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How to Trade Equities

The value of a company’s equities is very much driven by how investors view its performance, with the likelihood that traders will base a decision whether to buy shares in a company based on their analysis of the company’s future performance. If those shares then increase in price, the trader can profit by selling them for more than he purchased them. On the other hand, if that company instead performs poorly and its share prices decrease, if the trader decides to close the trade at this lower level, they will incur a loss.

Alternatively, if a trader believes a company’s share price is likely to fall in the future, they may want to sell that company’s shares in order to buy them back for a lower price at a later date.

Trading Equities: Trading Hours

Companies can sometimes list their shares on stock exchanges other than their domestic exchange. For example, Sony is listed on Nikkei 225 and the New York Stock Exchange. As stock exchanges are not open for 24 hours a day, trading of a stock is limited to the trading hours of its stock exchange(s). For example, an investor can only trade Royal Mail shares during FTSE 100 trading hours, between 08:30 and 16:30 UK time. However, traders can still place buy or sell orders outside of these time periods to be initiated when the markets open.

Trading Equities and Industry News

Trading Equities and Industry News

Trading Equities and Industry News


It can be extremely helpful for equity traders to try and get some level of understanding of a company’s performance levels in order to try and more accurately predict the future movement of its shares. Researching and closely tracking news events and reports associated with industries and businesses related to the shares in your portfolios could very well be key. News updates within a sector can cause sudden and dramatic market fluctuations and you may be able to reduce your risk by keeping yourself well-informed of relevant industry news.

However, there are no certainties when it comes to trading and industry news may not affect a share’s price in the way you expect. For instance, if a company’s earning report demonstrates a steep decline in its profits, a trader may assume that its share price will quickly decline too. However, if that same company shortly afterwards announces plans to buy back a large number of its shares, it is very possible that the firm’s share price would rise, regardless of the results from the last few months. Traders who based their positions on the first piece of news could very well experience losses in such a scenario, so caution is required.

Create a Strategy


Although the gains from trading equities be great, losses can equally large. To increase your chances of successful trading, make sure you have a strategy in place before entering any trade.

First consider the long-term goals that you would like to achieve and conduct research into the equities market accordingly. Trading equities allows you to monitor the companies that interest you and that you are excited by – which can be extra motivation for your background research. Choose a time period for your trade that suits your lifestyle too; are you more inclined to profit from long term trades and market trends, or do you prefer the fast pace of short term trading?

It is also important to have an exit strategy in place. For example, whether your share of interest increases or decreases in value, at which level will you choose to close your trade? Additionally, it may prove wiser to make these decisions before entering a trade, so that you can make decisions without the potential of an open trade clouding your logic.

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