If you are a beginner who wants to invest in the stock market, you’ve come to the right place! If you want a passive income on the side while you focus on your day job, then stock trading is right for you.
Stock market investment isn’t complicated. Even beginners can learn it. In fact, it’s the most recommended initial investment for beginners because it’s the most stable market.
Let your money sleep and grow!
- Gainers & Losers
- 1. Steps to Get Started Investing in stock market >
- 2. Stock Trading in the Philippines: Short-Term vs. Long-Term >
- 3. Investing in Stocks VS. Trading Stock CFDs >
- 4. Steps on How to Buy Stocks in the Philippines >
- 4.1 What Are the Extra Fees When Invest in Philippine Stocks? >
- 4.2 How Can You Make Money Investing in Stocks? >
- 5. Steps to Trading Stock CFDs in Philippine >
- 5.1 How Can You Make Money Trading Stock CFDs? >
- 6. How to Read Charts in Stock Trading >
- 7. Final Thoughts >
- FAQ >
Stock trading follows a simple set of steps.
Research well-performing stocks in the Philippines.
Decide whether you want to invest for the short term or the long term.
Choose a trading method or strategy to use.
Learn to place trades and interpret charts.
Choose an exchange and begin trading!
That seems pretty straightforward, doesn’t it? But that’s not all!
For every step that you take in investing in the stock market, there are substeps that you need to learn, pay attention to, follow, or heed in order to become a successful investor.
Stock investing is easy once you’ve gotten past the hard part, which is learning it from the ground up.
Lucky for you, we’ve created a short guide that will help you begin your stock investment career!
Below is an outlined and more detailed discussion about everything you need to know when investing in stocks market. Trust us: after this article, you’ll be twice smarter about how to invest in stock market.
There are two approaches that every investor can take in stock trading: long-term and short-term. Which you choose between the two should depend on your goals, as outlined below:
Short-Term (Small, Quick Gains)
Short-term investing is when you buy or sell stocks, hold that position for several days or weeks, and eventually exit. Short-term investing relies on the idea that you can make gains in just a short time with minimal risks.
One type of short-term investing is day trading, or when you trade stocks within the market’s opening and closing time for the day. Day trading follows the same principle of small, quick gains.
In short-term trading, you need to be familiar with technical analysis and strategies to execute successful trades. A popular short-term investment option for traders is stock CFDs. More on that later.
Long-Term (Let Your Money Sleep)
Long-term investing involves investing in stocks that you think will perform well in the next five to ten years. This approach relies on the idea that the longer you hold an asset, the higher the gains.
The main disadvantage of long-term investing is the amount of potential risk. The stock market is volatile, and economic or financial factors may affect the performance of an asset you are investing in. That means that within the five years or so that you let your money sleep, there is a high chance that you will experience losses.
However, that also means that you could gain major profits within five years or so that you invested.
As a beginner investor, you need to know the difference between invest in stocks and trade stock CFDs:
Buy Stocks to invest
Stock investment is when you invest in the shares of a particular company, such as Jollibee Foods Corporation (JFC). Essentially, owning shares means owning a part of the company.
When you buy stocks from a company on an exchange, you need to pay the total price of each share. Your gains will depend on how much the share’s price has grown over a period, which is directly related to the company’s growth.
Stock CFDs Trading
Stock CFDs trading differs in that you are only investing in the underlying stock price movement without owning it. Essentially, you are only speculating on the asset’s market price and earning profit from it.
Contract for Difference (CFD) is a contract that lets investors profit out of an asset’s price movement over the short-term without owning it. The contract’s value only considers the price change between the entry and exit of the trade and not the asset’s actual value.
CFDs are also traded on leverage, so if your broker offers a 1:10 leverage, you only need to pay PHP1,000, but you can trade PHP10,000. While that may increase profits, it also means higher risks. Always remember that when trading in leverage, you could lose more than you began with.
- Gainers & Losers
How to invest in US Stock in the Philippines?
If you’re wondering to invest in US stocks, there are 2 popular choices, buy US stocks at the international stocks broker, or trade us stocks on CFDs.
The popular stock broker that supports the Philippines includes Tiger Brokers, IBKR, TD Ameritrade, etc. You can open an account online and complete the funds' deposits.
The simpler way to invest in the US stock market in the Philippines is to trade stock CFDs. While CFDs can be a gamble to take, investing in US stocks CFD opens you to a wider market.
In fact, trading US stock CFDs offer many benefits, such as low deposits, high leverage, and access to pre-market open and after-hours pricing. High leverage allows you to maximize profits, but that also means bigger potential losses.
With US stock CFDs trading, you can capitalize on the price movement of major US shares, regardless of their value going up or down. And with access to pre-and post-market pricing, you can seize all trading opportunities.
When trading US stock CFDs, your biggest risk is the probability of losing more than you invested, which comes with every high leverage. So, trade wisely.
