The London Stock Exchange is an marketplace for frequent lowering and raising shares. There are not one but two groups:
- Stockbrokers, who arena for you. They arrange the deal and receive commission, can certainly be 1 % with a least perhaps £ 15.
- Market generation devices, who buy from and sell to you. They get the difference between the frequent lowering and raising price the spread (this might about 1%).
There is a kind of new trading system, called order driven trading (the old technique is called quote driven trading), operating for high value companies SETS (Stock Copy Electronic Trading System) whereby sellers and buyers are automatically matched. Never the less, deals are still to establish by stockbrokers.
Some large companies have secured means to trade in its bristling shares at lower costs than fork out direct by stockbrokers.
In conjunction with commission, stamp duty of different 0. 5% is payable on orders.
Adding these together and you've got to achieve a gain of about 2. 5% to holiday even.
The animals
The Stock Exchange is filled with nicknames. You have already met stags but and he has two more important activities bulls and bears. Bulls are optimistic and believe stock values will rise; bears use the opposite view.
To match the meat there are almost always chips! Blue chips are carries several in big companies looked upon as relatively sound, such instead of BP Amoco and Tesco. There are also white chips smaller, wedding band companies.
Share prices
Prices of state of the art shares are printed in every daily and evening papers so are found on Ceefax/Teletext an internet-based.
They are usually gathered into sectors, such instead of stores, electrical, engineering. Lists of share prices should include some or the particular:
- Yesterday's closing the purchase price: this being the middle market value, halfway between the frequent lowering and raising prices.
- Yesterday's increase/decrease, shown as + and even the previous day's price.
- Highest and lowest prices up until recently 52 weeks.
- Market capitalisation the number shares times current penalty fees, a measure of organization size.
- Gross yield last flooded year's dividend before tax as a number of the current price.
- P/E portion price divided by investment (profit before tax) any share, i. e. how many years' earnings to gather the share price (theoretically the bigger the figure the better the actual possibility growth).
Share first off indices
Most people know of the 'footsie'. It is perhaps FT/SE (Financial Times/Stock Exchange) 100 index the 100 beeing the largest 100 companies history market capitalisation.
The other main index is the all share index comprising each of the shares quoted on the primary exchange. There is including the mid 250, being in just a 250 after the very top 100, and the recently introduced Techmark index for first time technology stocks.
There are also indices for the main varieties shares on the London market and with foreign shares Europe, the region, Japan, the Far Far east.
Settlement
Most transactions are getting settled electronically through a new Crest system, under which share thing is registered in the naming of a nominee.
The old system using transfer forms and still provide certificates is still available but sometimes cost more.
Settlement of electronic deals seems to have made three working days after the transaction date. For certificated dealing it's still ten days.
Alternative make trades market
In addition in to main market, there could also be AIM, the alternative investment gang which deals in shares of businesses which are relatively new and small. It is an intermediate step before the primary market.
Stock exchange regulations are less onerous than for the main market, but this does not in itself mean more risk for investor.
Shares quoted on AIM be volatile, may be difficult to arena due to restricted numbers and will be more risky due to the food newness and small sized the companies. However, large profits can be produced.
OFEX market
This is an market for trading a new shares in unquoted associations, that is companies that are not quoted on
the main or AIM markets and are also much more risky.
Providers
Some operate on an enthusiastic execution-only basis whereby they just deal in step with instructions. If advice is also needed, it will will set you back. Deals are usually put on by telephone or web surfing.
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