Coins

How to Trade in the Stock Market

Common stocks in publicly traded companies are found in different exchanges in different countries. Apple, Facebook, Netflix, Amazon, Google, Moderna, Gilead and Tesla are some of the companies one can buy and sell in the US stock market.  Air New Zealand, ANZ, Ryman Healthcare and Mercury are found in the New Zealand stock market.  

Yahoo Finance (https://finance.yahoo.com) is a good website to check the worldwide stock market.  It shows the historical performance of each company shown by a ticker.  A ticker is the name of the company used in the stock market.  Apple for example uses AAPL.

Buy and Sell

Once you have opened a trading account, it’s time to buy and sell. See previous post on how to open (http://www.feettogo.com/blog/2020/04/02/hatch/ and http://www.feettogo.com/blog/2020/04/02/directbroking/. ) Check other brokerage companies in the country you are currently a resident or citizen.

Timing is very important in Buy and Sell.  Buy when the price is low.  Sell when the price is above your Buy price.  Hold and wait until it reaches the target price. As simple as that.  Other websites will help you in the technical analysis if you want to delve into it deeper. Check the historical performance.  As everyone know, there is a massive market crash due to the COVID19 or the so called Corona virus.  See the graphs below in the last 3 months. Some stocks are still trying to climb to their peak.

US Stock Market
US Stock Market
New Zealand Stock Market
New Zealand Stock Market

How much profit you target is another thing to consider.  The stock market is very volatile.  It is important to set your risk level. Let’s study Tesla (TSLA) and the profit target. With an initial investment of US$5,000 and a target of 10% price increase, you will end up with US$483 net profit if the price reaches US$767.80. But the the target price has not been reached, so no sale will happen. Wait again for the next trading day if it reaches the target price. If you set your target price at US$753.84 (8%), then stocks will be sold with a net profit of US$383.36 within the day! See the table below for the breakdown of calculation.

Tesla Performance
Tesla Performance
10% Increase Target Price
10% Increase Target Price

It depends on what the target profit is. Once the target profit is achieved, then sell the current stock and buy a different stock. Then the cycle goes on. You have an option as well to just stick with the current stock and wait for it to increase further.

Hatch has this so called Good Faith Violation. If this happens you are barred from trading for 12 months. It goes like this. You have X dollars in your account, then bought Y stock. If Y stock increases to the desired target, then you can sell the Y stock on the same day. The proceeds when you sell the Y stock can be used to buy Z stock or the same Y stock. However, you are only allowed to sell Z stocks after 2 business days when the account has cleared, otherwise Good Faith Violation will happen.

If the stock price is going south, then wait until the price increases to the desired target. With the brokerage company mentioned in the previous post, there are no holding fee. This means you are not incurring any fees in keeping your stocks indefinitely. Look for brokerage company which does not charge monthly fees if this is your case. Some stocks carry dividends.

Happy trading and spend money wisely!

Please perform due diligence before investing.

Related Posts

  1. Hatch at http://www.feettogo.com/blog/2020/04/02/hatch/
  2. Direct Broking at http://www.feettogo.com/blog/2020/04/02/directbroking/. )

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