Trading shares entails speculating on share price movements without taking direct ownership. People who want to take a short-term position on a company’s share price – possibly during periods of high volatility or market activity – frequently choose to trade.

When you trade, you will be able to ‘purchase’ (go long) to speculate on rising prices and sell (go short) to speculate on falling prices. You may trade using leveraged derivatives such as CFDs. You need to receive a deposit – known as margin – to commit full market exposure. However, keep in mind that leverage may increase your profits and losses.

Investors acquire shares outright in the belief that they will increase in price and may be sold at a later period for a profit. They stick to the traditional mantra of buying low and selling high, sometimes known as going long. Investors will hold shares for a longer period, attempting to profit from changes in share price and dividend payments.

Trading stocks is speculating on a stock’s price movements using derivatives such as CFDs — without acquiring actual ownership. CFDs are leveraged products, so you won’t have to commit to the full position value. Keep in mind; however, that leverage may increase both your profits and your losses.