You are able to buy and sell shares through multiple avenues including post, phone and online. There has been a huge movement towards online trading as it is significantly cheaper and a lot more convenient.
Buying and Selling Shares Online
When buying and selling shares online, the transactions are ‘execution only’ – meaning that you will not receive advice about your share transaction (something which is common with offline trading). When buying shares, there is an additional 0.5% stamp duty on top of the cost of share dealing.
While the cost of dealing with shares online is cheaper, the quality of your service may very depending on which trade dealer you approach. Some services will bundle deals throughout the day but will only execute the trade at a particular time (to keep their costs lower). The obvious problem with this is that you may not be able to sell or buy your shares at the price you had expected.
Almost all share dealers will hold your shares as a stockbroker in what is called a ‘nominee account’. This stops you dealing directly with the firm, but it does also mean that any bonuses gained from holding shares in your name are lost. These bonuses include certain perks that holding the shares can attract but do not include dividends – dividends will be paid to your ‘nominee account’.
Once you have set up an account with a broker, it can be difficult to switch. If you are interested in switching broker then make sure you find out the costs of doing so – most brokers will charge a fee per stock.
Buying and Selling Shares Cost
The cost of selling shares changes depending on what platform you are using. For example, share dealing by phone is always more expensive than share dealing online. For more information, learn about selling shares by phone. When buying and selling shares online, you can expect transaction fees to start from £5.00 and work their way up as you begin to buy and sell larger quantities of shares. If you are given a price lower than £5.00 then you will want to make sure that you are not paying for additional costs elsewhere or that the price is not fixed to rise in the future.
Consider this when Buying and Selling Shares
- Decide on a price that you are happy to buy or sell your shares at.
- Always set up a stop loss. I.e. if your trade falls below a certain price then force your account to close the trade and sell your shares.
- Do the shares offer a dividend?
- Do not invest more money than you are willing to lose.
- Share prices fluctuate heavily and can tank heavily and unexpectedly.