Beginner Stocks Tutorial
Beginner
What is a Stock CFD?
A Stock CFD (Contract for Difference) is a popular trading instrument that enables traders to speculate on the price movements of individual stocks without actually owning the shares. Rather than purchasing the physical stock, traders enter into a contract with a broker, agreeing to exchange the difference in the stock’s price between the opening and closing of the trade. The result of this price change, whether a gain or loss, is settled in cash, making Stock CFDs an attractive option for short-term market players.
Lesson 1 of 10 | 5 Min
Beginner
How do you trade Stock CFDs?
Trading Stock CFDs involves speculating on the price movement of individual stocks without needing to own the actual shares. Most brokers offer access to a variety of stocks from global markets, including popular names like Amazon or Tesla. The first step in trading Stock CFDs is deciding whether to go "long" (buy) or "short" (sell), based on your prediction of where the stock price will go. Going long is for those expecting a rise, while going short is for traders anticipating a drop in price.
Lesson 2 of 10 | 5 Min
Beginner
Choosing a Trading Platform
A trading platform serves as your gateway to the financial markets, providing the tools and data you need to analyze stocks, place trades, and manage your positions. With numerous platforms available, selecting one that suits your trading style and needs is crucial.
Lesson 3 of 10 | 5 Min
Beginner
When can you trade Stock CFDs?
Stock CFDs are available to trade during the same hours as the exchange where the underlying stock is listed. For instance, if you’re trading Stock CFDs on U.S. companies like Apple or Tesla, your trading hours will coincide with the New York Stock Exchange (NYSE) and NASDAQ, which typically operate between 9:30 AM and 4:00 PM EST, Monday through Friday. Similarly, European stocks like BMW or Barclays follow the trading hours of their respective exchanges, such as the London Stock Exchange (LSE), which runs from 8:00 AM to 4:30 PM GMT.
Lesson 4 of 10 | 8 Min
Beginner
Liquidity & Volatility
Liquidity and volatility are two critical concepts that every trader should understand when trading Stock CFDs. These factors can significantly influence trading strategies, potential profits, and risks associated with the market.
Lesson 5 of 10 | 7 Min
Beginner
Pips & Lot Sizes
Pips (short for "percentage in point") are a unit of measurement used to express the change in value between two currencies in forex trading. However, when trading Stock CFDs, the concept of pips is somewhat different since stocks are generally quoted in whole numbers. Instead, traders often refer to price movements in terms of points, which represent the change in the stock’s price. For example, if a stock moves from $100 to $101, that’s a one-point movement.
Lesson 6 of 10 | 7 Min
Beginner
Leverage & Margin
Leverage refers to the ability to control a larger position size than the amount of capital you have deposited. In the context of Stock CFDs, brokers often offer significant leverage ratios, such as 10:1, 20:1, or even higher. This means that for every dollar you deposit, you can control a larger position size, depending on the leverage ratio. For example, if you have $1,000 in your trading account and your broker offers a leverage of 10:1, you can control a position size of $10,000.
Lesson 7 of 10 | 8 Min
Beginner
How to Choose a Stock CFD Broker
Choosing the right broker for Stock CFDs is essential, as it affects your trading experience, costs, and market access. Here are key factors to consider:
Lesson 8 of 10 | 8 Min
Beginner
Demo vs Live Trading
Demo Trading simulates real market conditions without risking actual money. Most brokers offer demo accounts funded with virtual capital, allowing traders to experiment with strategies, familiarize themselves with platforms, and develop skills without emotional stress. This risk-free environment is invaluable for beginners to practice executing trades and managing positions.
Lesson 9 of 10 | 5 Min
Beginner
Risk Management
Risk management is crucial in Stock CFD trading, helping protect capital and minimize losses. In a volatile financial market, a well-defined risk management strategy is essential for long-term success. Here are key principles and techniques for effective risk management.
Lesson 10 of 10 | 6 Min