القائمة الرئيسية

الصفحات

Stock Trading: A Beginner's Guide Start trading with us now

15 يوليو 2022

(0)

Stock Trading: A Beginner's Guide Start trading with us now

Stock trading has grown in popularity and momentum, especially with the development of online trading platforms. Compared to traditional methods, online stocks can be traded easily and simply. That's why more and more people are looking for the right way to start trading. This article is a comprehensive guide to stock trading, including its types, pros and cons, and how to trade stocks for beginners.

Stock trading: the basics

Stock trading means buying or selling shares of a particular company, and shares are based on daily price fluctuations, with short-term gains prioritizing over long-term ones. A person who buys and sells shares and makes financial investments in the stock market is known as a stockbroker. The main advantage of stock trading is that the trader does not own the actual shares but instead profits from the price difference. Shares are traded via a CFD (Contract for Difference), which refers to a cash-settled financial contract that uses financial derivatives to pay the difference between the opening and closing price of deals.

Shares can be traded through a broker or broker. When someone says that they trade on a stock exchange, they are referring to the buying and selling of shares on one (or more) of the exchanges that make up the broader stock market. The Nasdaq and New York Stock Exchange (NYSE) and the Chicago Stock Exchange (CBOE) are the largest stock exchanges in the United States.

Different types of procedures: which one to choose?

Shares represent ownership of a part of the company, which means that the shareholder directly owns the assets and profits related to that part of the company. Stocks are units of ownership.

These are the four types of shares that a trader can trade in the stock market:

growth stocks

Growth stocks refer to companies that can grow at rates above average market growth and outperform their peers in earnings and stock market performance. The profits that traders can make is due to large price increases; This in turn is the result of high growth rate, competitive advantages, loyal customer base and revenue. Amazon, Facebook, Apple and Netflix are examples of successful growth stocks. Amazon and Facebook have always had a high growth rate. Similarly, Apple and Netflix have loyal followers due to their competitive advantages.

Dividends (also known as dividends)

Dividend stocks (also called dividend stocks) are stocks of publicly traded companies that offer regular, solid dividends and do well in emerging markets. Return on capital, also known as cost or return (YOC), is calculated as the sum of the price increase and dividend paid divided by the purchase price. Most companies also use the current market price to calculate the performance of their shares. Since there is an inverse relationship between performance and stock price, the current performance decreases as the company's stock price increases. The advantages of defensive stock trading include: the ability to weather financial crises with minimal volatility, the presence of monetary support, and the potential for long-term positive returns.

New releases

The new issue refers to the securities registered for the first time in a listed financial market. Most of the new issues are issued by private companies that go public, providing new opportunities for investors. An initial public offering (IPO) is used to offer the new issue to the public through exchanges such as the NASDAQ or the New York Stock Exchange. The purpose of the new issues is to increase the capital of the company in question. The main benefits of trading these stocks include raising new capital and adding value to the business, making it easier to invest in and trade with a new company. Also, the stock price during an IPO is often low, which offers great potential for future earnings.

defensive actions

Defensive stocks refer to stocks of companies that offer regular and reliable dividends. Since there is a constant demand for its products, defensive stocks are more stable than other types of stocks, regardless of the general condition of the stock market. defensive action or

A huge advantage over other stocks is the long-term return with minimal risk. Defensive stocks are chosen in times of economic instability. Examples of defensive stocks include Coca-Cola, Johnson & Johnson, Procter & Gamble, and others. However, in emerging markets, these stocks offer lower dividends due to the low volatility nature.

Stock trading benefits

The entire stock market is worth $95 trillion, with potential for growth for years to come. The stock market is very risky and investors can make big profits or big losses. It can be used to generate income if risk is controlled. Next, we will discuss the main advantages of online stock trading:

Income: Stock trading involves buying and selling shares without actually owning them. Therefore, in a bear market, traders can take advantage of a weak market. The strategies involve buying stocks at low levels to make a profit and selling at higher levels. Online stock trading is one of the most popular ways to make money. Once they can take advantage of the risks, the traders can make huge profits.
Hedging - Stock trading helps you diversify your portfolio. By diversifying the portfolio, the trader can collect diversified investments, which helps reduce risks such as loss of capital or large fluctuations in the portfolio. For diversification, a novice trader can buy more than 10 stocks in a variety of different industries in the stock market. This is recommended because in times of economic instability, buying company shares can be risky as the price may fall.

Low Capital - As there is no minimum to open a trading account, a trader can start trading CFDs on stocks with as little as $100, and this ensures the safety of his funds. The amount can vary depending on the trading strategy that the trader wants to use. It also depends on the broker that the trader chooses. With these points in mind, the value of the shares will always be low enough for the trader to bear the possibility of loss.

Easy Trading System - Stock trading is not as difficult as you might think at first glance. It is simple and easy, especially if the trader is familiar with forex trading. Once the trader has created an account with the broker and deposited the balance, he can go to the search window and select the trade he wants to enter. Traders know that the simple rule of thumb to profit is to buy low and sell high.

Disadvantages of the stock market

The stock market is highly volatile in nature, with new highs and lows forming every second. Hence, there are also many disadvantages in stock trading. The main disadvantages of stock trading will be discussed below:

High volatility - this is the main disadvantage of stock trading. Since the stock market is positively correlated with economic conditions, stock trading can be difficult if market conditions change rapidly.

Timing: Proper research is necessary before trading in a company's stock. This includes learning to interpret financial statements, annual reports and news. In addition, stock traders should also keep an eye on the stock market, as the share prices of major companies can collapse during a stock market crash, correction, or bear market.

