Structured course - how to trade the stock market - Sophia Trades

Gold Price Chart – Everything You Need to Know

April 15, 2026April 13, 2026Sophia Trades

In this article i’m going to talk about the Gold price chart and some of the key aspects of understanding how to trade Gold. We will look at the longer term price action per the chart and its relationship with stocks and confidence in the overall economy. Let’s get straight into it!

Gold Price Chart – relationship to the stocks and general consumer confidence

There is an inverse relationship between consumer confidence and the price of gold. This is because when consumer confidence is low, consumers consider that Gold, a precious metal which is real physical thing and valuable in the real world, is worth investing in. The value of Gold increases slowly and steadily over time, like a slow, steady, ticking clock. Let’s take a look at the monthly timeframe chart to get a view of the long term movements of Gold:

If you would like a discount to the chart software that I use (Trading View), please click the link below:

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As you can see on the above chart, dating back to 1980, the price of Gold has climbed slowly to a record high. Over this time, the price increased by 1,313%.

Over the last ten years, the price grew by approximately 400%:

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On average, over the ten years this works out to be:

5,618-1120 = 4498 USD

/10 =449 USD per year

This works out to be an annualised return of approximately 13.7%.

When economic growth is strong, consumer confidence is high, and consumers tend to favour higher yielding investments rather than slow and steady. This can cause the price of Gold to dip.

How is the Gold price chart affected by inflation?

If consumer confidence is being driven or influenced by inflation, we may see the Gold price chart prices increasing with a corresponding decline in the relevant currency value.

So is there anything we can use to give us an indication of what levels of consumer confidence are relevant? Yes! We can use the Conference Board’s Consumer Confidence Index (CCI). You can see the website for the CCI here:

US Consumer Confidence

If targets are missed, this can trigger nervousness for the markets and this will likely have a positive impact on the Gold price chart.

What happens to the Gold during a recession?

The price of Gold tends to increase during recessions as consumer confidence tends to be lower. As mentioned above, when consumer confidence is low, people tend to invest their money in Gold as a saver haven until the turbulence has reduced in the stock market.

Gold Price Chart – is there anything else to be aware of?

Although the Gold price chart is typically inversely related to consumer confidence and the stock charts, the correlation is not always perfect, as other factors can be at play, including interest rates, the strength of currency and political events and news around the Globe!

What does the CII Board currently say about what they expect to see in consumer confidence?

As per the CII website, they have published graphs showing that they expect consumer confidence to fall slightly from where it is currently. You can see this graph and data here, under the ‘Present Sitaution and Expectations’ index graph:

US Consumer Confidence

I hope the information published here will help you in your trading journey and in particular help you to decide whether you think the price of Gold will rise, or fall, in the medium to long term.

Disclaimer!

Nothing on this blog should be taken as financial advice or encouragement for you to enter a trade. You are expected to speak to a financial adviser or carry out your own due diligence before entering any positions. Everything on this blog is made for educational purposes and to equip you with the knowledge you need to be able to make your own financial decisions.

For more great tips and advice on trading the stock market, please visit:

https://www.sophiatrades.co.uk

To watch me trade live please visit my patreon page here:

https://www.patreon.com/sophiatrades

Finally, if you would like to receive a discount on the Trading View charting software I use, please click on the relevant link here:

https://www.tradingview.com/?aff_id=117138

Please note any subscriptions taken via my affiliate link with Trading View may result in me earning a small commission. However, I provide complete transparency on me using Trading View personally – I publish my success on the financial markets via my broker reports and any profits earned were done so by using my own Trading View subscription, so I genuinely do recommend them and have been using the Trading View charts for many years.

What are stocks? Everything You Need to Know

March 23, 2026March 25, 2026Sophia Trades

You may have heard it’s a good thing to buy stocks, to invest in stocks, etc, but you may be new to the financial markets completely and you may be wondering what they are. Perhaps you are someone who has worked your whole life in a manual job and you have never had any dealings with the financial markets or business. Perhaps you have been a stay at home mum and you now want to understand how to look after your wealth and your finances for yourself? You have come to the right place. Let me help you understand, what are stocks…

What are stocks? The basics

In a nutshell, a stock is a share of a company. When answering the question, what are stocks, you should think of the answer like a literal slice of pie:

The pie – the whole pie, is a company/business and buy purchasing a ‘share’ you will literally own a fraction of the business. Stocks have particular ‘control’ rights when it comes to running the business. Since you would partly own the business by owning a share, you would have the right to control what goes on in the business. This is handled by shareholder meeting and votes. Note that some shares do not attract voting or control rights. You need to pay attention to the ‘class’ of shares which you are buying and what rights are attached to them. When answering the question what are stocks, therefore, we must note that different stocks have different benefits and rights attached to them.

What other benefits come from owing a stock?

