate which brokers are regulated and provide platforms for trading these equities. We have gathered the list of the top UK regulated brokers for your convenience.

Featured Broker: 1. ETX Capital

(Regulated by The Financial Conduct Authority, UK #124721)

Utilising Trader Pro as well as the popular Meta Trader 4 platform, ETX Capital is one of the most popular options for those who want to trade US stocks. ETX Capital was first formed in 2002 and is trusted by over 50,000 traders. The majority of United States shares are presented to traders via American Depositary Receipts (ADRs). ETX Capital provide traders with a wide range of equities to choose from. Amazon, Facebook and Apple are a few examples of the blue-chip companies which are accessible.

American markets include the NASDAQ, the S&P 500 and the Dow Jones Industrial Index. Chart-based trading, one-click executions and guaranteed stop losses are a few other risk management tools are available at the disposal of every trader. Finally, leverages as high as 400:1 are options to consider. These carry a fair share of risk and should only be approached when they are thoroughly understood.

2. AvaTrade

Like the brokers listed above, AvaTrade offers American equities through a CFD trading system. Major exchanges include the Dow Jones Industrial Average, the NASDAQ and the NYSE. Some well-known equities within their repertoire include Apple, Coca-Cola and Google. Another worthwhile feature to mention is that AvaTrade provides a rather impressive spectrum of trading portals. These are:

  • ACT
  • Auto Trader
  • AVA Mobile Trader
  • Meta Trader 4
  • Meta Trader Mobile

This flexibility is intended to suit the needs of both novices and professional traders. AvaTrade has also embraced social trading as a portion of their existing architecture. Trading signals, commentaries, live news feeds and the capability to follow the actions of other investors are all significant benefits. This is particularly the case for those who may not be completely familiar with the American marketplace. As AvaTrade received the Best Broker Award from FX Empire in 2015, this company is indeed worth a closer look.

3. Core Spreads

Core Spreads provides two different platforms for the client to choose from. These are CoreTrader and Meta Trader 4. Note that CoreTrader is intended for spread betting while Meta Trader 4 is geared towards CFD positions. While this platform can be used to capitalise on indices and market-wide movements, Core Spreads currently enables the user to invest in over 500 American equities. A handful of examples include:

  • Apple
  • Facebook
  • Twitter
  • Goldman Sachs
  • Microsoft

All prices are updated in a real-time scenario and similar to other reputable brokers, mobile-compatible platforms are standard amenities. One final feature is that by following Core Spreads on social media outlets, “Core Points” are rewarded. These will determine any commissions for the following month.

4. London Capital Group

One defining feature of London Capital Group is that low minimum entry levels are ideally suited for conservative investors. Thus, even smaller portfolios can be catered to while the familiar Meta Trader 4 system provides the insight and clarity required to execute the right positions at the right times. Margins as low as 5 per cent are advantageous for those who hope to capitalise on a trade while only committing a small portion of their funds.

Scalping and hedging are both permitted and London Capital Group software is compatible with Windows as well as Android operating systems. Spreads as low as 2 cents can enable the astute investor to profit form even the smallest of movements.

5. Plus500

Plus500 is another respected platform. This portal was founded in 2008 and provides proprietary trading architecture (the Plus500 Web Trader). Those who are interested in trading American stocks will be pleased to learn that both small-cap and blue-chip options are available. Some common shares include:

  • Chesapeake Energy
  • Abercrombie & Fitch
  • Boston Scientific
  • Nike
  • JP Morgan

Please note that there are literally hundreds more to choose from. Plus500 also offers pre-defined limits in terms of profits as well as losses; ideal for the more conservative investor. A minimum deposit of €100 euros (or the equivalent currency) is required to open an account. Other useful instruments include email and mobile alerts, guaranteed fills, trailing stops and demonstration accounts. Leverages of 20:1 are available for all American equities. However, these should be approached with a certain amount of caution. Leveraging any trade can equate to sizeable profits as well as substantial losses.

