Stock trading has become one of the most popular online investment packages today.
Many investors now consider stock trading as a way of hedging against rising inflation. While stock trading could be lucrative; choosing the wrong stock could bring the trader huge losses in return. To avoid choosing the wrong stock, a lot of factors need to be considered while picking the stocks to buy. These include the past performance of the stock, its current price, the company’s potentials, the Trading volume of the stocks, dividends offered, etc.
Meaning of Stocks
Stocks are shares of a given company offered for public sales at the stock exchange market.
Types of stocks
To make it easy for traders to identify the type of stocks they wish to invest in today, we shall classify the various stocks available for trading under the five major headings below.
- Low price Stocks:This refers to stocks with prices still below $5. Some newly launched stocks after the initial public offering usually begin their growth with low prices to attract investors. Stocks under this category have more potential to grow as more investors come into the project.
- Stocks with large Market Capitalization: These refer to stocks with the largest investment into them. Thus we find them having a market capitalization above $50 billion. Often the prices of the stocks under this category could be very high above $500 per Stocks.
- Stocks with moderate market Capitalization: This is used to distinguish those stocks whose total market capitalization is not so high but not very low. Here, their total market capitalization could be between $1- $49 Billion. The moderate capital invested stocks usually have their prices from $100- $499.
- Stocks with low Market Capitalization:This embraces those stocks whose market capitalization is less than a billion. Here their total market capitalization could be from $10-$900 Million. The prices of these stocks are usually below $100.
- Dividend offering Stocks: These are a special type of stocks that offer the holders special reward over time for purchasing the company’s stocks. Often the dividend is paid annually depending on the company’s budget and initial agreement with the investors.
Best long-term growth stocks to buy today
- Shopify Inc. (#SHOP)
- Energy Transfer (#ET)
- Alibaba Group Holdings Limited (#BABA)
- com Inc (#AMZ)
- American Airlines Group (#AA)
- Best Buy Co. (#BB)
- Compass Inc. (#COMP)
- eBay Inc. (#EBAY)
- Google-Alphabet Inc. (#GOOG)
- Door Dash Inc. (#DASH)
Advantages of stock trading
- Serves as an investment package
- Offers dividends which is a form of passive income to investors
- Helps investors to diversify their portfolios
- Exposes the trader to the stock exchange market.
- Serves as a hedge against inflations.
- Provides a residual source of income.
Disadvantages of stock trading
- It is a risky investment as there is none to hold responsible should the prices crash in the future.
- Commissions are charged for trading.
- Stock traders are required to pay taxes.
How can one trade stocks today?
Stock trading has been made easier today due to the presence of online stock brokers. For instance, to trade stock in the UK the trader will need to create an account with the popular UK online stock brokers and complete the identity verification process to begin trading.
Next, he will need to decide how to trade the desired stocks whether to purchase them as spot shares which offer dividends, or to trade stocks as CFDs using the leverage provided by the broker.
List of Best Ten brokers to buy stocks today
- Hantec Markets
- Interactive Brokers