Since you own a part of a business when you purchase a stock, you are also entitled to receive income from the business (insofar as its profitable). You may receive income as ‘dividends’, or you can wait for your stock to accumulate in capital value. Over time, the business will ‘hopefully’ grow, and this will mean that your share will be worth more, later. What do we mean by ‘grow’? The business will be striving to make profit and that profit can be reinvested into new technologies, so that the business can sell more product. Note that if a company distributes a lot of its profits by way of dividends, then you are likely to get less capital growth in that particular shareholding. You can buy stocks which are good for capital growth (i.e. the directors typically decide to reinvest the profits into making the business grow and become more profitable), or you can buy stocks where the directors are usually paying a good chunk of the profits earned, out to shareholders in the form of dividends. You can tailor your stock portfolio to hold some of each!

I would like to refer you to my other article on dividends and how these can affect the share price of a company, which you may find helpful:

How does a dividend affect a share price? Everything you need to know! – Trader Pro – Learn how to Trade the Stock Market

I hope this article helped you to understand the answer to the question, ‘what is a stock?’.

Disclaimer!

For more great tips and advice on trading the stock market, please visit:

https://sophiatrades.co.uk

To watch me trade live please visit my patreon page here:

https://www.patreon.com/Traderpro8320

Finally, if you would like to receive a discount on the Trading View charting software I use, please click on the relevant link here:

https://www.tradingview.com/?aff_id=117138

What is Scalping in Trading – Everything you need to Know!

March 18, 2026March 16, 2026Sophia Trades

What is scalping in trading? This is a common question asked by beginner traders so I hope I can help you out with an understanding….Scalping is a very specific style of trading. In order to understand what it is, you need to know how it contrasts with the other styles… Let me explain!

What is Scalping in Trading? – Background

So just to give some background, there are many different types of traders, and what distinguishes you as a trader, from an investor to begin with, is that you hold positions for shorter periods of time and selling them on quickly. Within the sphere of trading, however, there are different styles again – and some of these styles can be categorised based on how long the position is held open as with trading versus investing. There are ‘swing’ traders who typically hold positions overnight or for a few days, and there are day traders who are in and out of trades within the same day. Then there are scalpers…

So what is Scalping in Trading?

A scalper trader jumps in and out of the markets many times over, within the space of just minutes. They execute many trades over the course of a day, accumulating profits slowly in small increments. I hope you are starting to understand the answer to the question, what is scalping in trading.

Positions are typically held for a few seconds to a few minutes. Traders who trade in this way, tend to focus on markets with high liquidity, so that they can enter and exit position easily. (If there are many buyers and sellers it helps them get in and out multiple times). They trade the smaller timeframe charts.

What scalping strategies are available?

There are many scalping strategies available to follow and many higher time frame strategies can be used on the smaller timeframes too. You can find a lot of traders on YouTube sharing their scalping strategies with you. My advice would be to test one with very small risks at first (risk only, say, £1 per trade) until you know it works, as there are many traders on YouTube who are misinforming people.

Is Scalping better than Swing trading?

This is a very difficult question to answer, because it depends on what you need and want from your trading. You may say, well, just money! However, the other details can be important for some traders. For example, I am a female trader, and the aim of this blog is especially to encourage other women to have the confidence and knowledge on how to trade the stock market. If a woman has small children, it may not be a suitable strategy for her to employ, as she will have many distractions and scalping may require high levels of concentration over a period of time. Unless of course she has childcare or periods where the kids are with Granny, hubby etc. This is in contrast to swing trading, where the trader can probably set a stop loss and target, and walk away for several hours or days.

Some traders are also more comfortable with deciding slowly and carefully, what the plan is, and executing it – and placing orders to safeguard it, whereas other traders may prefer to make decisions quickly in the moment! For some traders, the speed at which you need to make decisions as a scalper, will terrify them. It probably depends heavily on your preference for handling other things in life – do you like working under extreme pressure, or do you like to go carefully and slowly, and take your time? Only you can answer this.

What types of indicators are common in a scalping strategy?

Scalping traders commonly use indicators like the moving averages, the RSI, the MACD, and bolinger bands as indicators on where to get in and out of the markets. I personally use the MACD indicator a lot, and I know it can be used on the smaller timeframes, but it must be applied with discipline when the ‘direction’ of the market, is clear. I am not a scalper, however.

If you would like to understand more about the MACD indicator and some of the other ones I’ve mentioned, you can refer to the technical indicators section of this blog:

Technical indicators – Trader Pro – Learn how to Trade the Stock Market

I hope you found this article helpful in understanding the answer to the question, what is scalping in trading.

Disclaimer!

For more great tips and advice on trading the stock market, please visit:

https://sophiatrades.co.uk

To watch me trade live please visit my patreon page here:

https://www.patreon.com/Traderpro8320

Finally, if you would like to receive a discount on the Trading View charting software I use, please click on the relevant link here:

https://www.tradingview.com/?aff_id=117138

How to buy stocks – everything you need to know!

March 12, 2026March 21, 2026Sophia Trades

In this article i’m going to talk about how to buy stocks to build wealth. I will talk about the types of due diligence you can do before deciding which stocks to purchase, how long you might want to hold them for, how you can hedge your positions and keep a balanced portfolio, and the different avenues through which you can buy stocks including as regular asset purchases or broker accounts using leverage. Let’s get straight into it!

