Online share trading provides investors with the ability to execute trading in real-time and manage their positions using a variety of tools. Online trading, can be accomplished using a PC or MAC as well as mobile devises like a smart phone or tablet. There are several different financial instruments that you can use to attain exposure to the share trading market. This includes, purchasing shares directly, options on shares, futures contracts that follow shares as well as contracts for differences (CFDs).

Purchasing Individual Shares with an Online Broker

To own a percentage of the profits of a company you can purchase the shares directly from a stockbroker. An online stockbroker offers clients access to shares in companies. Each country has its own rules and regulations that cover stocks. Generally, the leverage that is available is low. For example, in the United States leverage on stocks, called Reg T, is 1.5 to 1.

The benefits of owning individual shares or ETFs is that you can receive a dividend from the company paid to you by your broker. The stockbroker you choose will likely be registered to trade stocks with an exchange. These exchange traded products eliminate any credit risk as you are dealing directly with the exchange as opposed to an over the counter product where you might have credit risk.

There are discount brokers as well as full-service brokers. Both will offer the ability to trade online. Most will also offer both computer platform and mobile accounts. The main difference are the commission costs. Some discount brokers offer free commissions. Full-service brokers charge a commission but offer research and trading ideas in exchange.

Using a Futures Broker

Many futures exchanges offer futures contracts on individual shares or indices. Futures contracts are the obligation to purchase an asset at a specified date in the future. Most futures contracts provide investors with leverage using a margin account. Leverage is created using borrowed capital. Your futures broker will offer you a margin account which will allow you to borrow funds to purchase or sell futures contracts. For example, a futures broker might offer you enough leverage that you can buy $100 of shares using only $10. Most futures brokers offer trading platforms that are computer based as well as mobile.

Using a CFD Broker

A contract for differences is a financial product that also uses leverage to help you enhance your returns. A CFD tracks an underlying asset. You are only responsible for the profits or losses that are the results of your trades. You are not responsible for owning the underlying asset. CFDs generally do not pay dividends. You want to make sure that your CFD broker is regulated. Additionally, many CFD brokers offer demonstration accounts which allow you to test-drive their system before you begin to risk your own capital. Many CFD brokers offer state of the art trading platforms that are browser based as well as mobile.

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