By DAYTRADINGz, the complete stock market money turnover was about $149 trillion from July 2020 to June 2021. That’s why trading stocks is so popular nowadays. For example, in the USA, nearly 53% of families invest in such assets. However, dealers may get high profits only by applying trustworthy brokers’ websites (e.g., fbs.com). And doubtful platforms’ services usage is fraught with money loss.
What Is Stock Trading?
Such an activity implies buying or selling particular shares of a company. The process is grounded in daily value fluctuations, within which short-term profits are prioritized over long-term ones. As a part of this activity, traders buy and sell shares as well as invest in the stock market.
The key feature of such a trading variation is that dealers don’t own real shares but profit from the price difference. These stocks are traded via CFD (or Contract for Difference). Such agreements use derivative contracts to pay for the gap between the closing as well as opening transaction quotes and imply cash settlement (without purchasing a real share).
What Are the Types of Stocks?
Shares (or equity securities) reflect the ownership of a certain company’s piece. Thus, shareholders obtain the right to own assets and receive incomes related to the subject part of the enterprise. Four types of stocks are in the market. Each share variation has its peculiarities.
What Should Be Known About IPO?
The issue of new shares is accompanied by an initial placement of securities on a publicly traded financial market. Most of the stocks come from private enterprises that have become public. And this implies new opportunities for investing. An initial public offering (or IPO) is applied to propose new shares through stock exchanges such as the NYSE or Nasdaq. Key benefits of an IPO for business are:
- simplicity of investments implementation as well as PR;
- raising new funds and increasing the enterprise’s value;
- granting great prospects for future profits since the shares’ price at the initial offering is usually low.
The last advantage is also essential for traders. This is because the dealers can get huge incomes at low investment volume.
Growth Stocks Features
Such shares are proposed by companies that develop above the market average. These enterprises outperform their competitors in terms of efficiency and profits. Here, the key advantage is a significant increase in quotations. That’s because of high growth rates. Moreover, such enterprises excel in competitive advantages, the availability of a constant customer base, and significant revenues. Facebook, Amazon, Netflix, Apple, etc., offer growth shares.
Dividend or Income Stocks
These shares refer to public companies regularly paying dividends and performing well in bull markets. Share return, also known as the yield on cost (YOC), is determined as the sum of the price increase as well as dividends paid divided by the purchase value. Nay, numerous enterprises apply the actual market price to estimate the return on their shares. Among the benefits of trading such stocks, experts note the presence of cash reserve, the potential for long-term positive results, as well as less volatility during financial crises.
Defensive Stocks Features
Such shares provide regular dividends and reliable company profits. Furthermore, such assets don’t depend on the state of the stock market. Therefore, they’re more stable. In terms of long-term returns, defensive stocks are better than others. They are also subject to lower risks. That’s why specialists advise trading the described stocks during economic instability. However, these shares are less gainful in bull markets. That’s due to low volatility. Examples of such stocks are Coca-Cola, Procter & Gamble, and so on.