Ever since 3D Touch's introduction in iOS 9 for the iPhone 6S and 6S Plus, a little-known trick for moving the cursor around and selecting text was built into Apple's stock keyboard. Since then, it works on all iPhones models with 3D Touch baked in, leaving the iPhone 5S, 6, 6 Plus, and SE out in the cold. However, iOS 12 makes this "trackpad" work on all iPhones, 3D Touch or not.
In any app where you enter text, such as Messages, and Notes, and Safari, to place the cursor, which Apple refers to as an "insertion point," in a specific spot of the text you're editing, just tap where you want it. If it doesn't end up in the right place, you can tap-and-hold to bring up the magnifying bubble that increases precision. When you let go, you'll also see selection options, including "Select," which selects the nearest word or number, and "Select All," which selects everything.
While all iPhone users can take advantage of this method for placing the cursor, it was the only thing that could be done on an iPhone 5S, 6, 6 Plus, and SE running iOS 11 and under. Any iPhone that has 3D Touch built in can access a trackpad that makes this easier by applying pressure anywhere on Apple's stock keyboard. But if you're running iOS 12 on one of those non-3D Touch iPhones, you're finally able to access the trackpad too.
You'll need to have an iPhone that supports 3D Touch and is running iOS 9 or higher if you want to use pressure to activate the trackpad. If you're using an iPhone 5S, 6, 6 Plus, or SE, you'll need to running iOS 12 or higher to mimic this effect.
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To unlock the hidden trackpad in the stock Apple keyboard, either press anywhere on the keyboard (using 3D Touch) or tap-and-hold on the spacebar, until you the keyboard turns a light gray color. Then, while still holding your finger on the screen (you can let loose of the pressure if you used 3D Touch), move your finger around to move the insertion point to the right spot in the text.
Tip: Some third-party keyboards let you turn the keyboard into a trackpad, such as Gboard, but in this example, it works a little bit different. In Gboard, you need to 3D Touch on any of the letter keys to bring up the trackpad, then you go left or right to move the cursor accordingly. You can't move it vertically by swiping up and down, though, like you can with Apple's keyboard.
If you have an iPhone that supports 3D Touch, you can also do a bit more with this trackpad. So far, iOS 12 does not appear to have any way to simulate these selection tools with the trackpad for non-3D Touch devices, but dragging the cursor is a good first start. And you can also fall back on the regular way to select text.
To select text with 3D Touch, without lifting your finger off the keyboard trackpad, press deeper to select a word. If you press a second time, you should be able to select that whole sentence. Pressing three times should select the entire paragraph. Personally, I never have luck with the second and third presses, so if you run into the same issue, you can just press once, then drag to select all the text you want.
If you don't have 3D Touch or don't want to use 3D Touch on the trackpad, you can double-tap a word or number. To select more text, drag each bar (the "grab points") on the left and right side of the word or number to select a bigger text snippet. This applies in text entry fields only. When you're just reading in apps such as Apple News, long-press on a word to select.
Also, when in text entry fields, you can also place the cursor, then tap on it to bring up the selection menu to choose "Select" or "Select All."