How to buy stocks – why buy stocks in the first place??

Adding stocks to your asset portfolio is a great way to build wealth. They generally increase in value over time and can generate income for you via dividend distributions. Many of the wealthy people you know of, including Warren Buffett, built their wealth by buying and accumulating stocks. After a period of time, the stocks gain capital value and they can accumulate to an enormous amount. Most of the pensions are invested in stocks. It is generally how wealth is built. So if you have decided you want to understand how to buy stocks, what’s the next step? Let’s take a look!

How to buy stocks – due diligence

OK, so you have decided that you want to built wealth by purchasing stocks. What sorts of due diligence should you use, to decide which stocks to purchase? There are different approaches to this. You could keep an extremely balanced portfolio by buying into an ‘index’, or a few indices!. An example of this is the S&P 500 – you can purchase a contract like a share, based on the movements of the S&P 500. If the top 500 stocks in America increase on average, you will see a gain in your trading account. You can also receive dividends from buying into these indices. If you want to remain hedged and balanced in purchasing into indices, you could buy into the indices which are present in different countries, such as the FTSE 100, in the UK, the S&P 500 in the USA, the Nikkei 225 in Japan etc.

If you want to purchase specific stocks based on careful research, you can carry out fundamental analysis based on the company’s key published information which is usually found in the company’s financial statements. If it’s a publicly traded company, you can find the financial statements online. The analysis you can do is to look at the company’s profit statement and balance sheet – to see how healthy they are. If you do not understand how to read a company’s set of financial statements, don’t worry! We have articles prepared by an ex chartered accountant (me) that will help you, below. Navigate with the link below to the Fundamental Analysis part of this blog and you will find lots of helpful articles on understanding a balance sheet, understanding a profit statement, how dividends affect a share price, and more!

Fundamental Analysis – Trader Pro – Learn how to Trade the Stock Market

I am also sharing my videos on understanding a profit statement and balance sheet, here:

Another aspect of understanding a company’s financial position, is to understand whether it is a going concern, and will be for the foreseeable future. Please see my video on things to watch out for in a set of financial statements, here:

Aside from fundamental analysis, you can also undertake technical analysis from looking at the stock charts. I offer lots of guidance on how you can carry out technical analysis on this blog, here:

Structured course – how to trade the stock market – Trader Pro – Learn how to Trade the Stock Market

and you can watch me doing this on my Youtube channel, here:

Trader-Pro – YouTube

Something that can really help you to understand stock charts, is by subscribing to the platform, Trading View. This platform is absolutely amazing for sorting your watchlists and organising your potential opportunities. I can offer a discount to the trading view software. Click the button below for the discount, while it lasts!

I’m showing you below a screen shot of my chart on the NASDAQ – it can be fully annotated with notes about significant events, just as one example of how versatile this chart software is!

Get a discount to the chart software, Trading View

I hope this resolved any queries you have on the due diligence aspect of ‘how to buy stocks’.

How long should you hold stocks for?

OK, so you have decided you want to buy stocks to generate wealth and you have researched using our tools on fundamental analysis, which stocks or indices to buy. Now you are wondering how long to hold them for. There is no set rule for this, but if you want to generate significant wealth, it is helpful to hold them for ten years or more. Please see my video on the power of compounding, here:

Holding stocks for over ten years can generate significant levels of wealth as they compound in value like a snowball. The answer to how long you should hold them depends on the level of wealth you want to generate. If you want to retire early as a millionaire, which is completely doable, you should hold them for over ten years. The younger you start, the better – ATTENTION, YOUNG READERS!

So how do you actually buy the stocks?

You can buy stocks either outright where you own the underlying asset, or you can buy through a CFD or spread betting account. Note the latter two types of accounts will attract fees for holding the positions overnight. There are many brokers that do not charge you for holding positions overnight such as Trading 212 (I have no affiliation with them but I do use them myself for holding long term positions without leverage).

If you hold positions in a spread betting or CFD account you are able to buy more assets than you actually have the cash for! I explain this on my margin blogs and videos, linked below. You will not own the underlying assets in these scenarios, so the dividends will be lower too:

Leverage and Margin – Trader Pro – Learn how to Trade the Stock Market

I hope you found this article helpful on how to buy stocks. Perhaps if you did, you can leave a comment below. I would love to hear from you, and answer any questions you might have.

Disclaimer!

For more great tips and advice on trading the stock market, please visit:

https://sophiatrades.co.uk

To watch me trade live please visit my patreon page here:

https://www.patreon.com/Traderpro8320

Finally, if you would like to receive a discount on the Trading View charting software I use, please click on the relevant link here:

https://www.tradingview.com/?aff_id=117138

How to start trading – everything you need to know!

March 9, 2026March 21, 2026Sophia Trades

In this article i’m going to explain everything you need to know about how to start trading. I will explain to you how to build a plan, understand the markets and this blog contains a lot of free information about the different tools you can use to help you in your trading. Let’s get started!

How to start trading – the best place to start!

