STOCK TRADING 101

LEARN THE ROPES OF
STOCK TRADING

STOCK TRADING 101

LEARN THE
ROPES OF
STOCK
TRADING

Stocks are the ownership certificates (shares) of a company, issued by a business to raise capital for growth. Stock prices fluctuate depending on various factors.

You can trade stocks in two ways:

1. The traditional way to trade stocks is through buying and selling. The aim is to buy a stock and profit from a potential rise in its stock price by selling at the right time (and certainly before any decrease in price!). Buying a stock in this way gives you ownership of the stock, meaning you literally own a piece of the company. Pretty cool, huh?
2. You can also trade stock contract for differences (CFDs). CFDs involve trading on margin and speculating on price movements of a stock, whether that is upwards or downwards (in other words, going long or short).

Fun fact: Eurotrader offers ZERO commission on stocks!

STOCK MARKET EXPLAINED

TAKE STOCK
IN STOCKS

The Netherlands is known for a number of things: its canals, colourful tulips, traditional handmade wooden clogs, and the fact that the number of bicycles in the country surpasses the number of its residents.

What you probably don’t know – yet – about the Netherlands is that the first modern exchange was created in Amsterdam, the country’s capital, back in 1611.

Since then, almost every developed country has one or more stock exchanges, while more than 100k companies are traded publicly worldwide.

The stock market is where stocks are electronically bought and sold by individual and institutional investors through major stock indices.

As with many assets, supply and demand are one of the forces that move stock prices. Apart from fundamental factors, technical factors such as inflation, liquidity, trends, news or market sentiment may impact the stock prices. The impact of some of these factors is easier to quantify, while other factors cannot even be predicted.

Some other factors are specific to each stock and include the company’s financial health, innovation levels, price and valuation.

HOW TO TRADE STOCK CFDs

TRADING STOCK
CFDs EXPLAINED

As attractive some company ownership might be, the upfront capital needed to buy stocks can present a financial barrier for many traders. That’s why we offer stock CFDs as a more accessible alternative, though it’s worth noting that CFD trading comes with its own risks.

Trading stock CFDs grants you access to the super stock markets. With CFDs, you will be trading against stock price movements of a company, but you’ll have no ownership of the underlying assets nor of the stocks themselves.

But then, why trade stock CFDs?

Well, it allows you to take positions on both bull and bear markets, adding even greater flexibility to your trading strategy. Also, it is a good way to diversify your portfolio.

Trading stock CFDs allows you to use leverage, meaning you only need to put down a fraction of the trade’s full value to open a position for one share. For example, at 5:1 leverage, you will only need 20% of the price of the share to open a position.

A trader may make or lose money by speculating on stocks over a shorter timeframe by focusing on technical patterns, using methods such as scalping and day trading. Traders can monitor the stock’s performance along with their entry and exit prices.

DEFINITIONS

CFDS

Contract for differences (CFDs) are trading contracts that allow the trader to speculate on the rise or fall of different stock prices and pay the difference between the asset value at the beginning and the end of the contract.

SCALPING STRATEGY

This is where traders profit from small price changes created by small market movements through a large number of trades. Scalpers predominantly open and close trade positions very quickly, and many companies consider scalping to be activity carried out within a 3-minute timeframe.

DAY TRADING STRATEGY

A trader buys and sells a financial asset within the same trading day before the market closes.

TRADING STOCKS VS TRADING STOCK CFDs

THE ULTIMATE
CHEAT SHEET

Stocks Stock CFDs
Trading Strategy
Long-term
Short-term
Stock Ownership
You own the asset
You profit from its performance.
You do not actually purchase the stock.
Profit
You only profit from price rises
You can profit even from a falling market
Commission
You will be subject to broker fees
At Eurotrader, we charge zero commission on stocks.
You’re welcome!
Extras
You’ll receive shareholder privileges such as dividends
You can leverage your capital and maximise your profits.
Just be aware that you maximise your losses too.

STAY UP TO SPEED WITH
OUR DAILY TRADING
NEWSLETTER

TRADING ON A BUDGET

FRACTIONAL
SHARES

Sometimes the price of the stock can be out of reach for an everyday investor. However, those looking to trade on a budget can take advantage of purchasing fractional shares instead, which function just like real shares.

A trader’s overall Profit & Loss will scale up in proportion to the value of the underlying share. Thus, they will be entitled to a fraction of the dividend that is offered on it.

Fractional trading offers the potential to build a balanced and diversified portfolio regardless of the stock price and budget limitation. Fractional shares are also ideal for risk management: portfolio diversification with a smaller budget can be achieved since a trader does not purchase full shares and can allocate the budget in multiple stocks.

Fractional Shares Chinese
Fractional Shares Farsi

Did you know…?

You can trade fractional share CFDs
with Eurotrader. Sign up here to get started!

You can trade fractional share CFDs with Eurotrader. Sign up here to get started!

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PLAN-PICK-PERCEPTION-PSYCHOLOGY

FOUR STEPS
TO START
TRADING
STOCKS

FOUR STEPS TO START
TRADING STOCKS

1

Make a trading plan

Decide your budget, develop your trading strategy, and then decide how you will diversify your portfolio. Remember that if you trade on a budget, you may also consider fractional shares.

2

Pick the stocks

Speaking about picking the ‘right’ stocks, you may follow a well-known path. A way to start trading stocks is to select stocks of companies that you are familiar with, so you can consider all factors that can move their prices.

Another way to pick is to focus on a specific industry. In that way, it would be easier to explore trends, news and overall industry health.

3

Tell what’s what before you trade up

Learn from each trade, what worked and what didn’t. Always listen to what your book, the experts and the market is telling you, never your heart.

4

Know when to stop

Keep risk management in mind. Understand the risks behind stocks trading and define your risk level. Stick with your plan but remember that it may evolve during the trading journey, revealing your strengths and weaknesses.

Ready to
start
trading?

Ready to
start trading?

Here’s a quick recap on how to trade CFD stocks:

Ebooks Stocks Chinese
Ebooks Stocks Farsi

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