Lloyds Stock Trading
Lloyds Banking Group PLC is a collection of leading UK banks with shares traded on the London and New York stock exchanges. The business is one of the largest companies listed on the UK’s FTSE 100 index, registered under the stock symbol LLOY. This tutorial will cover a step-by-step guide on how to buy Lloyds stock, from choosing a broker to opening a trade. We will also cover share price influences, company details, and Lloyds stock trading strategies.
Top UK Brokers For Trading Lloyds Shares
AvaTrade is a leading forex and CFD broker, established in 2006 and regulated across 9 jurisdictions. Over 400,000 users have signed up with the broker which processes over 2 million trades each month. The firm offers multiple trading platforms, including MT4, MT5, and a proprietary WebTrader. 1250+ financial instruments are available, alongside a comprehensive education center and multilingual customer support.
Demo Account Regulated By MT4 Integration Yes ASIC, CySEC, FSCA, ISA, CBol, FSA, FRSA Yes Min. Deposit Min. Trade Leverage $100 0.01 Lots 1:30 (Retail) 1:400 (Pro)
Interactive Brokers is a leading global brokerage that provides access to a comprehensive offering of stocks as well as forex, futures, metals, bonds and cryptos. The firm has over 40 years experience in the online trading industry and is heavily regulated by SEC, FCA, IIROC, and SFC. Traders use the proprietary Trader Workstation and can access powerful tools and data feeds as well as comprehensive educational resources.
Demo Account Regulated By MT4 Integration Yes SEC, FCA, IIROC, SFC No Min. Deposit Min. Trade Leverage $0 $100 1:50
XM is a globally recognized forex and CFD broker with 10+ million clients in 190+ countries. Since 2009, this trusted broker has been known for its low fees on 1000+ instruments. XM is regulated by multiple financial bodies, including the ASIC and CySEC.
Demo Account Regulated By MT4 Integration Yes ASIC, CySEC, DFSA, FSC, FSCA Yes Min. Deposit Min. Trade Leverage $5 0.01 Lots 1:30
Lloyds Bank was originally founded in 1765 as a private bank named Taylor’s and Lloyds. In 1995 the bank merged with TSB, and Lloyds Banking Group PLC was formed in 2009 after Lloyds TSB acquired HBOS PLC.
Today, the company is one of the largest retail and commercial financial service firms in the UK, with over 26 million registered customers. Lloyds Banking Group has a market cap of approximately £36 billion.
Lloyds Banking Group also constitutes many other banking brands including Lloyds Bank, Halifax, Bank of Scotland, and Scottish Widows. The group provides a variety of retail and commercial banking solutions as well as insurance products and savings accounts, and has recently been listed as the third-largest bank in the UK by asset class, behind HSBC and Barclays.
The company has headquarters in London, with regional offices located in Wales and Scotland.
There are many factors to consider when deciding how and when to buy or sell Lloyds shares, and among the most important is the group’s earnings release dates. Major bank trading updates or financial statement releases can create significant share price volatility, depending on performance.
Lloyds operates on a standard fiscal year, with four major updates annually:
- February – Full-year earnings report
- April/May – Q1 interim statement
- July – Half-year reports
- October – Q3 interim statement
Keep an eye on previous price trends around these dates to understand their impact on the share price. If retail traders estimate a positive performance, they may purchase shares before public announcements to capitalise on the rewards.
To give an indication of the sway these reports hold over stock prices, consider Lloyds’ half-year earnings release in July 2020. In the initial trading hours following the release, the company’s shares fell by over 8%. This immediately took the firm’s share price to the lowest level since 2012.
Share Price Influences
- Dividends – Dividend ratios can significantly impact the number of traders investing in Lloyds. A rewarding dividend payout may see more investors buying into Lloyds Banking Group and gives them a reason to hold onto their shares, which will strengthen the bank’s performance. Dividends are expected to be rewarding at 2.73p per share in 2023 with an estimated yield of over 5%.
- Cost Of Living – A higher cost of living is likely to reduce disposable income and demand in numerous sectors including the mortgage market, as customers refrain from heavy borrowing. If this significantly eats into Lloyds’ mortgage revenues, it will also likely impact share prices.
- UK Performance – Given the bank’s heavy stake in the UK vs HSBC, for example, Lloyds is more susceptible to volatility in the country. This means that reports of recession in the UK are likely to impact Lloyds more than some of its peers, while it will benefit from a strong economic performance.