6. StockPair

As the name hints, Stockpair specialises in binary pair options. In other words, two discrete equities are chosen. The investor then predicts which one will rise. If this prediction is correct, he or she will receive a payout. The advantage here is that money can be made even during bearish market conditions. The client only needs to predict the relationship between the pair itself. Some of the American stocks currently offered include:

  • McDonald’s
  • Coca-Cola
  • JP Morgan
  • Proctor & Gamble
  • Prudential
  • AT&T

A minimum deposit of €250 euros (or the equivalent) as well as an estimated payout level of 86 per cent (according to FX Empire) both enable Stock Pair to be another platform to consider.

These are some of the most trusted and reliable providers of American stocks to investors from abroad. Just as with international shares, there is always a certain amount of risk involved with any trade. Clients should be able to accept this risk before they open up an active account.

Spread Betting vs Share Dealing: What’s the Difference?

spread betting vs share dealing

Differences between spread betting vs share dealing and the pros and cons of each.

The most significant difference between them is that in share trading you will actually buy and own the asset, share or stock that you are trading in. With share trading you have the ability to then sell them for a profit or loss at a later date depending on the movement in value. With financial spread betting, you never actually own the share or commodity in any way, nor have any right to ownership over it. It is a form of market speculation, where the trader will speculate on the movement of the asset, as to whether the value will increase or decrease.

What is traditional share trading?

As previously discussed, in traditional stock trading, the trader actually owns the stock. For example, if a new company was formed, for example Company XY, then the trader could invest in the company by buying shares. The shares in the company are purchased, meaning that you hold stock and therefore partial ownership in that company.

When dealing in shares, you will buy the stock and wait for an increase in share value, when it reaches a higher value and you wish to then cash in on the profit, you will then sell at a higher rate than you bought the stock. This is how the profit is acquired. Consequently if the value of the stock decreased in value you would make a loss.

When you buy shares, if buying in the UK, you usually are required to pay a tax or duty of 0.5% on any transaction related to holding shares. This tax applies to buying shares whether they are done electronically or not. When you sell on shares or make a profit from them, for example dividends, you are also required to pay Capital Gains tax.

The pros of traditional share trading
-You own the share or commodity.
-It is easier to assess the market, and to gauge when to sell you shares to gain profit.
-In general, share trading is seen as a long term investment strategy.

The cons of share trading
-You have to pay both Capital Gains tax and Stamp Duty Reserve Tax on any shares transactions / deals.
-Shares rise and fall in value and it can take a long time to make a profit, so are not always suitable as a short term investment strategy.
-There is the risk of potentially losing your money should the company fail. Any investment you made in the company would be lost.

If you would like a list of top share trading companies, read our comparison of share trading brokers.

What is spread betting?

The first thing to note, unlike traditional share dealing, as detailed above you do not own the actual share, nor have any right to ownership on the commodity being dealt in. This means you do not own any stock in the company you are spread betting on.

The 4 Steps to spread betting

  • 1. Find a reputable and regulated spread betting broker like ETX Capital.
  • 2. Select the financial instrument you wish to spread bet on, for example Facebook stock.
  • 3. Look up the price of Facebook stock with ETX Capital. They will provide a buy price and sell price.
  • 4. Decide which way you think the Facebook will go, if up in value buy if down in value sell.
  • 5. Decide your stake, how much money you want to put down. The stake relates to the amount of money you could potentially gain or lose per point of movement when compared to the value of the share.
  • The pros of spread betting
    -If you implement a guaranteed stop loss / limit order you know how much your profit or loss could be, if you make a profit then there is no UK tax.
    -You can close the trade at any time, without being dependent on if you are making a profit or a loss.
    -You can trade on margin which means you only have to pay a fraction of the actual cost of trades.

    The cons of spread betting
    -You have to pay an initial deposit to cover any potential losses.
    -If you predict the rise or fall incorrectly, you losses can exceed you deposits.
    -Spread betting is not suitable for long term investment

    The following are top rated and regulated brokers that offer spread betting: ETX Capital , Core Spreads and Spread Co.

    If you would like to see our full list of the top spread betting providers, read our comparison of regulated spread betting brokers here.

    As with any investment, your capital is at risk and there is the possibility you could lose money.

    image credit:Rafael Matsunaga

    Swing Trading vs Day Trading: What’s the Difference?

    swing trading vs day trading

    Day Trading and Swing Trading: What Are The differences?

