Stockbrokers uncovered: Delving into the jargon of buying and selling shares

Julie Brownlee, Fsp Invest, 15 Apr. 2014

Tags: buy and sell shares, shares, stocks, buying and selling shares, bid, offer, spread, stockbroker, stock broker,

When you first start investing, you’ll be concerned with how to buy shares. Over time, you’ll likely want to sell some shares too. So how do you go about buying and selling shares? What stockbroker jargon do you need to know? Let’s take a closer look at what you need to know…

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You buy and sell shares through a stockbroker

If you want to buy or sell shares you need to use a stockbroker, Gareth Stokes in Fear, Greed and the Stock Market explains. This will either be over the phone or online via your broker’s website.

A stockbroker’s system gives them a live feed from the Johannesburg Stock Exchange. This gives them live share prices. And it also shows them all the buy and sell orders available at that time.

In general, the smaller the stock, the wider the spread. On the other hand, more liquid, larger companies tend to have tighter spreads.

This is because smaller company’s shares aren’t as liquid. Stockbrokers may find it harder to get a buyer or seller for them.

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How the bid offer spread works

Regardless of whether you’re buying or selling, your stockbroker will quote you a spread. This is the buying and selling price of the share in question.

Let’s say you phone your stockbroker. You want to sell Company ABC. Your stockbroker may quote you the following spread: 436c to 440c.

The lower of the two prices (436c) is the bid price. This is the price that you can sell at.

The higher of the two prices (440c) is the offer (or ask) price. This is the price that you can buy at.

It’s best to try and avoid the first and last hour of market trading if possible. These tend to be the most volatile times of the day.

So there you have it, delving into the jargon of buying and selling shares.

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