The best place to start in understanding how to start trading, is to ensure you have a broad understanding of the financial markets, and how they work. To get you started with this, i’ve linked below a video I posted for beginner traders, explaining how the markets work and how to read a stock chart:

OK, so now that you understand how markets work and how to read the charts, the next step in understanding how to start trading, is that you must also put together a trading plan. The trading plan article i’ve linked below, is based on ‘technical analysis’ but you may wish to be a trader who focuses on fundamental analysis. I’ve linked below another article examining the difference between these methods of trading:

Fundamental or Technical Analysis – which one makes more money? – Trader Pro – Learn how to Trade the Stock Market

I’m now going to share with you, my key article on how to create a trading plan, but you can tailor this to include parameters based on ‘fundamental analysis’ instead of ‘technical analysis’ in order to suit your preferences. Here is the key article I published, on how to create a trading plan:

How to create a Trading Plan – make big wins trading – Trader Pro – Learn how to Trade the Stock Market

In the trading plan article, I outline they key steps to help you create and execute a trading plan, including risk management, a trading strategy (this is where you decide what method will determine how you will decide to enter each trade), and risk to reward ratio.

Risk management is an extremely important topic and you must understand this and how to use leverage and a margin account, before you commence trading so in light of this, I also recommend you read the articles on this section of the blog:

Risk Management – Trader Pro – Learn how to Trade the Stock Market

In particular, I recommend you read one which outlines how to manage risk, and also, explaining what leverage and margin is:

How to manage risk – make money trading – Trader Pro – Learn how to Trade the Stock Market

Edit Post “What is leverage in trading? Everything you need to know!” ‹ Trader Pro – Learn how to Trade the Stock Market — WordPress

Once you have understood the basics about how the markets work, and you now understand how to create a trading plan and manage it with proper risk management, and you understand how to avoid getting a margin call, you will be in a good place to start trading. You can also see the key technical indicators I recommend, on this blog, by reviewing my ‘chart analysis’ page. This shows you a real trader applying technical analysis to the charts and the idea of this section of the blog is to show you how you can apply this analysis in exercising your own due diligence before entering trades, and build this type of technical knowledge into your own trading plan, and journey.

I would like to wish you the best of luck on your trading journey!

I hope you found this article helpful.

Disclaimer!

For more great tips and advice on trading the stock market, please visit:

https://sophiatrades.co.uk

To watch me trade live please visit my patreon page here:

https://www.patreon.com/Traderpro8320

Finally, if you would like to receive a discount on the Trading View charting software I use, please click on the relevant link here:

https://www.tradingview.com/?aff_id=117138

What is trading? Everything you need to know…

March 3, 2026March 21, 2026Sophia Trades

I want to help beginner traders understand and answer the question, ‘what is trading’. I’m going to explain what trading is in this article, the difference between trading and investing, what types of returns you should expect from trading and how you can get started. Let’s get straight into it.

What is trading? Some basics…

Trading is the buying and selling of equities (shares), commodities, metals, contracts or other types of assets on an exchange. For every buyer, there is a corresponding seller and these buy and sell actions, drive the price and volume in any market. The idea with trading, is that you buy and sell at favorable points on a chart (or based on fundamental data), and the buy and sell happens more quickly typically, when compared to what an investor does. An investor typically buys assets over and over and holds them until they increase in value by a large amount, over a long period of time. Traders can be day traders – people who get in and out of trades within one day, or swing traders – where trades can span over the course of a couple of days or more. I’ve provided a link below to help you understand ‘fundamentals’. Fundamental analysis is the method of inspecting financial statements to try and ascertain the value of a share with a view to buying it low and selling it high!

Fundamental Analysis – Trader Pro – Learn how to Trade the Stock Market

I am also providing you with a link to a structured course which can help you understand how traders decide where to buy or sell based on ‘technical analysis’. Technical analysis is purely based on the patterns forming on a chart (which stem from events and real world scenarios – the patterns can form based on what real people think a share is worth for example):

Learn to trade – Trader Pro – Learn how to Trade the Stock Market

See also the chart analysis section of this blog, here, where you can see me doing this analysis and explaining my thoughts:

Chart analysis – Trader Pro – Learn how to Trade the Stock Market

What types of returns can you make from trading the stock market?

Traders can make 100% return on their capital, in a year. The reality is that different traders make different amounts – but if you are trading, rather than investing, you definitely want to be making more than a regular investment return. You are taking more risk than what you take with investing money in a more straight forward way as an investor, so risk normally goes hand in hand with return (or it should).

So how do these transactions take place?

We cannot answer the question ‘what is trading’ without considering how these transactions come about. Most transactions take place online these days. You can open a broker account to either buy shares and own the shares or you can open a position based on the movement in the price and enter into a ‘contract for difference’. This is where you enter into a contract with the other party, to agree that if the price goes the way you think it will, the other party will pay you xzy amount of money and vice versa. If the price goes against you, you will need to pay them. The other way of trading is via a ‘spread betting’ account. This is like placing a bet on the price movements of the underlying asset and for most intents and purposes, it is treated and seen, as gambling. There are different tax implications for these three different methods of trading, and broker accounts can be opened online to go with any method you believe is right for you.

