How to trade AIM
Buying shares in AIM companies, investors can own a tiny fraction of the business.
Due to the smaller size of most AIM companies, your risk and reward are amplified and the share prices can react accordingly.
When the business grows you can take advantage of any rise in the share price, however, the chances of the business failing are just as likely thus causing the price to fall or even drop to zero.
AIM CFDs and
CFDs and Spreadbetting are used to achieve leverage.
Rather than pay the full value of a transaction, investors only need to pay a percentage of the whole trade value when opening the position.
What this means to investors is that they have to generally commit circa 25% (£2,500) margin to purchase £10,000 worth of shares. This is referred to as the ‘Initial Margin’.
The key point is that the margin allows leverage, so that investors can access a larger amount of shares than they would be able to if buying or selling the shares themselves, and allowing the opportunity to amplify returns either positively or negatively.