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Royal Dutch Shell, known as ‘Shell’ (LSE; ticker: SHEL), remains dominant in the energy and petrochemical sectors. The company was established in 1907 following the merger of Royal Dutch Petroleum and the Shell Transport and Trading Company. Since then, it has solidified its position in the oil and gas industry, boasting a market capitalisation of £158.51 billion.
Today, the company operates through six key divisions: Integrated Gas, Upstream, Renewable and Energy Solutions, Chemicals and Products, Marketing, and Corporate. With over 103,000 employees across 70 countries, Shell has gained a reputation for its continued focus on innovation and renewable energy.
Functioning as a derivative instrument, A CFD (or Contract for Difference) allows investors to speculate and hedge on the underlying price movement of global financial markets, including Forex, Commodities, Bonds, Stock Indices, ETFs (Exchange-Traded Funds), Digital Currencies, and Stocks.
CFDs are legal agreements/contracts settled in cash between a buyer and a seller. For example, Trader A enters long (buy), Trader B goes short (sell), and the underlying asset's value increases. In this case, Trader A will pay Trader B the difference between the opening and closing prices of a trading position; similarly, if the value decreases, Trader B will pay the difference to Trader A.
Trading CFDs also allows traders to control larger position sizes through leverage/margin, essentially ‘putting up’ a small percentage of the position's total cost to trade an equivalent position size. When you trade with FP Markets, the initial margin requirement for Shell Share CFDs is 20%. If SHEL shares are trading at GBX2,544.50, buying 50 company shares would cost you £1,272.25. However, with a 20% initial margin, you can open an equivalent CFD position of 50 Shell shares by putting up £254.45 (1,272.25 * 0.2).
1. Open an FP Markets Forex and CFD Trading Account
To start trading SHEL Share CFDs, you will need a live trading account. To do this, visit FP Markets' main webpage and click the 'OPEN LIVE’ button to complete your application, as shown below.
2. Download your Trading Platform
Upon completing your registration, you will receive your login details via email. Use the credentials to access the Client Portal and download your preferred trading platform. With FP Markets, you can trade on MetaTrader 4 (MT4), MetaTrader 5 (MT5), cTrader, and TradingView.
MT5 is a popular choice among traders for investing in Share CFDs, such as SHEL.
3. Find the Shell Ticker
In MT5’s Market Watch (Ctrl+M), locate the SHEL ticker by typing ‘SHEL’ in the ‘Click to Add’ space at the bottom. Then, drag and drop the SHEL ticker to the chart’s interface to access real-time price updates. Once the price chart appears, you can modify it to meet your trading preferences.
4. Place the Buy or Sell Order
Assuming you've researched SHEL and identified a possible investment opportunity, enter the buy/sell orders MT5 through the order window (F9). In the required fields, enter details such as volume, stop-loss, and take-profit values, and press the buy/sell button to execute the trade.
Another way to buy and sell SHEL in MT5 is through the One-Click Trading feature (Alt+T), generally used by shorter-term traders to execute a position in a stock rapidly. However, you can only set stop-loss and take-profit orders once the trade is active; you can do this in the trading terminal (Ctrl+T).
Examples of buying and selling Stock CFDs:
Shell’s Q2 24 Earnings Report, released on 1 August, demonstrated strong performance. The company reported adjusted earnings of £6.3 billion, facing a 19% slip from the £7.7 billion earned in Q1. Cash flow from operations (CFFO) saw a 1.5% increase, reaching £13.5 billion.
Wael Sawan, Shell CEO, stated, 'Shell delivered another strong quarter of operational and financial results. We further strengthened our leading LNG portfolio, and made good progress across our Capital Markets Day 2023 financial targets, including £1.7 billion of structural cost reductions since 2022’.
In 2023, the company distributed £8.4 billion through dividends to its shareholders and £14.6 billion through share buybacks. This year, the quarterly dividend has increased by 4% to £0.344 per share.
Given that Shell has a major presence in the Middle East, the ongoing conflict between Iran and Israel can significantly impact oil prices. As the Middle East plays a crucial role in global oil production, given escalating tensions in the region, potential disruptions to supply chains could drive prices higher.
Despite reaching an all-time high of GBX5,958 in May this year, Shell's stock has been mainly on the back foot since, recently printing a fresh lower low at GBX4,865 and indicating early signs of a downtrend.
Chart pattern enthusiasts, however, will acknowledge the double-bottom pattern recently formed at the aforementioned lower low, which has since been completed (neckline breached, taken from the high of GBX5,271). Technically, this opens the door to an upside target of GBX5,679.
As a result of the above technical analysis, the trend favours sellers, while the completed double-bottom pattern suggests a bullish reversal.
1. Physical Shares
Another alternative to trading CFDs is physical shares. When investors buy physical Shell shares (usually through an investment brokerage account), they become shareholders, and their returns depend on how well the company performs. If the company outperforms or is expected to, the company’s share price tends to rise, ultimately increasing shareholders’ return on investment. Becoming a shareholder can also involve voting rights and dividend income.
2. Options and Futures
Futures and options are leveraged derivative products that investors use to trade shares, such as Shell, on a predefined date and price in the future. In a futures contract, the buyer and seller commit to transact at a predefined future price. In contrast, options provide buyers with the right but not the obligation to transact on a future price/date, though the seller (writer) is obligated to transact should the buyer exercise their right.
3. Exchange-Traded Funds (ETFs)
ETFs are investment funds freely traded on a stock exchange.
They comprise a collection of assets and are traded like regular stocks during market hours. Although an ETF may include SHEL, it should be noted that it is impossible to mirror the stock’s exact price movements. ETFs' primary advantages are their ease of trading, low cost, wide selection of ETFs, and diversification benefits.
1. Does Shell pay a dividend?
Yes, Shell pays dividends. Currently, the company offers an annual dividend yield of 4.12%.
2. What are the major differences between CFDs and physical shares?
Although CFDs and physical shares are similar financial instruments, their key differences lie in ownership and leverage.
CFDs do not involve ownership and are traded based on the underlying share price, whereas investing in physical shares makes an investor a partial company owner. Regarding leverage, physical shares are often traded without a margin account, while CFDs consist mostly of leveraged exposure.
3. Can I trade Shell on MT4 or MT5?
With FP Markets, you can trade Shell via CFD pricing on MT5 and cTrader.
4. What hours can I trade Shell?
You can trade Shell between 11:00 and 19:30 GMT+3 (Monday to Friday).
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