What else do you need to know when understanding the answer to the question, ‘what is trading’

Some of the types of broker accounts which can be opened (contracts for difference (“CFD”) accounts, and spread betting accounts) include leverage. Leverage is a loan which is offered by the broker to allow you to get into a larger position size than you may otherwise have been able to do. You put a deposit down on the open position, and these accounts are dangerous for a new trader because you can lose more than you put into your account! You should not trade with a margin/leverage account until you have a good understanding of this and how leverage and margin work. There are other articles on this blog explaining how you can manage your risk as a trader, which you may find helpful, as well as explaining margin and leverage:

Risk Management – Trader Pro – Learn how to Trade the Stock Market

I also published a video on YouTube which you may find helpful, on understanding how you can manage risk as a stock market trader:

I’ve also posted a video on YouTube explaining what margin is:

This introductory video on understanding the stock market, may be helpful for people who are new to the markets:

So now you understand the answer to the question, ‘what is trading’, how can you get started?

The best place to start would be by viewing my ‘Structured Course’ playlist on YouTube – which gives you some of the key lessons on how to become a stock market trader (below), and also refer to my blog article here, on how to create a trading plan:

Edit Post “How to create a Trading Plan – make big wins trading” ‹ Trader Pro – Learn how to Trade the Stock Market — WordPress

I also recommend you browse the other ‘structured course’ articles on this blog which take you through technical indicators, risk management, understanding the spread and many other things, here:

Structured course – how to trade the stock market – Trader Pro – Learn how to Trade the Stock Market – Page 3

Trader-Pro – YouTube

I hope you found this article on ‘what is trading’ helpful. Perhaps if you did, you can leave a comment below.

Disclaimer!

For more great tips and advice on trading the stock market, please visit:

https://sophiatrades.co.uk

To watch me trade live please visit my patreon page here:

https://www.patreon.com/Traderpro8320

Finally, if you would like to receive a discount on the Trading View charting software I use, please click on the relevant link here:

https://www.tradingview.com/?aff_id=117138

How to avoid pitfalls in trading with young children around

March 2, 2026March 21, 2026Sophia Trades

In this article i’m going to talk about how you can avoid pitfalls in trading with young children around you as a woman, when trading the stock market. I’m going to talk about practical tips you can apply in your trading right now, to avoid some of the things which can go wrong and cause stress. Let’s get straight into it!

First of all, let’s talk about what can go wrong in trading with young children around you

Wow – where do I begin? Here are a few examples:

Example 1 – You miss your target: you are in a trade and it’s going to go up to your target area, so you are keeping a bit of an eye on it while your toddler is eating their lunch. Sometimes trading with young children around you is unavoidable depending on the needs of the child and what’s happening with your trade set up and the market. Toddler drops lunch on the floor (along with the beaker, the rattle, the baby wipe and anything else within reach which has ended up on the floor in the preceding ten minutes). Crying ensues, stress in mommy ensues – “what am I going to feed them now – i’ve just made that lunch and it’s gone”. Trade goes near the target but mommy is focused on clearing up the spaghetti on the floor. Trade failed – it went back down to below target level and then into loss position by the time mommy realised what’s happened.

Example 2 – You forget to add a stop loss: You’re baby is asleep while you are planning and trying to execute your trade set up and entry point. You enter a buy position and just before you can set your take profit and stop loss, baby wakes up and is screaming for milk – it needs it NOW. You rush over to bubba to console them while you try and get a bottle ready and in the meantime, you have forgotten about adding your stop loss. Trade goes against you while you are heating up the baby’s milk and you end up in the red, to a level which is two times the size of the loss which would have happened, had you set your stop.

These are two examples of a multitude of things which could happen while you are keeping an eye on trades, while simultaneously looking after your baby or toddler. If you are a man or non caregiver of young children, I do not expect you to understand this. This is something which mothers contend with every day – it maybe that they are trying to do something else besides trade, quickly before their baby wakes up – there are many things which a woman could need to deal with while looking after small children, and the children are not interested in anyone else’s schedule, but their own. This is the biological reason why women ended up better at multi tasking.

OK, so we know these things can go wrong. What can you do about it as a trader to protect your account and your confidence?

The first recommendation I can make is for you to trade higher timeframes. The timeframes which should be avoided are the 5, 10, 15 minute time frames. Maybe even the 30 minute time frame. Why? The higher the timeframe you use, the more time you will have to execute your entries and exits and plan your trades. The price moves more slowly on the higher timeframe. It will give you time to sort your baby out, give him/her a bottle, adjust your target or add one automatically.

Another suggestion is to do your research at times when you know baby will be sleeping – the tasks which could have an interruption and not go wrong – like choosing which market to enter from the really high time frames like the daily, the weekly, and you can do this while your baby is sleeping in the evening but tend to him/her if he/she wakes up.

My recommendation would be to not trade without a stop loss or take profit being automatically set on your trades. You can do some analysis of what actually happened with the price movements (whether you made an error, why it went down instead of going up as you had planned etc) at a convenient time, as long as your position is automatically protected from going wrong.

