If you want to learn about investing in stocks, you will want to start at the beginning.
Make sure you understand that buying stocks means owning a small portion of a given company.
Many novices start with paper trading, which allows you to make pretend trades and see how they perform. This educates you and helps you to start to understand the flow of the stock market and how different events impact stock prices.
Before you make your live purchase, read the most recent information put out by the company for stockholders and compare it to what you know about the stock based on your paper trading.
Now, determine how you want to divide your investment budget among your targeted stocks and make your purchases. If a particular stock has a very high price for a single share, you may be able to purchase fractional shares.
Once you own stock, keep a close eye on your accounts. Watch now they rise and fall and see how they can help you build your wealth.
An investment broker can help people invest in the stock market, but you also have a few options to take a more self-directed route. The first strategy you can employ is to use an online brokerage dealer like Futu through the moomoo app. While you technically trade through the brokerage, you have greater control over the stocks and allows for a DIY arrangement with this setup.
The second strategy you can employ is to buy directly through the company. It means that instead of going through the stock exchange, you arrange to buy stock from the organization.
To invest in stocks online, you will want to follow these tips.
Stock options work differently than traditional stock purchases. A stock purchase involves buying a piece of the company. However, a stock option calls for you to make bets based on what you think a particular stock will do. You will purchase either a ‘put’ option or a ‘call’ option with stock options. The call option gives you the right, but not the obligation, to buy stock when it hits a certain price by a certain time. However, a put option gives you the right to sell a stock if it hits a certain price by a certain time. To succeed with stock options, you need to adeptly wager whether the stock will rise or fall, by how much, and within what time frame.
A put will give you the option to sell a stock at a given price. For example, if you think that a stock will not perform well, you may buy a put option to have the chance to sell it and avoid too much loss or even profit from the stock's drop. For example, if you put a put option to sell stocks at $50 and then it drops to $40, your profit is $10, minus the premium paid to put the put option. A put option permits you to sell a stock at a particular price. Generally, you will buy a put option if you think the performance of a given stock will decrease.
Borrowing a stock allows you to do something known as shorting a stock. Shorting a stock can be a complex and sophisticated investment strategy that allows you to make money off stocks that are falling in price. The process works like this.
● Your market analysis tells you that a particular stock will likely fall short.
● Say you see a stock that will fall and is currently worth $20 a share. You borrow shares of the stock from a broker and sell them immediately at the current price. You borrow 50 shares from the broker at $20 a share and then sell them immediately at $20 a share for a total of $1000.
● The price then drops if you predicted its movement correctly. Now the shares are worth only $5.
● Using the $1000 you made from selling the stock, you buy all of the shares back at their current price of $5. This means you only need to spend $250 to buy back all the shares.
● You return the borrowed shares to the broker, but you have now pocketed $750-- of course, subtracting any interest or commissions you owe for your trades.
● Need to disclose the risks: However, obviously if the stock rises in price, you will losing money. Using the $1000 you made from selling the stock, if the stock price goes to $40 a share – when you buy the stock back, that 50 shares will cost you $2000 and you will effectively lose $1000. [BJ3]
You can participate in this process by opening a margin account with your broker. You will have to make minimum deposits and demonstrate you have enough collateral. Your margin account will have to be approved by the broker. Keep in mind that since this is a loan, you have to consider factors such as interest on your loan. Also, the more money (aka 「leverage」) that you have the higher your potential risk.
To buy stocks after hours, you will need a brokerage platform that allows you to participate in the premarket or after-hours trading sessions. Futu makes this process easy for customers, with extended trading hours and multiple markets available for customers.
Since fewer people participate in the extended hours trading periods, you will see that stock prices often exhibit greater volatility during these periods; this means that limit orders are generally recommended. Once you have a brokerage account to help you trade after hours, you will place an order through ECN (electronic communications network), which will match your order with available stocks, similarly to how it works during traditional trading hours.
To buy the dip means that you think a stock is only experiencing a temporary dip and will recover. In this situation, the dip can be seen as a discount on the stock price, and you have the chance to profit as the stock recovers, and the price goes back up.
To buy the dip requires you to have a deep understanding of stock performance so that you can predict if the problem is only a temporary dip or an actual downturn.
You can purchase stocks, or small shares of a publicly-traded company, through one of the stock markets available worldwide. Two of the biggest are based in the United States-- the New York Stock Exchange and the NASDAQ, but others exist in cities such as Hong Kong.
You will work with a broker, either an in-person professional or an online brokerage platform, that allows you to buy and sell stocks.
‘Buying on margin’ means that you will make your purchase using the money you borrowed from your brokerage. To make this type of trade, you will have to have a margin account, and you will have to make a minimum investment specified by your brokerage. Once your account has been approved, your brokerage will allow you to borrow money to buy more stock than you would have otherwise been able to on your budget.
Like any loan, you will have to pay interest on the loans. You will want to make sure you fully understand the terms of your loan so that you know when you will owe interest on your loan. When you sell the stocks, the money you receive from the sale will go towards the loan's payment until you have fully paid it off. Then, any profits after that will go to your account. Please keep in mind that the use of margin may increase the risk of your portfolio. Only invest in margin after carefully reading the margin risk disclosure documents provided to you by your firm. Also – keep in mind the following risks in a margin accounts:
● You can lose more funds than you deposit in the margin account.
● The Firm can force the sale of securities in your account.
● The firm can sell your securities without contacting you.
● You are not entitled to an extension of time on a margin call.
A buy stop order is an order that will not start getting filled until the stock reaches your predesignated price. In other words, if you want to buy 50 shares of a stock when the price reaches $50, then you may have a buy stop order that specifies the purchase of 50 shares when the price reaches $50. The rest will not see this type of order of the market until the price hits your target and gets triggered.
Unlike a limit order, which specifies that you will only buy the stock at a specific price, a stop order essentially has an ‘on’ switch. Once the stock crosses your line, the order turns into a market order and will get fully filled. In other words, once it is triggered, it will keep getting filled even if the price of the stock continues to change.
Investors who want to trade stocks on the weekends will find that they have a few different options available to you. Your first option is to simply place orders for trades you want to make over the weekend and know that the orders will get filled when the market reopens at the beginning of the week.
Your next option would be to trade in other markets. You have the option of trading internationally using other stock markets that, thanks to time differences, are open at different times. For example, the Hong Kong stock market is about 12 hours ahead of the United States east coast. This means that Sunday evening in the U.S, the market will be opening in Hong Kong.
Finally, you can also consider the markets specifically in the Middle East, which operate on a calendar with Friday as the start of the week and runs right through the weekend.
This presentation is for informational and educational use only and is not a recommendation or endorsement of any particular investment or investment strategy. Investment information provided in this content is general in nature, strictly for illustrative purposes, and may not be appropriate for all investors. It is provided without respect to individual investors’ financial sophistication, financial situation, investment objectives, investing time horizon, or risk tolerance. You should consider the appropriateness of this information having regard to your relevant personal circumstances before making any investment decisions. Past investment performance does not indicate or guarantee future success. Returns will vary, and all investments carry risks, including loss of principal. Moomoo makes no representation or warranty as to its adequacy, completeness, accuracy or timeliness for any particular purpose of the above content.