A stock is a security representing a share of the company that has issued it. When somebody buy stocks it gives its owner (the stockholder) the right for a share of the company's income in the form of dividends; the right to participate in managing the company; the right for a part of the company's property in the case of its liquidation.
Stocks are one of the most popular investment instruments. Apart from the small dividend income, they also allow the owner to make money on the changes in their price. If the company is developing and the economic situation is good, the stock will be growing in price, bringing a decent income to its owner.
People normally buy stocks on the stock market via a broker. A broker is a company, a professional market player, that is licensed to make operations on the stock market for its clients. At a broker, the clients open trading accounts and use them to buy and sell stocks.
For successful investing, you should learn to evaluate the perspectives of the company the stocks of which you are going to buy. For this, there exist certain economic indicators, which the companies publish in their regular reports. Also, the overall political and economic situation in the world is to be assessed whether stock markets are growing or correcting.
As an example, let us take buying of the stocks of a world-famous company Apple. The corporation regularly demonstrates good economic results, and its stocks have been growing stably for years.
This January, the stocks were trading at $150.00 per stock. Today, the price is $266.70. So, this year the growth has been around $117 per stock. In percent, the result is even more impressing: if we had bought the stocks in January, the profit by now would have been 78%! Plus, some dividends.
The purchase of real stocks is a good instrument for long-term investment. The essence of a long-term investment is in buying promising stocks and holding them till the planned revenue reached.
A CFD is a contract for difference, a marginal instrument more suitable for aggressive, short-term trading. The contract is signed for the change in the stock price. A CFD allows using increased leverage, normally 1:20, the commission fee is minimal, and the dividends are also paid.
Thanks to the leverage, CFDs feature increased trading opportunities: you can buy more stocks for the same money; however, the risks and the losses in the case of position moving also grow. If you use CFDs, you have to be more careful about the market state, learn to control risks, so this instrument, to my mind, is more suitable for traders than investors.
Simple guide to buy stocks
Let us discuss the steps you will need to make to buy Apple, Uber, Facebook or other stocks from the RoboForex company (broker license IFSC Belize number IFSC/60/271/TS).
Opening an account
First, register your Personal Members Area at www.roboforex.com and verify your data. Then log in your PMA and via the menu Account choose Open account, then the R Trader terminal, the currency, the leverage, then type in and save your password.
The R Trader web platform features both modern technology and a comfortable interface. It has more than 10,000 various financial instruments, including stocks, CFDs for stocks, indices, cryptocurrencies, Forex, ETFs. You do not have to pay or install anything also — the R Trader platform is free of charge and opens in the window of your browser, offering several languages.
After you open your account, you need to deposit it for the sum that you are planning to spend on buying stocks. You can deposit your account by any means comfortable for you, be it electronic payment systems, bank payment, or a plastic card Visa/MasterCard. The minimal deposit for R Trader is just $100.
For buying stocks, you need to access R Trader - rtrader.umstel.com and log in your account, typing your login and password. Then you need to open the chart of your required instrument via Search Instrument, introduce its ticker or choose from the list; for example, let it be Facebook stocks (ticker FB). Then choose to buy either stocks or CFDs.
To the right from the price chart, there is the trading window and the customizable list of instruments. In the first one, there is the current selling price named SELL, current buying price named BUY, the number of stocks, commission fees, and the margin. You can buy some stocks at the current price or put a LIMIT or STOP order and buy later at the price you prefer.
After the buy, under the price chart, there appears an open position with the number of stocks bought, the price, the commission, the current profit/loss. A Stop Loss to limit losses and a Take Profit to lock in profit can be placed. To your email, you will receive everyday reports on the situation on your account with the number of stocks bought, profit and losses specified.
As you can see, it is quite easy to buy stocks from a broker. You open an account, choose a promising company, and buy the stocks. You only have to wait until they grow in price and bring you a profit. However, you should keep the risks in mind.
In the long perspective, stocks tend to grow but on the short-term market, there are corrections and declines. If you have bought a stock at its peak and there happened a correction, you will have to wait long for the price to recuperate and resume growth.
So, to invest successfully in the stock market, you need to go analyze it thoroughly before buying stocks. For this, you can address professional analysts and managers or develop your skills of fundamental and technical analyses.
If you want to know more about the stock market and the situation in certain companies, I recommend the articles of my colleague Evgeniy Savitsky in the section Stocks of our blog.