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Stock Trading

Stocks are often referred to as the most exciting form of tradeable asset in the binary options industry. Broadly speaking a stock is a type of security that signifies a certain ownership in a corporation. It is a unit of a company and represents a potential claim by investors on part of the corporation’s assets and earnings.

Traders are able to benefit from the fluctuation in the value of international leading brands such as Facebook, Google or Volkswagen. Binary options have democratised the access trading for traders of all walks of life. Traders of Stellar Finance have the opportunity to access a large array of stocks which have been put at their disposition. Our traders feel a special zeal to go through the daily news to understand on which one to trade. Stellar Finance provides a daily insight on what has happened during the last 24 hours of the financial market so that they are able to better follow while gaining a deeper insight on the asset they have invested. Traders often tend to specialise themselves into specific stocks on which they are able to have a constant monitoring. We intend to have a maximum of leading stocks so that traders are able to get everything under a single roof.

Besides the economic crisis of 2008 where the global economy went through an unprecedented crisis, in June 2016, investors were able to benefit massively from the fluctuation of the market due to the Brexit vote.

Origin of Stock Trading

Stock trading is not a new concept but has existed for centuries. In the early 1600’s ships made long voyages across the vast streak of oceans taking several months to bring products from one region of the world to the other. Navigations techniques were not advanced as they are today. The voyage entailed considerable risks. It often happened that ships met the unfortunate fate of bad weathers or being attacked by pirates where the owners lost not only their ship but also their very valuable goods. To counter for this and limit the risk associated, ship owners adopted the practice of seeking investors who would invest money in the voyage. They have then attributed a percentage of profit (depending on their level of investment) when the voyage was successful. Inadvertently they were actually investing in companies, as stocks which are known today.

In our modern era, Companies list their stocks for various reasons but mainly to raise money in a judicious way. There are basically two main ways for a company to raise capital, either by borrowing from financial institutions or by selling stocks. Borrowing tends to tie the company for a long time especially if a large capital is required, whereas stocks do not pose this problem but however the ownership of the company is consequently diluted. It is good to note that stock trading of major companies is part of the Stock Exchange which regroups leading companies under their aegis. The value of individual companies affects the overall performance of stock markets such as Nasdaq, Dow Jones or Nikkei 225 among others. Hence a very good understanding of the stock of individual companies can actually give a broader insight to much of the industry.

It is good to note that binary options traders are not actually purchasing the stock itself but simply predicts whether the asset will gain or lose value. This is advantageous in the sense that traders do not need to invest huge amounts of money to make profits. Rather the trader get the opportunity with binary options to make small investments in view to make a substantial amount of profit due to the fact that the binary options industry give high payouts. Traders do not need to invest huge amounts raising the possibility of making huge losses as well. For instance with a $250 deposit at Stellar Finance traders are able to benefit from the opportunity of trading stocks, such would not have been possible had the trader opted for traditional methods. First, the amount to be invested would have proved to be too steep hence debarring potential clients, the trader would have had to learn all the complex technicalities and last but not the least with a low investment, traders would be making even smaller amounts of profit. However, it is good to understand the mechanism involved in the process before traders.

A holder of stock is commonly referred as a shareholder, he/she has a claim to a part of the corporation’s assets and earnings. A shareholder basically owns a part of the company. However there are other factors to be considered to decide to which extent a shareholder ownership is within the company. It is broadly speaking determined by the number of shares a person owns relative to the number of outstanding shares.

Types of Stocks

It is interesting for binary options traders to be able to get a very good insight on the two main type of stocks. It is important to properly grasp the basics of stock to be able to get the most out of your trading. It is in this optic that we have gone through the two most common form of stocks available, so as to provide a valuable insight to our traders.

Common Stock

Common stock is the type of stock which is the most sought by individuals. When investors or shareholders are referring to stocks, they are referring to common stocks, it is the most popular form of stock. The key characteristics of Common stocks are that owners of this type of share represent a form of ownership in the company, they actually own a unit of the company they can consequently claim dividends on a portion of profits that the company made depending on the established procedures at the company. Investors have the right to get one vote per share so as elect those who will be board members, who in turn have the responsibility to oversee the major decisions made by the management of the company.

Common stocks have many advantages in the long term, it encourages capital growth, hence higher returns.

Preferred Stocks

Preferred Stocks just like common stocks entail ownership in the company to some but it does not necessarily give voting rights. Preferred shares give the opportunity to shareholders to benefit from a fixed dividend assumably forever. Moreover, in the event that the company finds itself in a compromising situation and needs to liquidate its assets, preferred shareholders are paid in priority over those owning common shares. Preferred shares, however, are callable, that is the company who have issued them have the privilege into redeeming back the shares, at any given time for any reason against usually a premium which is offered to the investor.

Stocks Examples

(1) Google(2) AIG(3) Samsung(4) Coca Cola(5) Facebook

Stellar Finance has made sure that all the leading stocks are made available on its platform such that our traders do not miss any opportunity of making good money due to the fluctuations of the market.

Factors impacting on Stock

Stocks are impacted upon by a wide range of influencers which are at times not under the direct control of the company. Traders carefully scrutinise information which will give them an eventual clue on whether the value of the asset will rise or fall, hence helping them to make accurate predictions.

  • Political : Decision which governments take often have a direct impact on the value of stocks. New legislations requiring a new framework will requires companies to follow the rules. Hence affecting stocks. Political decisions are often external factors on which companies do not have any control. Political stability also have an impact on the value of stocks. As an example, in June 2016, investors were able to benefit massively from the fluctuation of the market due to the Brexit vote which was due to a political decision.
  • Natural Calamities : When the operations of companies are affected, the value of the stock will definitely be influenced. These are independant of companies but have large impact on operations.
  • Demand and Supply : The market mechanism of demand and supply affect the value of stocks. When supply exceeds the demand, there are more units out, hence the value of these unit will fall causing the value of the stock to fall.
  • Major recruitments : A new CEO for a major company being freshly appointed will have his/her own ways of melding the business which could either boost the sentiment of investors or dampen prospects leading the value of the asset to lose value considerably.

How to trade Stocks with Stellar Finance?

  • Log in your trading account. If you do not possess one, you are kindly requested to open one here.
  • Choose the trading tool which you prefer.
  • Once you have chosen your trading tool, click on the Stock tab which is located on the top of the trading platform. Choose your preferred stock and set your expiry time.
  • Choose Call if you think the price of the asset chosen will rise and select Put if you think the price will fall within the expiry time.