    In the world of trading there is typically only two main types of traders; those trade on long–term investments, and those who trade short–term. It is the latter that will be our focus for this article. Short–term traders can be split once again into various types, this article will focus on swing traders and day traders. As with all things in life, both swing and day trading have their pros and cons, and the pros of one method to an individual trader may be cons to another trader. So what is the differences? And what are the advantages of each?

    If you want more information about day trading brokers, we have included a comparison of the best day trading brokers here.

    What is Swing Trading

    Swing traders look to take advantage of swings in the various stocks, commodities, and currencies that they choose to trade in. Swing traders analyse their markets of choice and look for potential movement, perhaps in opposition to the current trend, perhaps movement away from stable, and seek to capitalise on that movement. These swings can take anything from days to weeks to resolve, placing a swing trader somewhere between a trend trader and a day trader in terms of time frames. Swing trading doesn’t typically offer as much of an opportunity for big gains as day trading.

    What is Day Trading

    The typical behaviour of a day trading involves more or less what you’d expect from the name. Rather than making investments which may take weeks, months, even years to pay off, day traders focus their attention on making smaller profits from a high number of trades. A day trader will typically analyse their market (or markets) of choice, perhaps using a charting system, and place dozens of trades in a single day. The aim is to make a profit by making mostly successful trades and capping the losses on the unsuccessful ones so as not to minimise the losses. Day trading is a purely short term affair, and as such, these traders will rarely hold onto trades over night.

    So Which is Better?

    As with many things in life, there is no “better”, as such, there is only what suits you best. For example, if you’re looking to make trading your full–time gig, day trading is probably the better option due to a higher potential for profits. Of course the other side of that coin is the higher risk of losing a lot of money. Day trading typically needs your undivided attention to properly monitor your trades and ensure you don’t miss out on opportunities, and that can result in a lot of stress. Spending day after day staring at computer screens intently is not everyone’s cup of tea. Swing trading, on the other hand, is a bit more relaxed. The longer time frame means a swing trader needn’t sit watching their trades play out, and can even trade alongside a full time job. It’s worth noting that, due to swing trades typically being held over night, the margins required are a little higher. For example, the maximum leverage of a day trade can be twice that of a swing trade, meaning more capital is required per individual trade in order to make a worthwhile investment. Swing traders are still at risk of significant losses, however. The method of trading cannot protect your capital from bad trading decisions or unlucky market swings.

    Another factor to consider is the initial cost. If you’re going to make a real effort at day trading, you will want to invest in the proper equipment and tools to give yourself the best chance. Charting software, computer equipment (multiple screens are a must) as well as various recurring expenses such as the cost of obtaining live price quotes. Swing trading meanwhile can be accomplished with little more than a standard computer and the typical trading tools available to all. With a little patience and diligence, a swing trader can get by with little to no investment. Swing trading typically yields lower rewards than day trading, so the investment needed to get started in day trading is just another risk to consider.

    Ultimately, if you’re going to choose between swing and day trading, it all boils down to how much you want to make, how much you’re willing to risk, and how much of yourself you want to give. Those who devote more time and are willing to risk more of their money will be in a position to reap greater rewards, but as always, your capital is at risk when you trade, no matter how you decide to do it.

    Where to Trade

    So you’ve decided whether you want to be a swing trader or a day trader, now you just need to pick a place to trade. Fortunately there is a veritable cornucopia of brokers online to help you achieve your trading ambitions, such as eToro, Plus500, FXPro, and many more. For those looking to swing trade in their spare time, sites like eToro and ZuluTrade are particularly suited due to their social component. On these services, not only can a swing trader use the platform’s tools to make trades, they can also see what other traders on the service are doing, adding an extra data point to their analysis. If day trading is more your bag, most of the available trading platforms have the tools you need, it’s just a matter of finding one you like. Perhaps there are different aspects of certain platforms that you prefer. If that’s the case, there’s nothing stopping you from using more than one trading service.

    For more information on Plus500, read our Plus500 review here.

    Fortunately, many of these platforms will allow you to open a “demo” account, or try a practice mode before ever trading with actual money. And, while this kind of trading isn’t recommended for those with little or no experience, it is still worthwhile for those who do have that experience to try a practice run of any new trading platform before taking the leap. As with all trading it is important to remember that your capital is at risk.

    image credit:pocketwiley