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What are securities and how do you trade them?

Reading time: 12 minutes

Did you know that securities offer investors one of the best ways to grow their capital? Many of you may already be familiar with investing in securities such as stocks and bonds. However, in the digital era, there are now many different types of securities available for investors; which means learning about them in detail is hugely important to be a successful investor.

What are securities and how do you trade them?

In this article, we will cover:

  • What are securities in finance?
  • The different types of securities available:
    • What are equity securities?
    • What are debt securities?
    • What are marketable securities?
  • How to start investing in securities
  • How to buy and sell equity securities
  • And much, much more!

What are securities in finance?

The term security refers to any negotiable financial instrument. Some common examples include stocks and bonds. Another way to define securities are as financial contracts which grant the owner a stake in an asset and which can be bought and sold.

What are securities - Different types explained

As world economies have developed there are now a variety of different types of securities available for investors. Generally speaking, the two most common types of securities that investors are interested in are equity securities and debt securities.

1. What are equity securities?

Equity securities are probably the most commonly known form of securities and refer to shares of publicly traded companies, such as Apple shares, BP shares, and so on. When a business wants to grow it needs funding. Companies can either borrow the money from a bank, find private investors or go to the capital markets and issue shares, or securities, to raise capital.

If you go on to buy a security, or a share, in a publicly-traded company which is offering them, then - in effect - you are purchasing ownership in the company. As the company makes profit you can share in the profits by collecting a dividend or a potential rise in the company's share price. You can learn more about dividends in The Best Dividend Stocks for Income article.

Did you know that with an Invest.MT5 account you can buy and sell equity securities such as stocks from 15 of the largest stock exchanges in the world? You can also create a stream of passive income by collecting dividend payouts and open an account with just a €1 minimum deposit. You can get started right now by clicking the banner below:

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2. What are debt securities?

Debt securities are most often referred to as bonds. If a company or government wants to borrow money they can either try to get a loan from the bank or they can issue a bond. After issuing a debt security (a bond), investors who buy the bonds are effectively lending the issuer money. The bond entitles the holder, or purchaser of it, their money back - with interest - once the bond matures.

Investing into debt securities such as bonds is much more complex than investing into equity securities such as shares. In fact, the corporate bond market is mainly for institutional traders and investors. However, there is a way to still capitalise on debt securities and these are through products such as ETFs ( Exchange Traded Funds). You can learn more about these in our 'How to Start Investing in ETFs with €1,000' article.

For example, investors could gain exposure to debt securities, such as bonds, through the Vanguard Long-Term Bond ETF. According to Vanguard's product page, this ETF primarily invests into government bonds. This product and many more are available to invest in through the Invest.MT5 account. You can also view a chart of historical prices in the MetaTrader 5 trading platform which is provided by Admiral Markets UK Ltd for free, as shown below:

MetaTrader 5 showing equity securities

The Admiral Markets MetaTrader 5 trading platform showing a chart of the Vanguard Long-Term Bond ETF, its contract specification and the symbols window.

Disclaimer: Charts for financial instruments in this article are for illustrative purposes and does not constitute trading advice or a solicitation to buy or sell any financial instrument provided by Admiral Markets (CFDs, ETFs, Shares). Past performance is not necessarily an indication of future performance.

Did you know that you can download the MetaTrader 5 trading platform provided by Admiral Markets completely FREE? After downloading it you can view historical prices of, and trade on, a wide range of instruments covering multiple asset classes. Having the platform will also prove useful in a later section when we go through a step by step process on how to buy and sell securities like shares. You can start your free download by clicking the banner below:

Trade With MetaTrader 5

Before we look into how to start investing in securities, let's look at a few other types of securities first.

3. What are fixed-income securities?

A fixed-income security is an investment that pays out interest on a regular schedule until maturity when the principal is paid back. In effect, fixed-income securities are debt securities of which the most popular type is a bond.

4. What are mortgage-backed securities?

Mortgage-backed securities, or MBS for short, are investments that are secured by mortgages. When an individual gets a mortgage from a bank, the bank then turns around and sells the loan to an investment bank to generate more capital for new loans.

The investment bank then may package a collection of these mortgages and sell them as a mortgage-backed security. These can then be bought and sold on the secondary market to other institutions.

This type of mortgage-backed security played a big role in the stock market crash of 2008 and is highly controversial.

5. What are marketable securities?

Marketable securities are a way for companies to make money from their cash reserves. A company will hold cash in its reserves in case they need to act quickly to take advantage of an acquisition, for example.

Instead of sitting on this cash, gaining no interest, the company will invest a portion of the cash into short-term liquid securities. These marketable securities tend to mature in less than a year so investments can be converted into cash very quickly and are mainly comprised of debt securities such as corporate bonds and equity securities such as shares.

