How to trade stocks: Painting the Big Apple Red

LONDON, July 11, 2012 /PRNewswire/ -- Manchester United, 19 times English Football League champions, plan to paint the Big Apple red after the announcement of their planned flotation on the New York Stock Exchange later this year for an estimated $100 million.

There's been big noise coming out of the stock market recently with the Initial Public Offering (IPO) of Facebook in May, not since Google in 2004 has a company's flotation created so much hype. So the news of Manchester United's IPO will echo through the sporting world as millions of fans scramble, hands down the back of the sofa, in a frantic effort to buy shares in their beloved team. One could also expect that even over in Asia, bearing in mind the club was originally planning to float in the Far East on the Singapore Stock Exchange, fans won't long hold a grudge and might join the investment party.

So what are stocks and why buy them?

For a business to grow, it needs money, and one way to generate funds is to split the company into shares and sell them to investors via an IPO. For every share an investor buys, they become a partial owner of the company.

The value of a share is ultimately determined by the value of the company. If more people want to buy shares in a company, the company's share price and therefore value goes up.

In the eyes of Manchester United, the IPO would provide them with some much needed cash and  go some way to paying back their debt, which currently sees the red devils owing some 420 million pounds.

For their fans and share holders, on top of owning a small part of their beloved team, this could add a cool few million pounds to the club's war chest, allowing them to spend big bucks in bringing the best players, and more trophies, commercialisation and merchandising opportunities to the red half of Manchester, and this in turn could see the share price increase.

How can I buy and sell stocks using spread betting?

Stocks are traditionally bought and sold via a stock broker, but this can be time-consuming and costly. You can however trade stocks through spread betting, which means you don't have to pay any hidden fees or commission, as an alternative way to trade the market. As an investor you don't actually own the underlying asset (i.e. the stock) but speculate on whether you believe the share price of a company will increase, or decrease.

As an example, if you want to trade Facebook with Capital Spreads you can bet on whether you think the share price of Facebook will rise, or fall.  If you buy at xx for 1 pound per point, you will make 1 pound for every point that our sell price rises above your starting price. Conversely, for every point that the sell price decreases you will lose 1 pound.

Risk

The IPO of Manchester United could be an attractive investment. It is one of the world's most bankable brands with a colossal merchandising empire and millions of fanatical fans all over the globe. A word of warning though for all you traders who are already itching with anticipation, there is not always money to be made in buying a sports team (just ask Alan Sugar) or any mega-brand company for that matter (Facebook's share price decreased over 30% in the first three weeks), so always think carefully before you invest money. If you are thinking about spread betting, why not open a Capital Spreads demo account and trade virtual funds without any risk of losing your investment.

To learn more about spread betting visit the Capital Spreads Learn Centre. 

Spread betting and CFD trading carry a high level of risk to your capital and you can lose more than your initial deposit. These trading products may not be suitable for all investors so seek independent advice.

Capital Spreads is a trading name of London Capital Group Ltd (LCG) which is authorised and regulated by the Financial Services Authority.