Now that you know what stock and stock CFDs are and how to invest in them, let’s get cracking!
Lucky for you, we’ve created two short step-by-step processes to help you begin trading in both markets.
If you’ve decided that buying stock for the long-term is right for you, simply follow this short guide:
Step1: Choose a Stock Broker
The first step to trading in any market is choosing a broker. To invest in the Philippine stock market, you have two options: Online and Traditional Stockbrokers. For this part, we’ll discuss COL Financial.
In the Philippines, one of, if not the most well-known online broker is COL Financial. The reason for this is because it’s a beginner-friendly platform that is easy to navigate; plus, you can open an account and begin investing in stocks for as low as PHP1,000.
Most beginners in stock trading begin with COL Financial. Some beginner stocks that most Filipinos invest in are Jollibee Food Corp. (JFC) and Ayala Corp. (AC).
Step2: Open and Fund Your Account
COL Financial offers a beginner account called COL STARTER, and it requires a low deposit of PHP1,000. This account provides similar access to its two more expensive accounts on some aspects, including research, support, and facilities.
Step3: Place an Order
Browse through the offered stocks and determine which one/s you want to invest in. Once you’ve decided, you can choose to buy or sell.
It will help if you’ve already researched how particular stocks have performed in the last months or years, so you can use that information to decide which stocks you think would gain you profit.
Step3: Place an Order
Investing doesn’t end when you place an order for a stock. As long as you have money on that platform and shares you invested in, your work is never done.
Keep track of your investments daily, so you know whether you’re profiting or losing money out of it. The market changes daily, and so would the value of your investments. In the meantime, also read about stock trading to gain further knowledge.
Unfortunately, your responsibility as an investor doesn’t stop and end at the actual investing. Some additional fees and taxes are charged to you as you invest in shares.
The good thing is, these fees are automatically charged to you every time you place or execute an order. But while you don’t really need to worry about it, it helps to know which fees you are paying. It’s also so that you don’t get surprised at the number of charges that come with your trades.
Some of the automatically charged trading fees are Value-added tax (VAT) on commission, which is at 12%; PSE Trans Fee at 0.005% of the Gross Trade Amount; and a Clearing Fee at 0.01% of the transaction amount.
In addition to that, selling a stock also charges you the Stock Transaction or Sales Tax, which is at 0.6% of the transaction amount in 2021. Note that all these fees may also depend on your broker’s fee structure.
There are two main ways that you can earn out of your stock investments.
Capital appreciation is when the price of the stock you invested increases. For instance, if you bought the stock at PHP300 per share, then the market value rises to PHP400 after a week, your capital appreciation is PHP100. That profit only becomes realized once you sell the share at PHP400. However, if you decided to hold onto it and the stock’s value fell to PHP250, then your loss is at PHP50.
Dividends are profits that corporations distribute to their shareholders. This happens when a corporation has profits or surplus gains, and they pay shareholders a proportion of this profit either through cash or more shares of stocks. Usually, dividends are paid out once a year, but some corporations do it quarterly.
If, on the other hand, that you’ve decided to invest in stock CFDs instead, here are the steps you need to follow:
Say you’ve already chosen a broker, opened and funded an account, and decided which stock CFD to invest in. It’s time to get down to business. For this part, we’ll be discussing trading stock CFDs on MiTrade.
Step1: Place an Order: Go Long (Buy) or Go Short (Sell)
First, you need to know the price of the stock CFD you are looking to invest in. Stock CFD prices are always labeled as sell/buy or bid/ask, and the difference between the two is called the spread.
The price of the CFD you are looking to invest in is based on the underlying asset price.
A more comprehensive example of trading stock CFDs is outlined in the next subheader of the article.
Step2: Set Stop Loss and Take Profit
Stop loss and take profit levels help you minimize losses and lock in gains, respectively. Both are part of a risk management strategy that you should always have, not only in CFDs trading.
A stop-loss automatically closes a trade when it hits that particular level, which you can set several points below the current market price. On the other hand, a take profit or limit order does the same thing but is set a few points above the current market price.
These levels are necessary for a volatile market. You should expect your investment to fluctuate in both directions before you can close the trade.
Step3: Close the Trade
Once you have secured enough gains and would like to prevent potential losses, then it’s time to close the trade.
(Note that you will manually close the trade if your set stop loss and take profit levels were not hit). Your profit or loss will automatically reflect on your screen and on your account.
- Gainers & Losers
Stock CFDs trading is an excellent way to gain large profits in a short period. That is because it trades on leverage. In addition, you can gain profits from trading stock CFDs whether you buy (go long) or sell (go short). For example:
Let’s say you want to invest in NAS 100 stock CFDs. The share price for each NAS 100 is at 5000 USD and you want to invest twenty. Your broker offers a 1:20 leverage, so that means you’ll only need 5,000 USD to trade a 100,000 USD position.
