Keeping money idle is not a wise choice to reach financial freedom as long as inflation remains. So what to do with that money? Save it in a bank to earn interest? Also not a perfect option. Especially in such a pandemic period when most central banks keep the interest rate as low as possible to boost the economy. One of the good ways to make money at this time is via trading stocks. Buying shares of companies and making profits from their increase in value and dividends.
The stock market is one of the most traded financial markets besides forex or commodities. It also has a quite long history as the very first stock exchange has been launched in 1611 in Amsterdam. In the stock market, the trading assets are shares issued by companies. Each share represents partial ownership of that company. After buying shares of a company, you will become a company’s shareholder. Normally, a company issues its shares to gather more capital from the public; in return, it grants the buyer partial ownership of it.
Investing in shares, investors capitalize on the positive outcome of the share’s value. The share’s value basically ties to the business performance of its company; besides, it is also affected by demand and supply. Whenever the value goes up, the investor earns more money and vice versa. If the company operates well and generates profits, it can also distribute a proportion of its income to shareholders based on the ownership level or how many shares that shareholders are keeping.
Similar to other financial tools, the stock neither stays the same nor moves in just one direction but fluctuates continuously. An increase in value or an upward trend can go through many up and down phases alternately. Therefore, choosing a good company, which has a great prospect and an effective business strategy, is crucial when trading stock.
The advantage of trading CFDs in the stock market
Stock trading is no doubt a trendy investment, but it doesn’t make buying shares accessible. Several hinders can be listed as follows:
Fund. A Tesla share costs around $800. Imagining you need nearly a grand just to buy a single share. It is not to mention other taxes and relevant fees. If you have a finite capital, it is quite difficult to approach.
Geographic issue. The New York Stock Exchange (NYSE) is the largest stock exchange in the world where all traders want to participate, but how to do that if you are living in an Asian country now?
Good news, both of these two problems can be solved when you trade CFDs (contract for differences). In this trading form, you still have the chance to engage in the stock market but not via buying shares. Instead, you speculate the change in the value of share during a certain period. Besides, you don’t need to register at the exchanges but just simply create an account at a global broker like NSBroker to access all of the companies’ shares. This approach can benefit you in a lot of good ways: