Amazon is one of the biggest companies in the world. In fact, it is so big that it can be accurately stated to be the third biggest in the world.
Most companies are in a constant flux of where they rank relative to the others.
Once you are in the top ten biggest in the world though, you do not move much. This becomes a blessing and a curse at the same time.
The obvious upside is that each share of Amazon is supremely valuable. If you have an Amazon share, that one share is worth around £3,000.
This makes it worth more than ten times most company’s shares. Its value increases in amounts of hundreds of dollars before depreciating down to no less than £2,500. This means that whether you are a high yield, long-term investor or a day trader, you can squeeze Amazon for some kind of value.
But Amazon’s shares sitting at around £3,000 presents its own problem. How are you supposed to buy something that expensive if you are not already rich? In fact, where are you supposed to buy Amazon shares? It’s not like they are sold at gas stations. And what do you do to make money off of them?
Related: Best Shares to Buy Now in 2023
These are all good questions. And luckily, they have answers. Let’s take them one by one and see: Just how do you buy Amazon shares as someone trading stocks in the United Kingdom?
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Where Do You Buy Amazon Shares? 🛒️
The first step to buying Amazon shares is figuring out who is going to sell them to you. But the funny thing about the stock market is that the question of “who” is not actually that hard to answer.
Anyone who has Amazon stock is also looking to sell it. Nobody holds onto stock, petting it like a cat. That means you do not have to hunt down an individual seller. The much more important step in the process is finding the place where all the sellers of Amazon stock go. These are called trading platforms.
How do you get on Trading Platforms?
Trading platforms are usually managed by brokers. A broker is a company that gives you access to a stock market. It can be the London Stock Exchange, the New York Stock Exchange, or basically any other major stock exchange. Amazon will be listed basically everywhere, so you will not have trouble finding it.
Technically speaking, there is a review and auditing process that is required to get on these platforms. Calling it “a review and auditing process” makes it sound incredibly serious, but it is not. Mostly, it is a robot doing a background check to make sure you did not commit any securities fraud.
After you create your account, you will have to verify and fund it. This means connecting your bank account, as you cannot just buy shares with a credit card. And besides, you need to be able to send funds to your bank account once you accrue them. This requires an account and routing number.
What are the Best Trading Platforms for Buying Amazon Shares?
If you are all ready to go and get started trading, then there are a few select names in stock trading you are going to want to familiarise yourself with. These platforms are all great, with a few unique tools.
This is easily one of the best trading platforms for trading tons of stocks in the United Kingdom.
They have access to overseas markets as well, including the ability to buy Amazon.
The best part is that you can use their cryptocurrency trading features to buy stocks with cryptocurrency as well.
Where most trading platforms focus on helping new traders get their start, IG helps veterans trade in new and interesting ways. Make use of this if your priority is utilising the more esoteric methods of trading stocks. It is not for beginners, but sometimes you need a trading platform with some kick.
3. Interactive Brokers
One of the best worldwide trading platforms, Interactive Brokers is another highly advanced option. It opens the door to trading shares from tons of different markets. This can be good for getting to Amazon, as it means that anything you pick up for a low cost somewhere else might be worth more when you finally trade it for Amazon or its associated companies.
What Should You Look for in a Trading Platform?
Chances are that you noticed a few repeated themes in the three examples of trading platforms we gave. For instance, there is a clear distinction between what platforms work for a beginner trader and which platforms work for someone more advanced.
When you are looking for a trading platform, answering the question of whether you are a high-level trader or not is important. You do not want to get into trading stock options and CFDs if you do not have the knowledge to get value out of the attempt. Most people lose their money this way.
Choosing the right trading platform begins with understanding what kind of trading you want to do and how you want to do it. Most trading platforms will at least provide you the tools to find that out.
Is Paper Trading any Good?
People do not ask this question enough. Even when it comes to just trading one stock—even if that stock is Amazon—everyone should understand that nothing in the market is certain. It is far better that you learn that lesson while trading with fake money than trading with real money.
Paper trading is the act of setting up an account using fake money that only trades in fake money. You do not get any money out of it, but you risk nothing just learning how things work. This is how you establish a strategy. Some people are worried that they will do something right while paper trading and not be able to replicate it, thereby simply “spending their luck” on fake trading.
The thing about building a strategy is that it is not a strategy if you cannot replicate it. And while it is fun to imagine that you can get lucky and make a lot of money by accident, it is much more likely that the opposite happens, and you lose a bunch of money. So, paper trade first.
Once you are on a platform, verified, and funded, you can start buying shares. But then you run into the next problem: They are so expensive! How are you supposed to buy a £3,000 share of anything?
The answer is: You don’t.
How do you Buy Amazon Shares? 💰️
There are a few different ways you can buy Amazon shares, but we will start with the standard method: Buying the share itself. Or rather, buying a percentage of a share since the whole share is too expensive.
You see, you do not have to buy into a whole share. You can just buy as much of a share as you can afford. This is especially helpful with big shares like Amazons. The amount the share increases in value is proportional to the percentage of the share you bought. This is called a “fractional share.”
How Do Fractional Shares Work?
Let’s slow down and talk about this: Imagine that Amazon’s shares cost £3,000 each exactly. You buy £30 of a share. That is 1% of a share. So, if Amazon’s share price goes up by £500, then your £30 share will go up by £5 in value. Obviously, that is a very big “if”, as a share going up by £500 isn’t happening.
