Share dealing: the act of buying and selling shares A share represents a unit of ownership in
a company. When you buy a share, you become a part-owner, or shareholder, of that
company. The more shares you buy, the more of it you own. Traditionally, investors buy shares in a given company, such as Apple or Coca Cola, in the hope the value of that company will rise. If it does, so will its share price, and
any shares the investor owns can be sold on for a profit.
However, if the value of the company falls, its share price could also fall and the shareholder
will make a loss. Shares are bought and sold on a global network
of exchanges. Most UK shares, for example, are traded on
the London Stock Exchange, while US shares are primarily traded on the New York Stock
Exchange or NASDAQ. Collectively, these exchanges are known as
the stock market. In traditional trading, shares can only be
bought and sold when the designated stock exchange is open.
For example, shares listed on the London Stock Exchange are only traded between 8am and 4.30pm. Those listed on the New York Stock Exchange
will trade between 9.30am and 4pm eastern time. Share dealers usually fall into one of two
categories: investors or traders. Investors generally focus on long-term value,
attempting to build a portfolio that offers profitable returns after several months or
years. Traders, on the other hand, aim to capitalise
on short-term price movements, with some making hundreds of trades per day. Both have benefits and drawbacks, whichever
you choose depends on your objectives, and how much time you can devote to the markets.