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Lloyds Banking Group (LSE; ticker: LLOY) is a UK-based banking and financial services business. Its brands –Lloyds Bank, the Bank of Scotland, Scottish Widows, and Halifax – have a combined history of approximately 330 years, dating back to 1695. Of note, Lloyds Banking Group was only formed in 2009 after Lloyds TSB took over HBOS plc during the financial crisis.
With more than 500 high street branches and a market value (market capitalisation) of £33.22 billion, Lloyds is the largest digital bank in the UK. According to its 2023 annual report, the bank serves nearly 30 million customers and has over 2 million shareholders – £3.8 billion was returned to shareholders through dividend distributions and share buybacks last year.
The bank operates through three core segments: ‘Retail’ (provides personal customers current accounts, loans, and mortgages, etc.), ‘Commercial Banking’ (offers businesses access to debt financing, risk management services, and transactional banking, etc.), and ‘Insurance, Pensions and Investments’ (helps customers with long-term retirement plans and investment needs, etc).
Contracts for Differences (CFDs) are financial instruments that are traded over the counter (OTC). This means that CFDs are traded off-exchange unlike physical shares or futures and options contracts, which trade on an exchange.
CFDs are contracts formed between the broker and investor used to either speculate or hedge the underlying price movement of Share CFDs, such as Lloyds. The primary structure of a CFD is that both parties – the buyer and the seller – agree to exchange the price difference between the opening and closing prices of a trading position. In addition to Shares, CFDs facilitate investing across global markets, including Currencies (Forex), Commodities, Bonds, Exchange-Traded Funds (ETFs), Digital Currencies, and Stock Indices.
It is vital to understand that investors generally trade on margin (leverage) with CFDs, allowing for a more significant position size with a smaller initial investment value. To help explain the meaning of leverage, let’s assume Investor A wants to purchase 10,000 shares of Lloyds at GBX54.42. Unleveraged would equal a total investment value of £5,442 (0.5442 * 10,000). However, trading CFDs with a 20% margin requirement at FP Markets would permit investors to trade an equivalent position size of 10,000 shares though only ‘depositing’ 20% of the initial value (£1,088).
1. Open an FP Markets Forex and CFD Trading Account
Opening a Forex and CFD account with FP Markets is the first step to investing in Share CFDs. Visit FP Markets and click the OPEN LIVE button to access and start the Account Application page.
2. Download your Trading Platform
A trading platform is your hub for navigating global markets and placing trades. Therefore, you must be comfortable with its functions.
To select your preferred trading platform, log in to the FP Markets Client Portal (using your login credentials sent to your email address upon registering) and, from the menu on the left side, select ‘Platforms’. While FP Markets provide access to several options, most stock traders tend to favour MetaTrader 5 (MT5) or cTrader.
3. Find the LLOY Ticker
To find the LLOY ticker on the MT5 trading platform, ensure the platform is open and connected. Following this, open the Market Watch tab (Ctrl+M), type ‘LLOY’ at the bottom of the Market Watch and select the correct stock to create a new row.
To open the chart, drag and drop the stock from the Market Watch to the chart’s primary interface at the centre of the platform and begin altering its setup to suit your trading strategy.
4. Place the Buy or Sell Order
Entering trading orders on MT5 is done mainly through the platform’s order window (F9 – image on the left below), which allows investors to input trading parameters according to their trading strategy, including order types, volume and stop-loss values. Short-term traders, nevertheless, may opt to enter via MT5’s one-click trading feature (image on the right below), though this function only permits entering trading volume; additional parameters must be entered after the trade is active, which can be done through the trading terminal (Ctrl+T).
Share CFDs:
Lloyds (LLOY) Stock Price Chart
Evident from the daily chart used above, the share price of Lloyds Banking Group experienced a sizeable decline in October, down 9.2%. Seeing the Q3 24 earnings results print better-than-expected numbers, the downside move surprised some investors. The selloff occurred on the back of concerns regarding the Financial Conduct Authority (FCA) investigation into the mis-selling of motor finance. Although the bank is believed to have allocated £450 million to cover this cost, analysts are projecting fines could far exceed this amount (some forecast a bill of between £2-3 billion). Thus, this could potentially weigh on the bank’s bottom line and further increase losses in its share price.
Ultimately, the stock is viewed as stable and has frequent dividend payouts. Still, it should be noted that due to its exposure to the housing market – according to Statista, Lloyds Banking Group is the largest mortgage lender in the UK – its profits are closely tied to the housing market’s performance.
According to data from Refinitiv, 63% of analysts favour a ‘Hold’ for the stock; 27% recommend a ‘Buy’, 5% suggest a ‘Strong Buy’, and 5% favour a ‘Sell’. The stock’'s current mean (median) price target is GBX66.12 (GBX63.00).
From the monthly chart, longer-term studies reveal that price has been working with a range between GBX23.32 and GBX87.48 since early 2009. Within the range, you will see the stock hovering just north of support from GBX51.60, a level with a history dating back to 2010. Consequently, a retest of this level may attract mid-range, longer-term buying, targeting the upper boundary of the consolidation.
From the daily timeframe, price action is seen trading from a support area between GBX51.36 and GBX53.04. You may note that the lower space of this support zone houses the monthly support line at GBX51.60. As a result, with the daily timeframe trending higher, the noted supports will likely be monitored closely for buying opportunities.
Physical shares entitle the beneficiary shareholder (the investor) to partial ownership proportional to the number of company shares purchased, along with receiving other economic benefits. These may include distributing regular dividend payouts and offering voting rights. Purchasing shares is usually done through an investment brokerage (the nominee shareholder).
Companies like Lloyds Banking Group issue shares (called ‘equity funding’) to raise capital to fund growth, research, debt financing, etc. As a reminder, physical shares are exchange-traded, meaning they are traded through formally, regulated exchanges, like the London Stock Exchange (LSE).
Some investors opt to invest in stocks using futures and options contracts. Futures and options are leveraged derivatives products and are exchange-traded. In a few words, futures contracts commit both the buyer and the seller to transact at a future date at a specified price. With options contracts, the obligation falls on the seller (the ‘writer’ of the option contract), while the buyer has the ‘right’ but no ‘obligation’.
An ETF is a specific investment vehicle that tracks a market index, like the FTSE 100 or the Nasdaq (this is referred to as a passively managed ETF). The structure of the ETF pools money from investors and creates a fund that is traded on a stock exchange. Therefore, investors can purchase shares of the fund like they would a regular stock.
While single-stock ETFs are available, passive ETFs remain widely popular. Importantly, if you invest in an ETF that tracks the FTSE 100, for example, which has exposure to the Lloyds Banking Group stock, its price movement, understandably, will not precisely track the stock. Most investors tend to purchase ETFs to help diversify their portfolios.
1. Does LLOY pay a dividend?
Lloyds Banking Group does pay a dividend. As of writing, the company’s annual dividend yield is 5.33%.
2. What are the major differences between CFDs and physical shares?
Although similarities exist between CFDs and physical shares, important distinctions differentiate the two investment options. Unlike physical shares, which are exchange-traded and bestow ownership rights to investors, CFDs are traded OTC and are cash-settled derivatives. Another distinction is that investors use a cash account to invest in physical shares (leverage is available, but it is usually limited to about 2:1). At the same time, CFDs provide access to greater leverage options.
3. Can I trade LLOY on MT5?
With FP Markets, LLOY can be traded on both MT5 and cTrader.
4. What are the trading hours for LLOY?
The trading hours for LLOY are between 11:00 and 19:30 GMT+3 (Monday-Friday).
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