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With execution only share dealing, you make all trading decisions including which stocks to invest in and when to buy and sell.

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AJ BellHargreaves LansdownAJ BellHargreaves Lansdown
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Last updated
November 7th, 2024

What is execution only share dealing?

Execution only share dealing is a type of stock trading offered by a broker that lets you buy and sell shares without getting personalised advice on which ones to choose.

You make the trades yourself, either through a platform or by calling your execution-only broker. Because no one is advising you, you cut the cost of share dealing by avoiding the fees that come with advisory brokers.

This kind of account is best suited to people with a lot of investment experience, as you will be responsible for choosing what you invest in and when. You need to research the markets and manage your investments.

To start share dealing you need to open a share dealing account that offers an execution-only option. Then you can add money to it and start buying and selling shares.

What charges to look out for with execution only accounts

There are four main charges to look out for when choosing an execution only share dealing account:

Charge per trade

This is what you pay for each deal you make, whether you are buying or selling shares, e.g. £9.95 per trade. If you decide to trade over the phone, charges are often significantly higher, around £20-£30.

Platform fees

This is what some brokers charge for using their platform, which can be taken monthly or annually, e.g. £9.99 per month. Some platforms don’t charge these fees, so it’s worth shopping around.

Transfer fees

This is what some brokers charge when you transfer money out of your account, e.g. £25 per transfer.

Frequent trader rate

This isn't offered by all providers, but some share dealing companies offer a frequent trader rate for those who make regular trades. For instance, Hargreaves Lansdown charges £11.95 per trade for up to nine deals a month, but this drops to £5.95 for regular traders. To qualify for this rate, you need to make 20 or more deals per month.

Execution-only pros and cons

Pros

Buy or sell shares faster
Lower per-trade charges
No advisory costs

Cons

You take on all the risk
Charged per deal
No advice provided

What other options do you have?

Execution only stockbrokers are not the only option for those keen to invest in stocks and shares, There are two other types of share dealing broker you could consider:

  • Advisory: You get advice on which shares to buy and sell, but the deals you make are ultimately your decision

  • Discretionary: You give authority to your broker to buy and sell shares on your behalf, usually based on agreed investment objectives and your personal financial situation

Execution only trading can be more risky, because you're making all trading decisions on your own. There’s a possibility that you could lose money on some of the trades you make.

Do you have to pay tax on the shares you buy?

If your shares are held in an ISA, you will not need to pay tax on your profit or purchases. If they are in a different type of account, you may need to pay capital gains tax and stamp duty or stamp duty reserve tax.

The amount of capital gains tax you pay when you sell your shares will depend on your income tax bracket and how much money you have made from the sale.

Jargon Buster

Bear market

A bear market is a market environment where a major index or stock falls 20% or more from its recent highs. It’s the opposite of a bull market.

Blue chip stock

Blue-chip stocks are the stocks of large, industry-leading companies, typically with good reputations. The term was derived from blue gambling chips, the highest-valued chips in casinos.

Broker

A firm or person who executes your buy and sell orders for stocks or other securities. Some brokers also provide advisory services.

Bull market

A bull market is the opposite of a bear market and is a market experiencing a prolonged period of increasing stock prices that are at least 20% above a recent low.

Day trading

Day trading is the practice of buying and selling a stock or security within the same trading day, often with the intention of profiting from small fluctuations in price.

IPO

An Initial Public Offering (IPO) is the first sale or offering of a stock by a company to the public. 

Portfolio

A collection of assets that makes up a trader or investor’s portfolio. Your portfolio can contain a single stock or an infinite number of stocks and other securities.

Stop-loss order

A stop-loss order directs a stockbroker or share trader to sell a stock when it reaches a predetermined price. It is usually used by investors who want to limit their potential losses on a particular share.

Volatility

Volatility can either refer to an individual stock's price movements or the movements of a financial index. Stocks that fluctuate wildly in price over a short period of time are considered highly volatile, while those that move slowly are deemed less volatile.

FAQs

Can I buy shares in any company?

No, the company must be listed on a stock exchange such as the London Stock Exchange (LSE) or Alternative Investment Market (AIM). Do your research to check which exchange is best for you.

Can I get advice from an execution only broker?

No, you will need to choose an advisory or discretionary broker for advice on which shares to buy and sell.

How do brokers execute trades?

After a broker has been instructed to carry out a trade, they will try to find another broker looking to trade in the same shares. They will then negotiate a price for the shares and strike the deal. 

How much you pay will depend on when the deal is made, rather than when you placed the order. During working hours, most brokers offer a ‘Quote and Deal’ instruction, where you’re given the best price and have 15 seconds to accept. 

If this isn’t possible, the broker must locate a specialist who offers the types of share they’ve been instructed to trade. You could choose an order that gets the broker to buy at the best price possible when they find a deal, or you can set limits for the maximum you’re willing to pay or the minimum price at which you’re prepared to sell.

Processes vary by broker, so check what kinds of orders you can make with your chosen provider.

Can I deal in shares through a mobile app?

Yes, if an app is available through the company you’re using. Before you use an app to make trades, you’ll need to set up an online account and transfer money into it. If mobile access is important to you, make sure your broker offers this before you sign up, as not all do.

How can I cut the cost of share dealing?

Consider signing up for a frequent trader account if you think you’ll make several trades per month – this could reduce the cost of each individual trade, although you should always check each company’s terms before signing up.

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About the author

Salman Haqqi
Salman Haqqi spent over a decade as a journalist reporting in several countries around the world. Now as a personal finance expert, he helps people make informed financial decisions.

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