- PE Ratio – Another influence on Lloyds’ share trading price is the group’s price-to-earnings ratio. This measures an organisation’s current share price relative to its per-share earnings. Investors may use this to compare the viability of a trade, particularly vs other FTSE 100 competitors such as HSBC or NatWest. The lower the PE ratio is, the better it is for potential investors. However, a high PE ratio may suggest a company with good growth prospects.
- Regulations – Regulatory reforms have been planned in the UK following Brexit and many consider it likely that the government will ease regulations in the finance sector. A shakeup could do wonders for Lloyds if, as Chancellor Jeremy Hunt puts it, it manages to ‘turbocharge’ the UK economy.
- Interest Rates – High interest rates are generally bad news for the economy, but banks sometimes buck this trend since they can charge more for lending. When interest rates rise and stock prices fall in other sectors, more investment may flow to Lloyds Banking Group and other banks. Interest rate hikes in 2022 drove Lloyds’ net interest income up 15% in the 9 months to September that year. However, you should factor in the effect that high interest rates will have on the mortgage market, as they could severely dampen lending demand.
Share Price Highs & Lows
The Covid pandemic caused significant fluctuations in the Lloyds Banking Group share price, dropping as low as 23.98p in September 2020 vs 63p in February 2020. Stocks are still trading at a 25% reduction vs pre-Covid levels.
The economic travails in the UK are an ongoing risk for the share price of Lloyds. Buyers and sellers are expected to remain cautious when borrowing funds given the slowdown in the housing market and the increased mortgage rates. The Office for Budget Responsibility (OBR) said the UK economy is expected to shrink by 2% by mid-2024.
As of 2023, Lloyds’ share price is around 53p with a 52-week range price between 38p and 53p. The Bank of England has suggested that the UK is facing its longest recession ever – a bleak forecast that suggests lower demand for loans and a higher rate of loan defaults, factors which may impact the profits of Lloyds Banking Group and trading strategies.
Pros Of Lloyds Stock Trading
- High dividend yield
- Prospects for growth in post-Brexit UK
- Potentially good value for money after recent stock price slips
- Widely available to trade on many online brokers and most instruments
- The group is an established brand name that includes some giants in UK and world banking
Cons Of Lloyds Stock Trading
- Poor UK economic performance indicates potential trouble for Lloyds
- Potential for volatility and unexpected swings due to broader market conditions
How To Trade Lloyds Stock
Lloyds is traded on the London Stock Exchange which has open trading hours between 8 AM to 4:30 PM (GMT) Monday to Friday. The ticker symbol is LLOY.
There are several ways that you can purchase or invest in Lloyds Banking Group shares, however this will vary between online brokers or trading platforms. Thanks to the size of the company, retail investors should have no problem finding instruments that allow you to start trading Lloyds stock:
- Purchasing Shares – The most common method of investing in Lloyds Baking Group is by purchasing shares directly through an online broker. Shareholders will receive a portion of dividend payouts and may be able to participate in votes. They also stand to make a profit (or loss) depending on if the value of the stock rises or falls.
- CFDs – A leveraged derivative that enables retail investors to speculate on the share price of Lloyd’s stock, without owning the underlying asset. You can purchase CFDs to go long or sell them to go short and trade them with leverage.
- ETFs – An exchange-traded fund (ETF) is a pooled product, typically linking assets by a common factor. Due to its significant market cap, Lloyds will feature in many banking funds including the L&G Quality Equity Dividends ESG Exclusions UK UCITS ETF with a 53% weighting.
- Stocks And Shares ISA – A stocks and shares ISA is an investment account that allows UK residents to invest without any tax implications. Retail traders can choose to include Lloyds shares as part of a portfolio. Hargreaves Lansdown, for example, offers this account type with a 0.45% annual holding charge.
- Spread Betting – A derivative trading strategy, in which traders do not own the underlying asset they bet on, but speculate whether the share price is going to rise or fall. If Lloyds Banking Group’s share price moves in the predicted direction, a profit is achieved. Spread betting is also tax-free in the UK.
Finding A Broker
An online broker is a gateway allowing retail traders and investors to profit from Lloyds’ stock price movements, so it is vital to choose one that is both competitive and secure. Many brokers will provide retail traders with various ways to invest in Lloyds stocks, but ensure that they offer the right trading vehicle before you sign up.