But the idea is the same whether the share increases by £500 or £5: The amount your share increases is the same as the amount of a share you own. If you own 5% of a share, then it will increase at 5% the rate that the full share increases. This means it will never increase by much without a big percentage.
Why Buy Fractional Shares?
But the thing is, you do not need an Amazon share to increase in value by much in order to make money off of it. 5% of an Amazon share’s value is greater than 100% of many other company’s shares.
Of course, it does beg the question as to what the best amount to put into Amazon is. Truthfully, it is all about what your investment strategy is. For instance, if you are focused on short term income gain and day trading, then you are going to want to aim low on the size of your fractional shares.
This is because many day trading strategies are built on making small investments that are low risk and pay out equally small amounts. So, you buy a fractional share that is less than 5% the total value of Amazon’s share price, then sell as soon as it increases by anything more than 2%.
If you are looking to do something more long term, then you will want to have at least 10% of a share. This does not mean you need to buy all 10% at once, however. You can buy the share 1% at a time.
Alternative Ways of Buying Shares 📊️
But buying shares wholesale is only one possibility. There are alternative tools for getting value out of shares. Keep in mind though, these are riskier ways of trading. That means they have a higher buy-in, but also a higher maximum output. So, trade at your own risk.
Contracts for Differences (CFDs)
The first alternative method of buying shares is called a “contract for differences”. This is probably the highest risk and highest reward security you can trade while still actually trading a stock.
Not all platforms are going to carry this due to how risky it is. But here is basically how it works: First, a buyer and seller meet. Sometimes the buyer approaches the seller, sometimes it is the other way around. They agree on a stock, and a date. Then, the buyer offers a price for the future date.
So, imagine there is a share, even a fractional share. The buyer offers to buy that share at the appointed date for the appointed price. The seller either accepts or rejects it.
The goal for each party is to make more money than they normally would on that date. The seller wants to sell the stock for more than it would be worth on that date, while the buyer wants to buy it for less than it will be worth on that date. As you can probably see, this often pits them against each other.
It is not strictly zero-sum, however. It is possible for a CFD to benefit both buyer and seller.
It just will not happen most times.
One of the more popular ways of trading without actually buying the share is by selling the “option” of buying the share. This is a weird one, but it is a good way of trading after the markets have closed.
Trading stock options means that rather than trading the share itself, you are trading the option to buy the share. This means that the share cannot go anywhere, but you can still choose not to buy it.
This appeals to people, as the option of a share can follow very different trends than the share itself. Since the option’s value is determined by where people think the price of a share will go, rather than the market value of the share itself, its price is more negotiable.
This cuts both ways, however: You might get an option for an unusually low price and sell it for an unusually high price just by having a silver tongue. But you have to be careful to avoid buying something at a high price and selling it for less than it is actually worth.
Thinking About Dividends
So far, most of what we have covered concerns investing with the expectation to sell at a later date. You might also invest, and then sell the portion of the money you made off of a stock. But the way most people use stocks at the high levels is actually even simpler: They do not sell them at all.
If you invest in a company, then you will occasionally receive what are called “dividends”. These are payments that are based on the size of your investment. Some companies pay dividends every month, some pay them once a year. Most pay them once every fiscal quarter per year.
How Big are Amazon’s Dividends?
Considering it is one of the biggest companies in the world, everyone wants to know what Amazon’s dividends look like. But many people are surprised to learn that the company does not pay dividends at all. This is actually why we emphasise selling the stock so much in this article.
The best way to make money off of Amazon stock is to sell it when it is more expensive than usual. Since the company does not pay dividends, holding onto its stock is just a good way to exercise your hands.
Why Doesn’t Amazon Pay Dividends?
Many people ask this question. But the interesting thing about the stock market is that for all its rules, there are as many exceptions to those rules as there are companies following those rules.
Basically, Amazon is far from the only company to not pay dividends. It is not even the largest company to not pay dividends. Berkshire Hathaway, Warren Buffet’s own real estate firm, has the most expensive stock in the world. It is frequently priced somewhere between $450,000 and $500,000 per share.
But for all of the wealth that goes in and out of that company every day, it also does not pay a dividend.
In both cases, the answer is the same: Amazon, and huge companies like it, are more volatile than they might seem. The price of Amazon’s stock that we mentioned earlier? That is likely a gross overestimation on the part of the market. Amazon probably cannot meet that demand with supply.
So, if Amazon started making promises of dividends to its shareholders, a slight change in their ability to meet supply could result in their stock price correcting. This correction could result in them being contractually obligated to pay a dividend that they cannot actually afford.
Thus, Amazon lets people make money off of its huge, frequently fluctuating share price. It does not, however, promise any of that money like a normal company would. If you want to make money off of Amazon’s stock, you will have to buy low and sell high like it’s the summer of 1984.
If you want to buy Amazon shares, then there are lots of places that will sell them to you.
Even better, you can get fractional shares if you cannot invest in a whole share and sell them the moment they produce the yields that you need. Or you can hold onto them and wait for them to grow more.
And if you are looking to get a lot of value out of your trades, you can take even riskier trades. Whatever you want to do, there is a pathway to do it. Just know your strategy, and know when to get out.