While that may seem like a big opportunity to trade, remember that your gains or losses are calculated on the total 100,000 USD position, and not the 5,000 USD you provided, which is called the margin.
$5,000 = ($5,000 x 20) ÷ (20 ÷1)
margin = (share price x quantity) ÷ (leverage)
Now, if you think the price will increase, then you buy or go long, and if you think it will fall, you sell or go short.
For instance, if you bought 10 NAS 100 with the long price at 5000 and it rose to 5010, with each NAS 100 contract equal to 10 USD per point (pip), a ten-pip upward movement means you gained 2000 USD. It follows the same principle as selling. See calculation below:
Buy (Go Long):
$1000 = (10 x 10) x (5010 - 5000)
Profit = (quantity x price per pip) x (current price - price when bought)
If you decided to sell or go short when the value of NAS 100 was at 5000, and then it rose to 5010, your loss would be computed as:
Sell (Go Short):
Loss = (quantity x price per pip) x (price when bought - current price)
$ -1000 = (10 x 10) x (5000 - 5010)
These computations should elaborate on how leverage can be both an advantage and disadvantage in CFDs trading.
While it is very enticing to trade a large amount of money and just shelving out a smaller portion of that from your wallet, your losses could also amount to so much higher than you initially invested. That is why trading in leverage should always be done with caution.
Reading stock charts requires familiarity with technical analysis and the different types of charts: bars, lines, and candlesticks. As a beginner, we’ll be explaining these three alongside an example.
The ticker symbol of a stock is displayed on a chart, alongside its price movements over the last minute, hour, day, week, month, or year. There is an option to change the date interval on the display chart, which many traders refer to when using technical analysis, or when they use trading indicators to determine the future price movements of an asset.
The price movement or performance of a particular asset is plotted in graphs so traders can visualize its upward and downward movements over time. The line graph and the bar chart are two chart constructions that show the underlying asset’s movement. Meanwhile, the candlestick chart provides greater detail, as shown in an example from the direction of NAS100 on MiTrade below:
If you wish to, you can switch between the candle, line, and graph display by clicking the icon on the top left of the chart.
On this graph, you can see that the time interval is set to every 15 minutes. The graph also shows a significant slide between 16:00 and 2:00 hours. That means that during these hours, NAS100 was on a downtrend. At the beginning of the 2:00 hour, the movement is aiming to go upward and establish an uptrend. Whether it’s a success or a failure will show in the future price movements of the asset.
Investing in the stock market in the Philippines shouldn’t be intimidating for a beginner investor. You just need basic proper education about stock trading, enough funds, and dedication to begin your investing journey.
Both Philippine and US stocks offer high chances of profit but also remember that stock trading can be a long, hard gain. It could take months to years before you see a sizable increase in your investment, especially if you started small.
On the other hand, if you want to trade in leverage and higher chances of sizable profit, then stock CFDs might be better for you. Stock CFDs trading can be daring to take, but the chances of having large profits in a short period are high. You could immediately double your investment in just a few days. Still, that also means the risks are just as high as the possible gains.
The best advice any pro-investor can give a beginner is to never invest money you cannot afford to lose. Stock trading is a volatile market, and there are as many chances of profits as there are of losses. The PHP 20,000 you invested today could turn into PHP 40,000 or PHP 0 in weeks or months. So, don’t put your hard-earned money into stocks, just invest what spare money you have. Then, build your investments from that.
The second piece of advice is to always diversify your portfolio. Never invest in just one stock since that could lose you all your money faster than if you divided your investment into multiple stocks.
The third, and perhaps the most underrated advice, is to always set a stop loss. After losing a couple of hundred pesos from your investment, you’ll learn. But why wait for that when you can do that now?
The fourth piece of advice, and perhaps the most important, is to choose a good and reliable broker that is regulated by international regulators. How much you gain from your investment wouldn’t matter if you are trading with an unreliable broker.
At MiTrade, you can invest in stock CFDs trading at very competitive prices. You can begin your investment journey in the stock market in the Philippines. Enjoy low fees, transparent spreads, and commission-free trading from a regulated broker today!
Q: How much is the minimum investment in the stock market in the Philippines?
You can trade with as low as PHP1,000 with most brokers, including COL Financial.
Q: What is the market time for stock trading in the Philippines?
The trading hours in the Philippines are from Monday 9:30 am to Friday 12:45 pm (GMT+08:00).
Q: How to buy Google, Apple stocks in the Philippines?
You can invest in US stocks from the Philippines with brokers that provide access to US shares, such as MiTrade.
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The content presented above, whether from a third party or not, is considered as general advice only. This article does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments. Mitrade does not represent that the information provided here is accurate, current or complete. For any information related to leverage or promotions, certain details may outdated so please refer to our trading platform for the latest details. Mitrade is not a financial advisor and all services are provided on an execution only basis. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks. *CFD trading carries a high level of risk and is not suitable for all investors. Please read the PDS before choosing to start trading.