Other features to consider when choosing Lloyds stock brokers include:
- Software – As well as a stable platform solution, does the broker provide any third-party analysis tools? This may include access to the TradingView charting package to view historical price data of Lloyds share prices or Autochartist to identify investment patterns using technical indicators. The best Lloyds brokers will provide this software with no additional fees or eligibility requirements.
- Trading Fees – Lloyds stock brokers charge traders for the services they provide. This may be in the form of a commission or spread. Look for a reliable broker with low or no commission fees and a tight spread. Also consider non-trading fees such as deposit/withdrawal charges or overnight holding costs.
- Regulatory Status – The best brokers to invest in Lloyds shares will be regulated by a top-tier financial body such as the Financial Conduct Authority (FCA). Lloyds brokers with reputable oversight offer the safest environment to execute investments. The FCA, for example, provides retail investors access to all the relevant capital protection schemes and compensation programmes if required.
- Customer Support – Regardless of your trading strategy or investment style, you will likely need support or guidance from your broker at some point. Those that provide 24-hour customer support during trading days will rank the highest. Live chat services are also an excellent feature, with typical response times of under five minutes.
Create An Account
Whichever broker you choose to trade Lloyds stocks, the method to get started will be pretty similar:
- Register for a new brokerage account
- Upload identity verification documents and proof of residency such as a passport, driving license, and utility bill
- Login to your trading account once the sign-up request is approved
- Deposit to your live trading account
- Purchase Lloyds shares or trade via alternative instruments such as CFDs
How To Buy Lloyds Bank Shares
The process of purchasing Lloyds stocks should be quick and easy, with transactions able to be completed in as little as ten minutes. The method may vary slightly between Lloyds brokers, depending on trading platforms and tools available.
We outline the process to purchase stock CFDs on the eToro platform as an example:
- Sign in to the eToro client dashboard with your registered credentials
- Search for ‘LLOY’ in the navigation bar or find it via the watchlist tab
- Select the ‘Invest’ icon from the top right of the instrument page
- Decide whether to go long or short by clicking the ‘buy’ or ‘sell’ button
- Choose the value to invest using the ‘+’ and ‘-’ symbols, or switch to units using the arrow toggles
- Add stop-loss or take-profit risk parameters if desired
- Choose your level of leverage if any by clicking the x2 symbol
- Select ‘Open Trade’
The eToro platform provides detailed statistics, charts, and analysis of all stocks including Lloyds Banking Group.
Bottom Line On Lloyds Stock Trading
Lloyds is a popular investment for UK retail traders given its dominance in the financial market. The stock price has fluctuated significantly during the coronavirus pandemic and its outlook is relatively murky as the United Kingdom faces significant financial challenges. Having said that, there are certainly many opportunities to make a profit from price movements. Do your research before buying or selling Lloyds Banking Group shares and follow our guide to help you choose the best broker and trading style.
Use our list of the best Lloyds stock trading brokers to start investing.
Can I Buy Lloyds Bank Shares Without A Broker?
You will need to open a brokerage account to trade Lloyds shares on the London Stock Exchange. Deciding which is best for you will depend on your strategy and requirements. The brokerage will act as the intermediary and host the trading platform to make your own trades. All you will need is some money to invest and a stable internet connection.
How Do I Buy Lloyds Bank Shares?
The best way to buy or trade Lloyds Bank shares is to open an account with a broker that offers direct trading or alternative derivative products, such as CFDs. Once registered, make a deposit, launch the trading platform, and open a new position.
How Much Does It Cost To Buy Lloyds Shares?
Fees will vary between brokers and trading instruments. Look out for low-cost UK brokers with zero commission charges or low spreads. Remember to factor in non-trading costs such as account funding and overnight holding fees.
How Can Invest In Lloyds Stocks?
There are several different instruments available to invest in Lloyds stocks. This includes purchasing shares directly, contracts for difference (CFDs), and exchange-traded funds (ETFs).
Are Lloyds Shares A Good Investment?
Lloyds shares continue to be a popular investment. The relatively low share price thanks to the challenging economic climate in the United Kingdom makes it an appealing trading opportunity. Having said that, there are risks involved. As the UK’s biggest mortgage lender, Lloyds’ success is linked directly to the UK’s economic outlook. Factors such as interest rates and inflation may have a significant impact on the performance of the banking group.