Now you know a little more about the different types of securities available, let's go through how you can start to buy and sell securities yourself.

What are securities - How to buy and sell equity securities

Buying and selling securities such as shares and ETFs can be done in just three simple steps:

  1. Open a stocks and shares trading account.
  2. Download your share trading platform.
  3. Open a trading ticket and take your first trade!

1. How to open your Invest.MT5 equity securities account

If you haven't done so already you can follow the steps below to open an equity securities account. If you have done so already, feel free to jump to the next section on how to download your equity security trading platform.

To open an account simply visit the Admiral Markets homepage and click on the green button labelled Create Account:

Admiral Markets offering equity securities trading

Then fill in the details required such as your name, email and password:

Admiral Markets signup page

Once this is done you will have instant access to the Trader's Room! From here, you can open different types of trading and investing accounts:

Admiral Markets dashboard

After clicking the green button labelled Open Live Account, you can select the account you wish to open. For investing in equity securities such as stocks and shares, select Invest.MT5:

Admiral Markets account opening page

From here you can open your Invest.MT5 stocks and shares investing account after filling out an application, uploading required documents and going through a verification process. Once this has been done, and your application has been approved, you are ready to download your MetaTrader 5 stocks and shares trading platform.

For a more detailed overview on opening a MetaTrader 5 account, read the 'How to Open a MetaTrader 5 Account' article.

2. How to download your MetaTrader 5 stocks and shares trading platform

From the Trader's Room homepage, navigate to the bottom and select the MetaTrader 5 for PC or MetaTrader 5 for Mac download links:

Admiral Markets dashboard platform download

Simply follow your computer's prompts to complete the download of your MetaTrader 5 stocks and shares trading platform.

3. How to place a trade in the MetaTrader 5 stocks and shares trading platform

Open up your MetaTrader 5 stocks and shares trading platform and follow these steps to place a trade:

  1. Open the Market Watch window by selecting View from the menu at the top of the platform or by pressing Ctrl+M on your keyboard. This will open up a list of tradable symbols on the left side of your chart.
  2. Right-click on the Market Watch window and select Symbols or press Ctrl+U on your keyboard.
  3. This will then open the window shown below which details all the markets available for you to trade on. From here you can add a wide variety of shares to your Market Watch window by selecting the relevant share or country and clicking Show Symbol.

MetaTrader 5 showing Admiral Markets equity securities

The Admiral Markets MetaTrader 5 trading platform showing a chart of the Vanguard Long-Term Bond ETF, its contract specification and the symbols window.

Disclaimer: Charts for financial instruments in this article are for illustrative purposes and does not constitute trading advice or a solicitation to buy or sell any financial instrument provided by Admiral Markets (CFDs, ETFs, Shares). Past performance is not necessarily an indication of future performance.

After clicking the OK button in the Symbols window you can now view the different instruments in the Market Watch window. To view a price chart of a company's share price, simply left-click on one of the stock symbols in the Market Watch window and drag it onto the chart area. From here you can now open up a trading ticket:

  1. Right-click on the chart.
  2. Select Trading.
  3. Select New Order, or press F9 on your keyboard.
  4. A trading ticket will open for you to input your entry price, stop loss and take profit levels and your share trading size (volume).

Admiral Markets MetaTrader showing equity securities trading ticket

An example of the MetaTrader 5 trading platform provided by Admiral Markets, showing a trading ticket window.

Disclaimer: Charts for financial instruments in this article are for illustrative purposes and do not constitute trading advice or a solicitation to buy or sell any financial instrument provided by Admiral Markets (CFDs, ETFs, Shares). Past performance is not necessarily an indication of future performance.

To learn more about the MetaTrader 5 trading platform, feel free to watch the video below:

What are securities - Why buy and sell equity securities with Admiral Markets?

If you are considering buying and selling equity securities, or gain exposure to debt securities through bond ETFs, you may consider the Invest.MT5 account where you can enjoy benefits such as:

  • The ability to invest in thousands of stocks and ETFs from 15 of the largest stock exchanges in the world.
  • Open an account with just €1 minimum deposit and invest from just $0.01 per share with minimum transaction fees of just $1 on US stocks.
  • Receive free real-time market data, with no delays, at no extra cost.
  • Create a stream of passive income by collecting dividend payouts.
  • Use the world-renowned MetaTrader 5 multi-asset class trading platform.

You can get started right now by clicking the banner below and enjoying all of the features above and more!

Invest in Stocks & ETFs

About Admiral Markets

Admiral Markets is a multi-award winning, globally regulated Forex and CFD broker, offering trading on over 8,000 financial instruments via the world's most popular trading platforms: MetaTrader 4 and MetaTrader 5. Start trading today!

This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or recommendation for any transactions in financial instruments. Please note that such trading analysis is not a reliable indicator for any current or future performance, as circumstances may change over time. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.