Stock trading is a lot easier when you trade stocks CFDs at AvaTrade
Before we get started with the specifics, it’s important to point out that when you trade stocks in a conventional sense, you’re buying into a company, in very small amounts. The more stocks you own, the greater your share in the company. Publicly traded stocks number in the thousands, and many stocks are being listed or delisted each and every day.
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The value of a stock is dependent on a wide variety of factors, including the fundamentals of the company, socio-economic issues, geopolitical issues, inflation, unemployment, taxation, and a host of others. At any given time all of these factors are working together – often in opposite directions – to influence the price of the company’s stock. But perhaps the biggest drivers of stock prices are speculation and perception. The more people that believe a stock is likely to move up or down, the greater the likelihood that they will move the stock price in a particular direction.
What determines stock value?
Stock prices are only calculated when a company decided to go public and makes its initial public offering. The company will primarily pay an investment bank that makes use of complex valuation techniques that determine the results of how many shares will be offered and at what exact price.
As a company’s total value is its Market Capitalization that is represented by its Stock Price once the company goes public this is published on the stock markets. Market capital is equal to the stock price, but multiplied by the actual number of shares. E.g.: If a company’s value is estimated at $100 million it may issue 10 million shares at $10 per share.
Why CFD Stocks Trading is so much easier
When you trade CFD stocks like Google, Coca Cola, Apple or Barclays, you’re not buying shares in a company; you are agreeing to a contract (CFD) with the broker to settle the difference in value between the entry/exit prices of that particular stock. Prices are always moving up and down, but traders can always take advantage of these price fluctuations, even in a bearish market. To learn more, visit our short selling page.
Making a profit in a bearish market
Since you’re not taking possession of the tradable asset, there is leverage of up to , which means that for a small investment you can trade substantially larger stock volumes. It is important to understand though that CFD stock trading has an upside and a downside, and sensible trading practices are encouraged at all times.
Advantages of leveraged stock trading
- Leverage trading enhances your initial capital
- Increase your profit potential but beware of associated risks
- Increases your exposure to the markets on particular position
- Allows you to fully capitalise on market investments
- Leverage also allows traders to offset capital losses from other trading positions
- Using leverage effectively can be pivotal as part of a balanced, well managed trade portfolio
The Trading Platform is Paramount
You’ll be able to make use of multiple trading graphs, management functions and other features to enhance your overall trading experience. Plus, you’ll be able to see your stock portfolio, alongside your indices, forex trading, and commodities portfolio.
We regularly update our traders with the latest news, educational resources and market commentary to keep you well informed about the hottest trends, movements and news from the world of stocks trading.
Find a Successful Stock Trading Formula before you begin to trade. Know the risks and potential positive outcomes prior to entering a Stock trading position. The use of limit and stop orders as well as leverage have a substantial role to play.