I hope you found this article helpful in deciding how you can avoid pitfalls when trading with young children around you. I also published a video on my YouTube channel, on avoiding pitfalls when trading with young children- which you may find helpful:

Disclaimer!

For more great tips and advice on trading the stock market, please visit:

https://sophiatrades.co.uk

To watch me trade live please visit my patreon page here:

https://www.patreon.com/Traderpro8320

Finally, if you would like to receive a discount on the Trading View charting software I use, please click on the relevant link here:

https://www.tradingview.com/?aff_id=117138

How does a dividend affect a share price? Everything you need to know!

February 22, 2026March 21, 2026Sophia Trades

How does a dividend affect a share price? This is an important topic for any trader and definitely something you should be considering before placing any trade – both in general and in relation to the timing of the specific stock you are interested in trading. I’m going to talk about what a dividend is, how this affects the price of a stock and how you can prepare for these fluctuations as a trader.

We want to answer, “How can a dividend affect a share price”, but first of all, what is a ‘dividend’?

So…. back to companies 101…. we know that a company is a business (or it can be an investment vehicle) in a legal entity ‘wrapper’. It is treated as a separate person entirely, from the business owner(s). The business is split into portions like dividing up a pie and these portions are the ‘shareholdings’ of the company. So the people who own the business are the ‘shareholders’ and they each own a piece of the company in accordance with their share holding and certificate, like a slice of pie. A dividend is a mechanism by which, the business pays out some profit to its shareholders.

So how do dividends come about?

In order to determine an answer to the question, how does a dividend affect a share price, we must first also understand how dividends come about! Any assets or income belongs to the legal entity of the business and is received within the legal entity. In order to distribute some of this income to the owners of the business (the shareholders), a ‘dividend’ must be declared and paid. The business will declare a dividend from ‘distributable profits’ only. If they do not ensure the dividend is made from ‘distributable profits’ it is possible the dividend will be made illegally. This is a slightly different topic but the directors basically need to ensure that the business has got enough cash and spare money before paying the shareholders a dividend, to make sure it is being fair to its creditors. The worst case scenario which could occur is that the company could pay a dividend and it depletes funds needed to pay creditor liabilities – this is why they must be paid from ‘distributable’ reserves. This is a slight digression, but it was worth noting here for anyone who does not know much about companies and how they work.

OK, so back to where we were… the directors of the company will assess whether the company is in a position to pay a dividend, and they will ‘declare’ it / in other words, they will announce to the market, that they have decided a dividend will be paid. This is the ‘ex dividend’ date – which is important. The cash payment of the dividend will follow a little while later and will be paid to the share holders in accordance with their slice of pie share holding. So if the company is divided up into 10 slices of pie (shareholdings) and they are all equal shareholdings, and the company declares a dividend of £800, what this means is that each slice of the pie shareholding will receive £80 as a dividend.

Are dividends mandatory?

No – dividends are not a mandatory thing on the part of the directors. They need the freedom and discretion to be able to examine the company’s financial position, prior to making any dividend declaration, and consider whether the company can afford to make a dividend from its distributable reserves.

Not only this, but some companies do not usually pay dividends and other ones do. It is entirely in the discretion of the directors and they are usually following the particular customs of the company in question. If a company usually pays a 1% dividend to shareholders, the shareholders would be in a position where they are accustomed to receiving this, and they would expect it. Indeed, it may be the reason they purchased those shares – some shareholders just purchase shares for the purposes of receiving dividends, and some shares pay more dividends, and pay more ‘often’ than others – so if the investor is someone who is interested in receiving dividends as income rather than more capital growth from his/her shareholdings, they may tailor their investment portfolio to the companies which pay dividends regularly and at a good rate. Notwithstanding this, the discretion of the directors must always be applied to ensure the dividends are not made illegally (from non distributable reserves – depleting funds for the creditors).

So how does a dividend affect a share price then?

So when a company makes a dividend, this dividend is in effect, the company paying out some of it’s earned profits to the shareholders. The company’s worth (share price) is based on it’s assets and earnings potential – it’s an estimate by the market based on supply and demand, of what people think that is worth! So when the company pays out some of it’s worth as a dividend, it is literally depleting the balance sheet of reserves and profit/cash – which could be used to buffer the company from any troubles, buy more assets, grow the business etc. I’m not saying paying a dividend is a bad thing but it ‘must’ affect the share price – logically, it will.

So when the stock goes ‘ex dividend’ (when the dividend announcement has been made), you can expect the stock to take a temporary nose dive in terms of the share price.

How can you plan your trades around this?

Make sure before you open a position on an equity, that you know what the next ex dividend date is, and be prepared in the plan of where to enter and exit, for the drop in share price when the stock goes ex dividend. If you are confident that there will be no significant impact from the question, how does a dividend affect a share price that’s fine… but it could affect your win rate if you ignore this and get in anyway!

I hope you found this article informative on resolving the question, how does a dividend affect a share price. Perhaps if you did, you can leave a comment below!

