Top Market Guide-Stocks

Stock trading is part of the ownership of a listed company traded on a stock exchange. The aim is to benefit from price fluctuations, but, of course, all investments or trades carry the risk of loss.

What does it mean to trade stocks? The trader's goal is to buy the stock at a low price, hold it for a period of time, and then sell it at a higher price. This is the difference between stock trading and stock investing, which involves buying and holding stocks for a long time.

When trading stocks, you can choose to buy real stocks or trade derivatives of the underlying assets, such as speculating on the price movement of the stock by trading stock contracts for difference (CFD).

In this guide, Phronimos Group look at how to trade stocks and some of the stock trading strategies you can use.

What is stock trading?

Are you interested in how to start trading stocks? Let's start with the basics. A stock represents the ownership of a company that is publicly listed on a stock exchange. Companies often go public to raise more money than private owners or banks raise.

Companies usually start selling their shares on exchanges (in the primary market, moving them from private ownership to a combination of private and public shares) through an initial public offering IPO. Once stocks begin trading on the secondary market (I. E., a stock exchange), their price fluctuates based on investors' assessment of the value of the stock throughout the trading session.

The funds raised by the company from equity investors are usually used to expand the business, whether through direct financing or through mergers and acquisitions (M & A ).

The difference between shares and stocks.

Have you ever thought about the difference between shares and stocks? The term "stock" refers to the entire public ownership of a company traded on an exchange, while "share" refers to a single unit of stock that an investor can buy or sell.

As an investor, you may "own" shares of Amazon (AMZN), but hold 10 shares of Amazon stock in your portfolio. Share and stock terms are used interchangeably when talking about price movements.

Different types of stocks

Stocks tend to be classified based on certain characteristics. Some stock traders use these categories to choose their trading strategies, and they only focus on certain categories of stocks.

How does the stock exchange work?

When it comes to actual stock trading (which means actually owning the stock you are trading), most public company stocks are traded on the stock exchange and they are part of the stock market. How does trading stock work on an exchange? These institutions bring together existing shareholders who want to sell their shares in the company and buyers who want to own those shares.

What is stock trading? Every company stock has a bid-ask spread-the difference between the lowest price accepted by the seller and the highest price paid by the buyer. When the transaction is executed, the seller receives a bid in exchange for its shares, and the buyer pays the asking price to receive the shares.

Some exchanges have physical locations with trading floors where buyers and sellers can meet, but most stock trading now takes place on electronic trading platforms.

Some examples of the world's major stock exchanges include:

• New York Stock Exchange (NYSE)

• the NASDAQ Exchange (NASDAQ)

• Shanghai Stock Exchange (SSE)

• Euronext

• London Stock Exchange (LSE)

• Japan Exchange Group

• Hong Kong Stock Exchange (HKEX)

What drives stock prices?

There are several factors that can affect the share price throughout the trading session. These include company-specific fundamentals, such as revenues and profits, and external factors, such as the macroeconomic environment and geopolitical issues.

Earnings Report

The main indicator of a company's performance is the financial report, which is usually issued quarterly or semi-annually. These reports show how much revenue a company earns from sales and other activities, and how much profit it generates.

The earnings report shows the company's cash flow. If the company pays a dividend, it also shows its value. If a company's earnings report exceeds or falls short of analysts' expectations, it usually causes the stock price to rise or fall sharply.

Economy

The overall performance of the major economies in which the company operates has a significant impact on stock price movements. Strong economic growth tends to pull up most stock prices, while recessions can keep stock prices down, even if individual companies continue to show strong financial results.

Politics

Government policies and political events such as elections and international conflicts have a big impact on the stock market. Especially those affected by international trade policies. For example, a trade war between China and the United States and the imposition of import tariffs on each other can lead to a strong stock price reaction.

Supply and Demand

Demand and supply trends can affect a company's financial performance-if there is a sudden change in demand or supply for its products and services. Demand for a company's stock can also vary by demographics.

For example, the Covid-19 pandemic lockdown caused new investors to enter the stock market for the first time and pushed up demand for certain stocks, which have become known as meme stocks.

Institutional demand and ownership also affect prices, for example, when large institutional investors sell stocks, or when stocks are added to exchange-traded funds (ETFs).

Trader sentiment

The sentiment of market participants has a big impact on stock prices. Due to the subjectivity of traders and investors, stocks often trade at much higher or lower prices than the company's fundamentals suggest. Participants can buy or sell shares based on news, announcements from the company's competitors, data releases, and other events.