Collective competition: In stock trading and stock market there are both novice and professional operators who have the time, knowledge, tools, models and computer systems to work.

Emotional factor: Because of their volatile nature, stock prices rise and fall every second. This can create emotional reactions, such as fear or greed.

Types of stock trading

Knowing and understanding the different types of stock trading is an essential step in understanding the process itself. In fact, once a trader acquires the knowledge about the types of stock trading available, he can then choose the most suitable trading style for his financial goals. Following are the different types of stock trading available in the stock market:

day trade

Also known as day trading, this type of trading involves buying and selling shares on the same day and is the most common type. Before the stock market closes at the end of the day, day traders quickly record their profits and losses and close their stock trading positions. Day trading is violent and requires quick choices. The type is best suited for active traders who can respond quickly to changes in the stock market.

Day trading is done using trading tools and software; Therefore, good technical analysis and risk management techniques are important. Technical analysis is performed on short time frames, from 1 minute to 4 hours.

Shopping center

Position trading covers holding stocks for longer periods of time, ranging from days to weeks, and sometimes longer. This is done based on expectations of strong long-term trends in the hope of making a big profit based on fundamental and technical analysis. Therefore, short-term fluctuations are not taken into account.

In position trading, only minimal adjustments or management is required. This aspect makes it suitable for busy professionals who prefer to work on other tasks without putting in extra effort and time to trade stocks with fair profits. This type of stock trading depends on the future potential of the company or stock.

swing trading

Swing trading refers to the strategy in which traders buy and sell stocks during uptrends and downtrends. Traders try to take advantage of small moves in a larger general trend. In swing trading, stocks are held for more than 24 hours until changes in the stock market turn into a profit. Daily market changes are calculated and estimated.

Position trading and swing trading are very similar, except that the position remains active for less than a few months. Swing traders aim to take advantage of fundamental momentum. Sure, this type of trading is risky, but the level of risk is lower than that of day trading.

guess (guess)

By being speculative, active stock traders want to take advantage of small market moves and intense selling. They research, locate and choose narrower or wider margins. The goal is to trade contracts with small profits.

In speculation, traders need a strong exit strategy because a big loss can wipe out all the small profits made by the trader. To ensure this, the right tools, the right strategies and the right timing are in great demand.

Steps to start trading stocks

Beginner stock investing should be kept simple by investing in diversified, low-cost index funds. Learn more about investing in stocks. On the other hand, the process of stock trading can be divided into six stages. Learn how to trade stocks by following these steps:

Open a brokerage/trading account

To start the stock trading journey, a balance in the trading account is required. This account contains the trader's investments for future use. If a trader does not have an account with a broker, it is recommended to open an account. The process will take a few minutes. No deposit required immediately. The trader can navigate through the sections of the account to get acquainted with the interface of the platform. Once the trader is ready to enter into stock trading, he can fund the account. In short, let's say a trader has chosen a broker and wants to open an account. He can follow these steps:

Open the broker's official website and fill out the registration form.
Choose the appropriate payment method to fund your account.
Complete the verification process if necessary.
Choose the trading asset you want to trade and start trading directly through the online trading platform.

To make the right trading decisions, you can use the tool's analytics and signals, as well as indicators built into the platform to create your own trading strategy. If stock trading is completely new to you, try using a copy trade service to copy trades from professional traders.Press here

Learn how to trade stocks online with a demo account

Most brokers offer an online stock trading demo account so that novice traders can try trading before they encounter the real stock market. The trader can follow the market dynamics in real time and practice buying and selling. Demo accounts also offer stock market simulators that simulate the charts, numbers, and actions of the real stock market. Thanks to this, the trader can perform several transactions with different waiting periods and techniques, and then check the results for obvious errors. Once the trader gains self-confidence, he can move on to the actual trading in the stock market. There are also automated trading platforms where the bot handles most of the trading.

Determine your budget for online stock trading

Determining and preparing a stock trading budget is very important because money is the essence of stock trading. Experts recommend allocating less than 10% of the portfolio to individual stocks. The investments should be equal to the amount that the trader could lose.

Set your benchmark and measure the benefits against it

Index measurement is critical in stock trading. Choose stocks to trade and remember to select a benchmark based on your location, industry and size, such as the NASDAQ Composite, S&P 500, or another similar index. Measuring the performance of stocks against indices. This will help you to think of the right indicator to measure trading performance.

keep your point

A trader should always remember to keep his or her view on online stock trading. Since hundreds of stock traders will be waiting for the same market moves, it is not always necessary to know the best stocks to buy before others, but they do indicate the fate of the market. In this context, it is necessary for a trader to conduct fundamental research, technical analysis, monitor stock trading stocks, create trading records, and monitor market conditions.

More information about broker commission

Expenses include money that a trader makes available to the broker to trade stocks online. This includes commission fees, which should be checked when choosing a broker. Individual shares purchased through a broker may not incur a commission fee. "Bid" refers to the selling price of the stock and "ask" refers to the purchase price. Spread and order refer to the difference between these two prices, which the broker charges as commission for executing the trade. Another important aspect that a trader needs to consider is risk tolerance - the amount of loss a trader can incur within the portfolio.

Check the spread amount for stock trading here.

Best Online Stock Trading Platform - Features

A good trading platform should have the following basic features:

Order Execution Tools - These tools will be required to place a market order and a limit order and should include support, reverse, dark, basket, time frame, complex, link, additional API and arithmetic expansion.