Disclaimer!

For more great tips and advice on trading the stock market, please visit:

https://sophiatrades.co.uk

To watch me trade live please visit my patreon page here:

https://www.patreon.com/Traderpro8320

Finally, if you would like to receive a discount on the Trading View charting software I use, please click on the relevant link here:

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How to Understand Financial Instruments

December 3, 2025March 21, 2026Sophia Trades

In this article i’m going to talk about different types of financial instruments, what they are, how they can be traded. The markets can be a minefield for new traders so it is hoped this article will shed some light on exactly what it is you are looking at, when you log into a broker account.

What are Financial Instruments?

Financial instruments can be any type of financial asset or liability with an underlying contract present giving rise to the asset or liability rights. For example, if you hold shares, you hold financial instruments. If you owe a loan company some money for the new car you just purchased, this is also a financial instrument. It’s a liability for you, but an asset for the vehicle loan company.

So what about the instruments you can see when you log into a broker account? The types you will see, will depend on whether you are logging into an account with margin, or a regular asset purchase account. I have covered what margin is, separately – please see the links below:

OK, so back to the question at hand! If you log into a margin account, you will see many ‘ETFs’ which are available for trading. This stands for Exchange Traded Fund. They are based on many different types of underlying assets. They are basically funds which track some sort of asset.

Financial Instruments – Indices

Indices are indexes of stocks of particular regions or sectors. For example, note the following indices which are available for trading:

NASDAQ ETF (NASDAQ 100) – this is a fund which tracks the value of the 100 top stocks on the NASDAQ stock exchange in America. It is heavily weighted in the technology sector. For example, you will find Apple, Google, Microsoft listed on this exchange/top 100 list. The ETF tracks the average value of all of these top 100 NASDAQ stocks. To buy into this asset effectively means you are hedging your trade or investment between many different successful companies.
S&P 500 – like the NASDAQ tracks the top 100 stocks, this one tracks the top ‘500’ stocks in America. The stocks relate to many different sectors.
FTSE 100 – the top 100 stocks in the UK – you are starting to get the picture, right?
FTSE 350 – the top 350 stocks in the UK.

These indices track the average value of the stocks listed on them.

Pictured below is the chart for the S&P 500 via the Trading View application:

ETFs – Commodities

The ETF commodities track the value of an underlying commodity asset. The commodity could be crude or brent oil (priced in USD per barrel), natural gas, wheat, soy… there are many different commodities available for trading. They are typically priced at a recognised unit of measure in the relevant industry – for eg. oil priced per barrel.

ETFs – Metals

Metals can be traded too via ETFs. Some popular metals include:

Gold (XAUUSD)
Silver (XAGUSD)
Copper
Lead
Platinum

Again, the price of these are based on typical units of measure of the underlying assets, usually in USD.

ETFs can be traded via a margin account – either a spreadbetting account, or a ‘CFD’ account (“Contract for Difference”). More on this below.

Ordinary individual stocks

You can purchase shares in a stock and own part of the relevant company. Unlike trading or investing in the ETFs, when you purchase actual stock shares, you own the underlying shares as opposed to just a contract or you making a ‘spread bet’ on the movement (more below on this). These are not purchased through a margin account but instead through a simple investment account.

When you own a stock share, you may receive dividends once or twice per year. If you purchase enough shares in the company, you will literally take control of the company.

The purchase and sale of stocks in the UK are typically subject to capital gains tax. Any dividends received will be taxed as dividend income.

Let’s look at the different types of financial instruments which can be used to open positions on these types of assets

Spread betting account

A spread betting account is used to place bets on the price movements of the underlying asset. You will never own the asset in this scenario. It is literally like making a bet a a book makers. The fee taken from the broker is heavily weighted on the ‘spread’ – the value between the buy and sell prices. The broker takes a cut by adding a bit more to the buy price for you, for example. It works in the opposite way too, when you sell.

Spread betting accounts are typically seen as ‘gambling’ and therefore exempt from personal tax liability, but note there can be some exceptions for professional traders. If you are getting to a point where you are buying and selling and making money without a day job from this method of trading, you are strongly advised to take some tax advice about the implications in the UK.

Please see my article on spread betting here for more information:

Understanding the spread – Trader Pro

CFD account (“Contract for Difference”)

Unlike a spread betting account, you will own the underlying asset in a contract for difference account. However, it is not the ‘shares’ or ‘oil’ or ‘gold’ that you will own. You will own a ‘contract’ for the price difference as it plays out in the market. If the price goes up and you purchased the asset, the ‘contract for difference’ will determine that you will be owed some money from the person on the other side of the instrument. The same is true the other way round. If you sell, thinking the price is going to go down, and it does indeed go down, the ‘buyer’ on the other side, will need to pay you, in accordance with the CFD. The broker controls the payments and receipts of all of these exchanges so this is not something for you to worry about – it is just useful for you to understand what it is, you are actually buying or selling.

CFD accounts are typically subject to capital gains tax in the UK, for individuals. (You are strongly encouraged to take your own tax advice on this).