What is a stock trading strategy?

Stock trading strategies are your preferred method of trading assets. Before you put your money at risk, it is important to develop a clear strategy for trading your stock market.

Types of stock trading strategies

There are many different stock trading strategies that you can use, depending on your preference for the market and how long you want to hold your position.

News Trading Strategy

This strategy is based on responses to news announcements and events. It needs to understand market expectations and react quickly after a news release. Traders need to evaluate whether news events have been included in the stock and trade accordingly.

A common trading strategy is to "buy the rumor, sell the news", that is, when the market has anticipated the announcement and factored in the share price in advance.

End-of-Day Trading Strategy

Some traders are most active at the end of the trading session, when liquidity usually increases and it becomes clearer how the stock price moves at the close. This strategy is less time consuming than other strategies because it only focuses on a small part of the trading day. This may make it a useful strategy for beginner stock trading.

Swing Trading Strategy

Swing trading is designed to take advantage of stock price volatility by buying before the stock goes higher and selling before the stock goes lower.

Swing traders use technical analysis indicators to provide buy and sell signals based on when the price trend is likely to change direction. This requires more monitoring of price charts and understanding of momentum indicators.

Day Trading Strategy

Day traders focus on opening and closing positions on the same day to take advantage of stock price fluctuations during the trading session.

Day traders usually open multiple positions in a trading session, but close them before the end of the day so that they do not open overnight and avoid being affected by the volatility of after-hours trading.

Trend Trading Strategy

Trend trading involves the use of technical analysis tools to identify price trends and trade stocks based on the trend direction.

Trend traders need to have a clear system to identify and track price trends and react quickly when the trend changes. Traders can reduce the risk of trend reversal by using trailing stop orders.

Scalping Trading Strategy

Scalping involves opening and closing positions in extremely short hours or even minutes to accumulate a small profit.

Scalpers need a high degree of self-discipline to exit trades quickly to make a profit, rather than keeping open positions in the hope of greater gains, as prices may suddenly move against their positions and trigger losses.

Position delivery strategy

Position trading is a trading strategy in which traders speculate on long-term price trends by holding positions for months or years. This strategy places more emphasis on analyzing the fundamentals of the stock than on technical analysis.

Risk management tools when trading stocks.

Learn how to use risk management tools (such as limit orders, take profit orders and stop loss orders to enter positions at the price you want, sell at a certain price to lock in potential profits, or if the asset you are trading falls a specific amount to avoid further losses.

You can consider diversifying your portfolio so that no single position accounts for a large portion of it to avoid losing most of your money if a particular stock falls.

You can also learn how to use technical analysis tools on price charts. This can help you identify price trends and trading ranges, generating an idea of when to open and close a position.

Keeping a trading Journal to understand your successes and failures can also help you learn to trade stocks better in the future.

Different ways to trade stocks: retail version.

In addition to real stock trading, traders can also consider other options, such as trading derivatives of stocks, such as futures or options contracts CFDs and taking positions on stock prices without owning actual stocks.

Derivatives allow traders to invest in the stock market without owning the underlying asset. For stock CFDs, traders can also use leverage, which means that their profits and losses are magnified.

Real Stock

Real stock simply means that you are buying stock in the underlying company. You can do this by opening an account on a stock trading platform.

Holding the underlying stock is suitable for both long-term investment and short-term trading. Some brokers offer fractional shares, which means you can buy a portion of a company's share if the total price is too expensive for you.

CFDs Trading

Contracts for difference (CFD) allow traders to use margin to maximize their funds for larger positions and speculate on stock price movements without owning the underlying stock. Note that CFDs are leveraged products, which means that both profits and losses are magnified. Keep in mind that buying stocks without leverage is also risky.

How to trade stock CFDs

How do I trade stocks using CFDs? A contract for difference is a derivative product. Brokers usually agree to pay traders the difference in the value of the security between the opening and closing prices. Traders can open a long position, speculating that the price will rise, or a short position, speculating that the price will fall.

You can register an account with a CFD provider such as Phronimos Group to speculate on the company's share price fluctuations. You can trade commodities, indices and forex in the same trading account.

CFD trading is considered a short-term method. Traders open and close positions on a one-day to one-week time scale, but that doesn't necessarily mean they have to be short-term. Less commonly, CFDs can be held for months at a time, but this will incur additional costs, such as overnight fees to pay for borrowed leverage.

To trade stock CFDs, please follow these steps:

1. Create a CFD trading account.

2. Select the stock in which you want to hold a position..

3. Use your trading strategy to identify potential trades.

4. Open your first trade and consider using risk management tools such as stop and limit orders and take profit orders.

5. Monitor your trades using technical and fundamental analysis tools.

6. Cone out according to your trading strategy.

If you want to learn how to trade stock CFDs for beginners, you can start by opening a demo account on Phronimos Group so that you can experience the process without taking risks.

Once you are ready to start trading with real money, open a real account and deposit the funds you want to trade.

The pros and cons of trading stock CFDs

There are several advantages to trading stocks using CFDs. Unlike buying and selling stocks directly, which requires the share price to rise in order to make a profit, CFDs provide you with the opportunity to speculate on the stock price in both directions. With the ability to sell CFDs products short, you can trade in both falling and rising markets.

CFDs can therefore be used to hedge existing portfolios. For example, if you hold a portfolio of stocks in a particular industry, but expect it to experience a short and sharp decline, you can use CFDs to short your existing stocks to hedge against this possibility.

If your expectations are wrong, you will get the added benefit of being able to offset any losses incurred by CFDs against the capital gains collected by your portfolio increase.

In addition, CFDs are usually traded commission-free and the broker makes a small profit from the spread. Traders try to profit from the overall change in price.

CFDs can be traded on margin. This means that traders only have to pay a fraction of the value of the trade to borrow the remaining funds from their broker. This allows for more investment opportunities, greater investment exposure and potentially amplified outcomes. Note that CFDs are leveraged products, which means that both profits and losses are magnified.

Phronimos Group provides 5% margin, which means you only need to deposit 5% of the value of the trade you want to open. For example, if you want to trade a $1,000 CFD with a 5% margin, you only need an initial capital of $50 to open the trade.

However, you should be aware that trading CFDs carries risks, this is because when the stock price is opposite to your position, leverage will amplify any losses, but if the price moves in the same direction, this can amplify gains. It is important that you do your research and understand the role of leverage before you start trading.

Why trade stock CFDs in Phronimos Group?

Advanced AI technology-centric: Personalized news feeds provide users with unique content based on their preferences. The neural network analyzes the behavior within the app and recommend videos and articles that fit your trading strategy.

Trading on Margin: Thanks to margin trading, Phronimos Group can provide you with the opportunity to trade stock CFDs and other top trading commodities CFDs, even if your account has limited funds. Remember that CFDs are leveraged products, which means that both profits and losses are magnified.

Trading spreads: By trading stock CFDs, you are not buying real assets. You only speculate on the rise or fall of the stock price. CFD traders can go short or long and apply a trading scheme that is consistent with their goals. In terms of strategy, CFD trading is similar to traditional trading. However, due to overnight fees, CFD transactions are short-term. Comprehensive Trading Analysis: The browser-based platform allows traders to shape their own market analysis and make predictions through stylish technical indicators. Phronimos Group provides real-time market updates and various chart formats, which can be used on computers, iOS and Android.

Register with Phronimos Group and use our web platform or download the trading app to trade CFDs anytime. You can trade in the world's most traded market in just three minutes.

Stock market trading hours

During what hours Can you trade stocks? Stock trading times depend on which exchange each stock is traded on.

Every stock market has fixed trading hours. For example, if you want to trade shares of Barclays Bank (BARC) on the London Stock Exchange (LSE), you can do so from 08:15 to 16:30(GMT) Monday to Friday. Transactions. The London Stock Exchange does not have a lunch break but most Asian stock markets do.

Most stock exchanges are open from Monday to Friday, but stock exchanges in the Middle East are usually open from Sunday to Thursday because Friday and Saturday are weekends in the region.

It is possible to place trades during non-trading hours, but since market makers are not involved, you need a lot of liquidity to execute. Here are the opening times of the world's largest stock exchanges.

In Phronimos Group, the trading hours of stock CFDs coincide with the trading hours of the relevant stock on the stock exchange on which it is listed. The stock exception is extended trading hours.

You can check the trading hours of the stocks you want to trade at any time on the market page on our website or on the platform. For example, Tesla CFDs are traded Monday to Thursday 08:10 - 00:00 and Friday 08:10 - 21:00(UTC).

What is the best time to trade stocks? Usually when the stock market opens and closes, this is because traders react to overnight news when the market opens and settle the day's trades near the close, and increase liquidity and price volatility. Keep in mind that high volatility will increase the risk associated with trading.

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