Umarkets offers its clients one of the most profitable ways of trading — online stock and stock index
trading on the stock exchange.
Securities or stocks — one of the most popular trading instruments during online trading on the stock exchange. The largest international and federal companies place their shares in the market, which allows everyone to profit buying and selling them.
Online stock trading on the exchange, as well as other asset trading, has its advantages and disadvantages.
Advantages of stock trading:
- Shares most predictably respond to economic news. Moreover, there is a direct dependence on the news and stock price;
- The price of a share is the same worldwide, which protects it from unforeseen fluctuations;
- The correct choice of shares allows you to achieve high profit margins with relatively little risk;
- The majority of traders, who have achieved great success in trading, trade in shares;
- A wide range of working trading techniques. Every trader can choose any style of trading in accordance with personal goals and trade preferences.
Owing to the advantages, online stock trading on the stock exchange is one of the most profitable forms of trading.
News and stock trading on the exchange
One of the most important factors affecting stock trading on the stock exchange is that stocks most predictably respond to economic news. Moreover, there is a direct dependence on the news and stock price. So, what news has the greatest impact on the behavior of the stock market?
For example, news about changes in directorship of companies. Such changes often imply a change in the company’s policy, which alarms shareholders and leads to an increase in sales/purchases, as well as sets the trend for the increase or decrease in the price of shares. In the same series of factors affecting the value of securities, there are news about the release of new models, the launch of production lines, the voicing of plans to expand or, conversely, reduce production, etc.
Financial reports of companies (quarterly, annual) perfectly show the current financial situation of companies, and therefore, affect the value of shares and total profitability.
Credit ratings of companies and any changes in them. Credit ratings compiled by specialized agencies (for example, Moody’s, Standard and Poor’s and Fitch Ratings) assess the creditworthiness of companies and their overall financial soundness.
News about mergers and acquisitions. Combinations of strong and promising companies usually lead to higher stock prices.
Of course, the news of all kinds of accusations or investigations, in which the leaders of companies appear, should not be overlooked. Whatever the outcome of these investigations, such reports are likely to lead to a fall in the stock prices of these companies.
The principles of stock trading based on the news imply a careful study of the information and its correct interpretation, this is the right way to successful transactions.
Among the disadvantages, we can highlight the fact that shares, unlike stock indices and other assets, are not traded around the clock, but at certain times. The second disadvantage of this resource is the wide range of shares represented in the market, which makes it difficult to choose the most profitable asset. You must admit that these disadvantages can easily be considered as valuable advantages, because the special “stock time” for shares saves the trader from the necessity to stay at the computer all the time, and a broad choice gives unlimited possibilities to find the most liquid option.
However, there are other risks in online stock trading:
- Shares are securities, and they have no real value. If the firm that issued the shares goes bankrupt, its shares will lose any price. In case of bankruptcy, the company losses can be up to 100%.
- During a crisis, the price of shares usually drops very sharply, and growth to the previous levels takes a lot of time.
- If shares are not listed on a stock exchange, during a crisis their liquidity also decreases greatly.
- In order to reduce the risks during online stock trading, it is necessary to form an investment portfolio. This requires the support of investment specialists, as this is a complex and costly process.
- In most cases, online stock trading on the exchange is a long-term investment, there are no momentary profits here.
Despite some risks associated with online stock trading on the stock exchange, remember that shares remain one of the most profitable instruments for earnings.
The subtleties of stock trading on the exchange
- Online stock trading is carried out through a trading platform provided by a broker. Learn all the nuances of working on the platform, and it will become your faithful assistant. The platform, in addition to direct entry to the market, will provide you with the necessary information about the situation in the market.
- To start trading, it is best to choose stocks of liquid companies, the so-called “blue chips”. These are shares of those companies financial state of which is stable, business reputation is reliable, and the names of which are known to everyone who is just a little interested in the economic situation in the world. The list of such companies is quite large; it includes both Russian companies and global giants. For beginners, the most reliable option will be companies with a capitalization of at least $200 million. The price of shares is a direct indicator of the company’s capitalization. For “small” enterprises, the price of one share can be $3. For companies with a serious capitalization, the price will be already 50 dollars.
- Stock trading on the stock exchange is a fascinating and profitable experience, however, it is associated with certain risks. Of course, over time and with experience, the level of risk decreases, because you will learn how to make a more accurate assessment of the market situation, you will be able to choose, based on analytical materials, the most promising resources for trading. Therefore, do not yield to the emotions and do not make rash transactions. Use all the available information, listen to your gut and start with small volumes, gradually increasing them.
Over time and with experience, a trader forms a “portfolio” of favorite stocks. Portfolio can be formed by economic sectors. For example, companies with energy and raw materials as their core business. Shares of such companies are directly dependent on the price of Brent oil (oil which is produced in the North Sea and exported to European and Asian markets. The price of about 70% of the remaining grades of oil is formed on the basis of the price of Brent). Also, do not forget about companies producing technologies, consumer goods and services (companies, such as Amazon). Health care is important as well. Proper formation of a portfolio will help you organize your trading and earn a steady income.
Stock indices are financial instruments that reflect changes in prices for a group of securities combined on a specific basis. In 1984, Charles Dow, the creator of famous The Wall Street Journal, invited investors to make an assessment of the overall situation in the market, not the value of one share. This is how Dow Jones, the world’s first stock index, appeared. This stock index reflects the total value of the 30 largest US companies. There are numerous indices in the market, including the NASDAQ100 — a “set” of the top 100 technology companies, BOVESPA — a reflection of the cost of 50 leading companies in Brazil, and DAX 30 — one of the most important indices in Germany that shows the average value of the largest German enterprises.
Stock indices are indicators of the market situation, however they are not independent trading instruments. CFD (futures) on stock indices are traded on the stock exchange. When opening a
transaction, the upward or downward movement of the price is taken into account, and not the specific value of the asset. A trader, placing certain bets, must correctly calculate whether the price will rise or fall, the success of the transaction depends on this.
Umarkets offers its clients online CFD trading on major stock indices, including the most popular ones, namely: Dow Jones, Dow Jones Industrial Average, S& P 500, Nasdaq 100 and many others.
Advantages of stock index trading
- To profit, you only need to set the movement of the index — up or down.
- Trading indices of leading companies of world economies is considered quite safe investment.
- In percentage terms, the volume of fluctuations of the indices is wider than that of other instruments, which gives the possibility of high profits.
For Umarkets clients, both online stock trading on the stock exchange and stock index trading are profitable and comfortable, thanks to the excellent trading conditions and professional support of the company’s employees.