In this section of the site you’ll discover everything you need to know about stocks and shares. You’ll read articles here on how to trade stocks, what stocks to trade and how to implement trading strategies as part of your trading day.
What are Stocks?
Perhaps some of the most famous stocks that you will have come across are those like Facebook, Apple and Google Stock. In essence stocks, also known as equity or shares are a type of financial security or asset which represents ownership in a corporation. It also represents a stake in the claim for the corporation’s assets and its earnings. By issuing stocks to the public, a company can raise capital that it might need to fulfill its contractual obligations or to help finance its long term growth objectives. Normally, the issue of these stocks is done through IPO or Initial Public Offering which then lets the stocks be traded on the stock exchange. For the last few hundred years, this is one of ways which companies raise much needed capital hence making the stock market the most mature of all financial markets.
As the stock market is the most mature markets, there are plenty of activities going on in the stock market. It is these activities which give rise to plenty of trading opportunities and hence numerous chances of making profit. Let’s now examine how stocks have been traded traditionally.
For the modern day investor such as the binary option trader, stock trading is an ideal way to make money from the financial markets. This is because there are a wide variety of stocks which the trader can trade with. And with modern day financial innovations such as binary options, it proves a much more cost effective way to trade then traditional stock trading since first there are no commission charges involved and second in order to trade the stocks in the traditional manner you would need huge sums of capital. So then trading stocks through something like binary options then represents a lucrative investment vehicle since the investor is only trading with a derivative of the stock and not the actual stock itself. As such the window for profits can be larger as the investor only pays a small premium for the binary option but still gets to profit substantially from the price movement of the stock regardless of how small the price movement maybe.
How to Trade Stocks
As a stock trader if you want to invest in stocks you need to make your order through an intermediary such as your stockbroker or bank (some banks have a division which holds a stock brokering license and can purchase and sell stocks on their clients behalf).
Once you have decided which stock that you want to invest in, you also need to inform the broker the price that you want to purchase the stock at. It should be noted that the price that you wish to transact doesn’t necessarily represent the actual price that your purchase will be made at. Due to slippage, your broker can only purchase your stock at the best available price. So at the end of the day, the price that you pay might actually be higher (or lower) than what you expected. Once your order has been communicated to your broker, you will no longer have control over your trade. The situation is entirely different when you trade stocks with binary options though. Let’s look at that.
Binary Options Stock Trades Vs. Traditional Stock Trades
When you trade stocks with binary options, you have more control over how your trade is carried out. This is because you are dealing with an option contract that is underwritten by the binary options broker. In other words, the transaction is only between you and the underwriter of the binary option contract which also happens to be your broker at the same time. There is no intermediary in between the transaction. The price that you get quoted is also the exact price where your trade will get executed. In other words, you know exactly how much you need to pay for your trade as there is no such problem as slippage when you are dealing with binary options.
The price that your trade gets transacted at is not the only thing that you know beforehand. Even the returns are published by the broker before the trade gets executed, hence giving you a good idea on the return of your investment. This is also a major departure point from trading stocks the traditional way to trading stocks with binary options.
With binary options, all the returns are predetermined with some brokers offering returns as high as 85%. If you trade stocks in the same manner, the same level of returns could take months if not years to achieve. With binary options, all it takes is as little as a minute to see this kind of returns on your investments.
Choosing the Best Stocks to Trade
Although there are a great number of assets to choose from when trading stocks either with or without binary options, the best kind of stocks are invariably those with a higher profit potential. These are normally stocks which are actively being traded.
Some of these stocks include:
- Apple Inc
Founded by Steve Jobs, the Apple Company has always been known for its innovative product as well as quality products making it a favorite among consumers and hence investor.
- British Petroleum (BP)
A British multinational Oil & Gas giant based in London, UK, BP is ranked as the top 10 energy companies in the world. It has operations in more than 70 countries.
- Coca-Cola Inc
A soft drink manufacturer based in the U.S, Coca-Cola dominate the global beverage industry offering consumers not just the iconic Coca-Cola drink but also hundreds of other brands.
- Facebook Inc
The largest social media company in the world, Facebook was founded by Mark Zuckerberg. It has nearly 2 billion users and has a market capitalization of around $250 billion.
- Google Inc
A technology based company, Google offers internet based services and is valued by the market at around $133 billion as of 2016.
- Vodafone Inc
With operations in more than 70 different countries, Vodafone is the top 5 largest mobile communication company in the world. Its stock is listed on the London Stock Exchange and on NASDAQ under the ticker symbol VOD.
Other stocks which are also worth considering include:
As a final note, when you trade stocks you should learn as much about the corporation you wish to trade and even the market sector that contains that stock eg. Technological, oil, financial.