The London Stock Exchange is a marketplace for buying and selling shares. There are two groups:
Stockbrokers, who buy and sell for you. They arrange the deal and receive commission, which might be 1 % with a minimum amount of perhaps £15.
Market makers, who buy from and sell to you. They get the difference between the buying and selling price the spread (this is usually about 1%).There is a new trading system, called order driven trading (the old system is called quote driven trading), operating for high value companies SETS (Stock Exchange Electronic Trading System) whereby buyers and sellers are automatically matched. However, deals are still set up by stockbrokers.Some large companies have set up means to trade in their shares at lower costs than are charged direct by stockbrokers.In addition to commission, stamp duty of 0.5% is payable on purchases.Adding these together and you have to achieve a gain of about 2.5% to break even.The animalsThe Stock Exchange is full of nicknames. You have already met stags but there are two more important animals bulls and bears. Bulls are optimistic and believe share prices will rise; bears take the opposite view.To go with the meat there are chips! Blue chips are shares in big companies thought to be relatively sound, such as BP Amoco and Tesco. Then there are white chips smaller, sound companies.Share pricesPrices of popular shares are printed in most daily and evening papers and can be found on Ceefax/Teletext and on the Internet.They are usually grouped into sectors, such as stores, electrical, engineering. Lists of share prices will include some or all of the following:
Stockbrokers, who buy and sell for you. They arrange the deal and receive commission, which might be 1 % with a minimum amount of perhaps £15.
Market makers, who buy from and sell to you. They get the difference between the buying and selling price the spread (this is usually about 1%).There is a new trading system, called order driven trading (the old system is called quote driven trading), operating for high value companies SETS (Stock Exchange Electronic Trading System) whereby buyers and sellers are automatically matched. However, deals are still set up by stockbrokers.Some large companies have set up means to trade in their shares at lower costs than are charged direct by stockbrokers.In addition to commission, stamp duty of 0.5% is payable on purchases.Adding these together and you have to achieve a gain of about 2.5% to break even.The animalsThe Stock Exchange is full of nicknames. You have already met stags but there are two more important animals bulls and bears. Bulls are optimistic and believe share prices will rise; bears take the opposite view.To go with the meat there are chips! Blue chips are shares in big companies thought to be relatively sound, such as BP Amoco and Tesco. Then there are white chips smaller, sound companies.Share pricesPrices of popular shares are printed in most daily and evening papers and can be found on Ceefax/Teletext and on the Internet.They are usually grouped into sectors, such as stores, electrical, engineering. Lists of share prices will include some or all of the following:
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