HFM information and reviews
HFM
96%
FXCC information and reviews
FXCC
92%
FxPro information and reviews
FxPro
89%
FBS information and reviews
FBS
88%
XM information and reviews
XM
86%
NordFX information and reviews
NordFX
86%

Stock Trading Guide: How to Trade Stocks


Feng Zhou   Written by Feng Zhou

Stocks, also known as shares or equities, represent ownership or equity interest in a company. Owning stocks can entitle shareholders to dividend payments or voting rights on corporate policies. Stock ownership is based on a per-share basis, and those who own shares are commonly referred to as shareholders or stockholders.

Difference Between Stocks and Shares

Although the terms "stocks" and "shares" are often used interchangeably, there are some distinctions between them. Buying shares implies owning a portion of a company, while the term "stock" is more commonly used to refer to a specific company. The stock market is where shares of publicly listed companies are bought and sold. It provides a platform for trading shares of companies like Amazon, Apple, Netflix, and Alphabet. Different countries have their own stock markets, such as the Nasdaq, New York Stock Exchange, Shanghai Stock Exchange, Hong Kong Exchange, and London Stock Exchange, among others.

In essence, the stock market facilitates the negotiation of prices between buyers and sellers. Companies list their stock shares on exchanges, allowing investors to purchase them. Exchanges like Nasdaq and NYSE monitor the supply and demand for each listed stock. Trading occurs during standard working hours in the host country, for example, from 09:30 to 16:00 (Eastern Standard Time) in the US stock market.

What Is Stock Trading?

Stock trading involves buying and selling stocks on various financial markets. Traders analyze market trends, company performance, and economic factors to make informed decisions about stock transactions. Owning stocks can provide benefits such as asset claims, voting rights, and dividend receipts.

Differences Between Traditional Stock Trading and Stock CFDs

Both traditional stock trading and stock CFDs offer exposure to stock price movements but differ in crucial ways. In traditional stock trading, ownership of assets is direct, and profits depend on stock price increases. In contrast, stock CFDs allow traders to profit from both rising and falling market directions. Stock CFDs are based on price movements rather than ownership, offering flexibility for speculation.

Stock CFDs, often used with leverage, require a smaller initial capital compared to traditional stock trading. However, leverage involves margin requirements, and falling below these requirements can result in automatic position closures with losses.

How Stock Trading Works

To start trading stock CFDs, you need to choose a broker that offers them. Look for a broker with a wide range of stocks across multiple markets and competitive fees. Afterward, open a MetaTrader 4 (MT4) account to access the trading platform and explore available shares. Select the stocks you want to trade by analyzing their price movements through fundamental and technical analysis. Combining these two analysis methods helps identify trading opportunities, and stock CFDs allow you to trade in both directions - going long or short - unlike owning the underlying asset.

Implement effective risk management by setting stop-loss levels and determining lot sizes based on the distance between stop-loss and the capital you're willing to risk. Diversifying your portfolio across different stocks and markets is also crucial.

Advantages of Trading Stock CFDs

Trading stock CFDs offers several advantages, including:

Disadvantages of Trading Stock CFDs

While stock CFDs offer advantages, they also have drawbacks, such as:

Selecting the right trading platform and tools is crucial for a successful stock CFD trading experience. Consider platforms like MetaTrader 4, AutoChartist for trade opportunities, and copy trading for a more passive approach.

Risk Management Tools and Tips

Effective risk management is vital in stock CFD trading. Use risk management tools such as stop-loss orders, take-profit levels, trailing stops, and appropriate lot sizes. Trading calculators, including margin, profit/loss, and pip calculators, can also aid in risk assessment.

Frequently Asked Questions (FAQ) About Stock CFD Trading


RELATED

Cable or Loonie? The ultimate guide to currency nicknames

What are these pro-traders talking about? Who or what are Matie and Guppy? Are they distant relatives or secret code words to enter a sorority?

Investing In Artificial Intelligence (AI): A Beginner’s Guide

Investing in artificial intelligence (AI) has become an increasingly popular choice for investors as the technology continues to reshape industries and drive innovation...

How does interest rate affect currency rates? How to make money on interest rate changes?

How do you predict the currency exchange rate when interest rates change? Can an ordinary trader make money off it? Octa analysts explain in the article.

Trade Silver Online: A Complete Guide for Beginners

To start with, what is silver trading? Traders have highly valued silver for many years now. The metal has various usages including jewellery or as a form of currency....

