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How does the stock market work?
Share trading majorly takes place on stock exchanges, for instance, the New York Stock Exchange (NYSE) or London Stock Exchange (LSE). The exchanges facilitate seamless buying and selling of shares between the concerned entities.
What moves stock markets?
It is primarily the share supply and demand that influence the price movement of the company’s stock on an exchange:
The number of available shares in any company is limited and controlled based on the company choosing to release more or buy back some stock to reduce supply. In case a company releases more stock, while demand does not rise to befit the increased supply, the share price is likely to go down. A buyback, on the other hand, without a corresponding fall in demand, the company’s share price will likely increase.
Demand for the company’s share price can fluctuate based on a wide range of factors, listed below:
The content of quarterly earnings reports and other major announcements influence the company’s share price, as traders and investors speculate over its performance based on fundamental analysis.
Macroeconomic factors, including data releases on GDP, retail sales, oil inventory data, interest rates and Fed meeting outcomes, play a major role in influencing share market.
Comments from a major investor or influencer, that may not be justified from fundamental analysis perspective, might trigger stock market movements.
The growing popularity of automated trading and real-time technical analysis tools backed by algorithms help traders spot the opportunity, causing movement in the share price.
How to build a share trading plan
Maintaining a stock trading plan helps you to evaluate what contributed to successfully trade shares and what factors led to unsuccessful ones. The share trading plan must include the four key factors:
It is advisable to decide whether to place an order you want to rely exclusively on fundamental or technical analysis or you would like to mix the two.
Know your risk profile
Your risk-reward ratio decides how much potential profit you would need to counter a potential loss. For instance, 2:1 ratio implies that you would expect your potential profit to be double to that of your potential loss.
Put your theory to the test
Before testing your strategy with real funds, you might want to opt to open a demo account and see if it is yielding or not with dummy funds. Once you are confident that your strategy would work on live markets, you can consider upgrading
Steps to making your first share trade
Open an account
Set up a CFD trading account to trade shares. Before you fund the account, you can trade virtually through a Demo account. Once you are familiar with the platforms, fund your Live account, and start share trading online in real terms. Create live account
Spot your market opportunity
Technical analysis tools including real-time indicators on a wide range of shares, regular in-depth news analysis and investment insights on shares, cited by our team of experts, help you to ‘spot your market opportunity.’
Open your first position
When you are all set to open your position, you can place your first trade across the platform of your choice. If you want to open a long position, choose ‘buy’, or to open a short one, simply opt ‘sell.’
Swift reliable execution with flexible access to trade across more than 40,000 shares.
Trade on the go with the user-friendly trading apps
With 30 years of experience in the industry, Century Financial is regulated by Securities and Commodities Authority(SCA).
Introducing Share Baskets
Share baskets refer to mini portfolios of shares pertaining to a specific theme. Share baskets offer the opportunity to obtain exposure to a larger slice of an industry, which is otherwise not possible while trading on a single share.
Market analysts identify popular themes and growth trends and handpick stocks to design share baskets to give you maximum exposure with a single position without owning the underlying shares.
Why trade shares with Century Financial?
Frequently Asked Questions (FAQs)
What do share CFDs mean?
Share CFDs enable a trader to buy and sell shares online without directly owning them. Further, the trader can speculate both rising and falling markets.
CFDs are leveraged product, allowing a trader to gain full exposure across shares by simply allocating a small deposit. Although, it magnifies possible profits, it also amplifies the possible losses.
What’s a good stock trading strategy for beginners?
Most common strategies are active trading, day trading, position trading, swing trading, and scalping. The key lies in identifying and timing the market opportunities. However, it is best considered that the trader uses stop loss to minimize the losses.
How can I trade CFD stocks online?
Open an account to start trading share CFDs. Research the companies and their respective industry’s prospects to choose the shares you want to trade. Based on your understanding, you can then open your first position.
Is trading share CFDs different than buying shares in a company?
The major differences between trading share CFDs and buying shares primarily, is leverage and ownership.
When you buy a stock, you are taking the ownership of the company’s shares, by paying the full price for each share. It implies that you are investing in the stock.
Trading share CFDs allows you to speculate on the price, without owning the company’s stock, as CFD is a derivative product. Moreover, CFDs trade on leverage, implying that a trader can place the order, with a smaller initial outlay of capital.
How can I open a stock trading account in UAE?
Create a trading account with Century Financial by clicking on the link below:
Fill in the required details, sharing your trading experience and knowledge for best services, upload required documents. Upon verification of the documents, you may fund your trading account and start trading with the #1 choice of UAE investors, Century Financial.
How to trade share CFDs with Century Financial?
With Century Financial, you can take a position on 40,000+ global share CFDs. We offer share CFDs on many popular stocks, including Apple, BP, Barclays, Tesla, Amazon, Facebook, and many more. Once your live account is funded, all you need to do is to spot an opportunity across global stock market, to place your first trade order.