Purchasing shares outright

In this scenario, as I mentioned above, you will own the underlying share, and you will benefit from all voting and dividend rights attached to the share. These are typically subject to capital gains tax in the UK although, as noted above, you should take your own tax advice about the implications of what you are trading, for tax purposes.

I hope you found this article helpful. I also posted a video – maybe you are more of a visual person and it would be helpful to see me talking through these instruments on a screen:

Understand my strategy in full: https://www.patreon.com/Traderpro8320

For more great tips on trading the financial markets, please visit my blog:

https://sophiatrades.co.uk

Discount on Trading View:

https://www.tradingview.com/?aff_id=117138

Finally, thank you to my existing members on Patreon, and for your likes, comments and subscribes. Happy trading!

Please note any subscriptions taken via my affiliate link with Trading View may result in me earning a small commission.

Fundamental or Technical Analysis – which one makes more money?

December 1, 2025December 3, 2025Sophia Trades

In this article i’m going to talk about the key differences between fundamental and technical analysis. Should you use fundamental or technical analysis in your trading? Which one is more profitable? Let’s find out…

Fundamental or technical analysis – what is fundamental analysis?

In a nutshell, traders who perform fundamental analysis look at the ‘fundamentals’ behind a company – they consider the company’s balance sheet and financial statements. The consider directors’ reports and any other information they can get hold of about the company, in order to predict future price movements. This might include using key ratios on the company’s balance sheet, to assess the company’s health or liquidity. The ratios used are not covered in this article. I just want to explain to you what the difference is between these two different approaches to analysing the markets and making trading and investment decisions. Some of the ratios can be used to determine a ‘value’ for a company and therefore, by dividing this value by the number of shares issued, you could derive an estimate of what the company should be priced at in terms of share price, and then see if you can see a discount to this as a purchase opportunity. Such ratios include the company’s P/E ratio. These types of ratios give an idea of how much the company can earn vs the amount of investment you would need to put down to purchase the shares.

It is my intention to post another article explaining some of the key balance sheet ratios and how you can use these to assess the health of a company. Watch out for this.

Fundamental or Technical analysis – what is technical analysis?

Technical analysis does not rely on the financial statements directly and other documents and information. Technical analysis is performed by analysing patterns on the stock charts. The stock charts can give indications of places where there is strong buying or selling pressure by noting patterns of price rejection at these levels. These can be used to predict future price movements. If you would like to understand more about technical analysis, there are plenty of articles on this blog to help you get started. Let’s look at an example of some areas where this price action can be noted:

Click here for a discount to the Trading View software I use

Note on the above chart how the price met some resistance at around 6,164.9 – where I have applied a horizontal support/resistance line in white to the chart. The price bumped on this level a few times and then sailed down very low – what this tells me, as a technical analysis trader, is that the price met a lot of selling pressure at that point. The highs could not be sustained – the buyers became depleted in the market – they did not believe the price was worth more than this level, at that time. This lack of buyers affected the volume of transactions in relation to people ‘buying’ which in turn drove the price down further.

Note that once a price becomes a resistance area, it can, subsequently become a support – note how after the price went past this level some time later, it dipped back down to ‘test’ the level – where I have marked the chart in red, before ascending further up. These patterns are common and can be seen in every stock chart across the markets. So the volume, and demand, which I can see on the chart, tells me a lot about how the share should be priced – it’s almost real time information as opposed to looking at the fundamentals.

So how does one method compare to the other?

Note that I stated technical analysis does not rely ‘directly’ on the fundamental analysis/documentation. However, the price which plays out as patterns on a stock chart, is ‘driven by’ the company’s fundamentals. As a technical analysis trader, I do not perceive these two methods as distinct – I understand that the price patterns I use on the chart, are driven by the fundamentals. I am a qualified chartered accountant by vocation, so although it would be very easy for me to check a company’s fundamentals, I personally, feel that the charts tell me everything I need to know. Therefore, the question of fundamental or technical analysis and which one is better or more profitable, is a bit of a misnomer.

I do keep aware of general major news in the markets and how this may affect what I would like to trade – for example, Trump’s tweets on tariffs and how these have been affecting Apple. However, in the most part, I rely on the technical analysis to give me an idea of when to invest or trade, where to invest or trade and most importantly, when not to!!

One of these methods is not necessarily going to make you more money than the other – it is best for you to become a ‘master’ of what you are doing, and develop skill in either one – this will help you best to make more profit.

I hope you found this helpful in terms of understanding fundamental or technical analysis.

I also published a video on YouTube which you may find helpful:

https://youtu.be/5nnCg5CfOMw

Understand my strategy in full: https://www.patreon.com/Traderpro8320

For more great tips on trading the financial markets, please visit my blog:

https://sophiatrades.co.uk

Discount on Trading View:

https://www.tradingview.com/?aff_id=117138

My performance in the live markets:

https://sophiatrades.co.uk/category/my-performance-statistics

Finally, thank you to my existing members on Patreon, and for your likes, comments and subscribes. Happy trading!

Please note any subscriptions taken via my affiliate link with Trading View may result in me earning a small commission.