How to trade Forex: fundamental insights

The world of trading is diverse. There is a multitude of assets for investments: you can start trading commodities and try your chances with CFDs, or you can...

7 Common Investment Myths That You Probably Believe

The reason why the investment market is so unique is that almost everyone knows what it is, and almost no one understands how it works. It gets even worse. You see since it’s so popular in popular culture/cinematography, a lot of people have illusory scenarios of how this should work.

Selecting Signals in Copy Trading

A few simple tips on how to choose profitable signals for a subscription in Copy Trading, and not to lose your money. These recommendations are also suitable for PAMM accounts...

How to Choose the Best Forex Broker

Choosing the best forex broker to open a trading account is quite hard as there are numerous choices available online. Although competition is very high pushing brokers...

IronFX: Leverage in Forex. Complete Guide

Leverage is simply borrowed funds that traders use to trade. In other words, it refers to the ability that traders have when opening an account with a forex broker...

3 Not-so-hot Tips for New Traders From

A new wave of investors, or collectively known as “Generation Investors”, has spurred into the stock market during the pandemic. Research conducted by the FINRA Investor...

Ten Most Valuable Currencies in the World

The United Nations recognizes 180 currencies in the world as legal tender. But while currencies such as the US dollar and the euro are popular and widely used, they do not hold the highest values...

Q2 2022 Earnings Season Explained

Earnings season is a few weeks when most public companies share their quarterly performance in their earnings reports. It takes place every three months...

Forex swap: what it is, how it is calculated, and what are swap-free accounts in Octa

One of the most misunderstood terms in Forex trading is swap or Forex swap. To trade successfully, you should understand what Forex swap depends on and how it is calculated. This article describes what a Forex swap is, explains its mechanics, and describes swap-free trading accounts.

Forex Trading Sessions: Types And Features

The schedule of forex trading sessions allows the trader to determine the best time to start working. During different sessions, the volatility of assets changes: increases or decreases...

Four Ways to Use Your Red Envelope Money as a Trader

Lunar New Year is a major historical and cultural festival celebrated by millions of people around the world, particularly the Chinese, Vietnamese, and Korean communities...

Oil Is Black Gold for CFD Trading

Oil is a mineral used to produce fuel. And it is also used as a raw material for household chemicals, cosmetics, clothes and many other products are made from it. But not only. Oil is also a popular commodity...

How to start trading

Diving into any new industry, especially forex, requires planning. In this article, we’ll break down the process of how to start trading in 7 simple but critical steps...

An overview of platinum trading

When traders log into their metatrader 4 account and consider trading precious metals, it is most likely that the metals of gold and silver first spring to mind...

Regulators Affecting the US Dollar

The value of the US Dollar can be affected by a number of different factors, such as the Central Regulator, also known as The Federal Reserve. The Central Bank...

Why trade shares?

Why trade shares, continue to read and learn more. Trading shares involves buying and selling company shares listed on a stock exchange. Traders choose to trade shares...

Vantage information and reviews
Vantage
85%
FP Markets information and reviews
FP Markets
81%
IronFX information and reviews
IronFX
77%
T4Trade information and reviews
T4Trade
76%
Exness information and reviews
Exness
76%
Just2Trade information and reviews
Just2Trade
76%

© 2006-2025 Forex-Ratings.com

The usage of this website constitutes acceptance of the following legal information.
Any contracts of financial instruments offered to conclude bear high risks and may result in the full loss of the deposited funds. Prior to making transactions one should get acquainted with the risks to which they relate. All the information featured on the website (reviews, brokers' news, comments, analysis, quotes, forecasts or other information materials provided by Forex Ratings, as well as information provided by the partners), including graphical information about the forex companies, brokers and dealing desks, is intended solely for informational purposes, is not a means of advertising them, and doesn't imply direct instructions for investing. Forex Ratings shall not be liable for any loss, including unlimited loss of funds, which may arise directly or indirectly from the usage of this information. The editorial staff of the website does not bear any responsibility whatsoever for the content of the comments or reviews made by the site users about the forex companies. The entire responsibility for the contents rests with the commentators. Reprint of the materials is available only with the permission of the editorial staff.
We use cookies to improve your experience and to make your stay with us more comfortable. By using Forex-Ratings.com website you agree to the cookies policy.