If you’re ready to open a position on a share, here are three steps to follow:
1. Decide how you want to trade
Use leveraged products like CFDs to trade stocks.
2. Select your opportunity
Choose from over 16,000 international CFDs on shares and ETFs.
Or if you’d like to learn more about share trading, read our in-depth guide below.
How to trade shares in South Africa
Learn how the stock market works
The stock market refers to the collection of markets and exchanges where shares in publicly traded companies are bought and sold. The buying and selling of stocks works in a similar way to any other marketplace, where parties negotiate a price at which to exchange an asset.
Institutions known as stock exchanges facilitate the trading of publicly listed shares. To be listed on a stock exchange, companies often undergo an initial public offering (IPO). Once shares have been made available to the public, individual and institutional investors can start trading them.
You’d buy a company’s shares if you believe it will experience strong growth. To earn a profit, you’d then need to sell them at a higher price. If, on the other hand, you believe that a company is going to experience difficulties that could affect its share price, you may decide to sell your shares to lock-in your current profit or limit any potential future losses.
What moves the price of shares?
Before it goes public through an IPO, a company’s shares will have a set price range – often determined by the underwriter of the IPO (normally a large bank). This range will be set according to the anticipated interest in the listing, as well as the company’s fundamentals – including its revenues, its products, and its existing popularity.
Once the IPO has completed, fluctuations in the share price are caused by changes in the supply of and demand for the stock. If supply is higher than demand, the share price could fall; if demand is higher than supply, the share price could rise.
There is always a limited supply of shares in a company. It may make the decision to issue more shares, or to buy shares back from shareholders to reduce the supply, but the number of shares outstanding is always known.
There are a number of reasons that the demand for a share can fluctuate over time, including:
- Earnings reports. Companies usually release interim reports on their financial performance once every quarter and a full report once a year. These influence the company’s share price as traders and investors use figures including revenue, profit and earnings per share (EPS) as part of their fundamental analysis
- Macroeconomic data. The state of the economy a company operates in will affect its growth. Data releases such as gross domestic product (GDP) and retail sales can have a significant influence on company share prices – strong data can cause them to rise, while weak data can cause them to fall
- Interest rates. if interest rates are low, the stock market might see increased activity – despite the previous factors mentioned here. That’s because more people could turn to stocks and shares to achieve greater returns than they might otherwise be able to if they saved their money in a bank account
- Market sentiment. Share price movements aren’t always based on fundamental analysis. The view that the public, as well as market participants, have on a particular stock can also cause demand to fluctuate. This is how speculative bubbles are formed
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Discover how to trade shares
With us, you can trade stocks by speculating on a share’s price movements with derivatives like CFDs.
With CFDs, you can enjoy tight spreads and limit your maximum risk by setting a guaranteed stop-loss1 before opening your position. CFDs can also be used to hedge your equity portfolio against future losses.
CFDs are leveraged products, which means that you won’t need to commit the full value of the position upfront – just a deposit, known as margin. But, bear in mind that leverage can increase both your profits and your losses.
With CFDs you can ‘buy’ (go long on) the shares if you think the stock price will rise, or you can ‘sell’ (go short on) the shares if you think the price will fall.
Shorting with derivatives can be an effective way to hedge against downward price movements in your non-leveraged investment portfolio, or it can be a way to generate profits outright from shares that are falling in value.
However, please note that short-selling is a high risk trading method because share prices can keep rising – theoretically without limit. This means that when taking a short position, you stand to incur unlimited losses. If you are using derivatives, you can attach stops to your positions to protect yourself.
Build a share trading plan
A good trading plan can be hugely beneficial to your stock trading, as it will outline exactly what your aims are, how much capital you have at your disposal and what your appetite for risk is.
The aim of a trading plan is to take the emotion out of your decision-making, as well as providing some structure for when you open and close your positions.
Choose a stock or ETF CFD to trade
Understand the risks and charges
Open a stock CFD trading account
We’ve got a truly market-leading shares offering– with over 16,000 international shares and ETFs, as well as a host of global indices. With us, you’ll also benefit from our out-of-hours All Session stocks offering, which lets you take a position on over 70 leading US shares when you otherwise wouldn’t be able to.
So, if you want to take a position on shares, you’ve come to the right place. Traders have been using our services to access financial markets since 1974, and today we offer CFDs to retail traders who are looking to manage their next opportunity.
Find a stock CFD trading opportunity
- Stock market screener. Filter shares by country, sector or index – and sort by EPS, market cap and more
- Technical analysis tools. Use our powerful HTML5 charts that include indicators such as Bollinger bands, RSI and moving averages
- News and trade ideas. Find information on stocks to watch and market opportunities from our team of expert analysts and in-house financial writers
- Trading alerts. Set notifications for when a share price reaches a certain level or moves by a certain amount
Open, monitor and close your first position
Once you have chosen a stock to focus on, you can open your first position.
Can I make a profit trading stocks?
You can make profit share trading by correctly predicting whether a company’s stock will rise or fall in value.
If you decide to trade shares with derivative products, you could take advantage of falling market prices by going short.
How can I trade shares online?
You can trade shares online via the IG trading platform, which offers you a fast and smart way to trade via your web browser. You will have full dealing functionality and be able to open, close and edit positions with just a few clicks.
Learn more about the IG online trading platform.
How can beginners start trading or investing in stocks?
Beginners can start trading or investing in stocks by learning as much as possible about the market before they open a position. One way to do this is to take a look at IG Academy’s range of online courses.
Another way for beginners to gain confidence trading stocks is by opening an IG demo account. They can build their strategy in a risk-free environment by practising trading with £10,000 in virtual funds.
How do you buy shares in a company?
What are the costs of share trading?
Develop your knowledge of financial markets
Find out more about a range of markets and test yourself with IG Academy’s online courses.
1Tax laws are subject to change and depend on individual circumstances. Tax law may differ in a jurisdiction other than the UK.
2Trade in your share dealing account three or more times in the previous month to qualify for our best commission rates. Please note published rates are valid up to £25,000 notional value. See our full list of share dealing charges and fees.
3Negative balance protection applies to trading-related debt only and is not available to professional traders