Did you know that every device from Apple installs the app "Shares"? Why? It's simple, in the US every second person buys shares.
In Russia, trading on the stock exchange is not so developed. Many believe that buying and selling shares is a complex process. Not to mention the earnings on such transactions. But it is not, buy securities and make money on them is not so difficult, and now you will see this.
Share – a security confirming the right of its owner to a share in the authorized capital of the issuing company (this is the company that issued this security). In other words, the shareholder is the owner of a part of the company.
Currently, anyone can become a co-owner of such major companies as Google, Apple, Gazprom, Norilsk Nickel and many others.
Securities (shares, bonds, futures, etc.) of companies are traded on the stock exchange. Currently, there are about 200 exchanges in the world, but only 4 – 7 of them are the largest. Among the largest in volume and most popular can be identified:
- NYSE (New York Stock Exchange) – the turnover of the exchange is approximately half of the total turnover of foreign exchanges.
- NASDAQ (National Association of Securities Dealers Automated Quotation).
- LSE (London Stock Exchange).
- AMEX (American Stock Exchange).
- FWB (Frankfurter Wertpapierborse).
- TSE (Tokyo Stock Exchange).
- MICEX (Moscow interbank currency exchange).
Securities are traded on the exchange in the currency of the country in which the exchange is located. For example, Apple shares (NASDAQ) can be bought only for us dollars.
Shares are traded on the stock exchange, but just buy them will not work, you will need to contact the broker. A broker is an intermediary between an exchange and an investor. Currently, there are a lot of brokers, you can choose any.
If you briefly describe the action plan for trading on the stock exchange, you get a list:
- Register with a broker.
- We sign a contract for the provision of services.
- Refill your account.
- We determine the securities that are necessary, and give the broker an order to buy them. The order can be given by phone or through the trading terminal (by the way, many brokers provide the opportunity to trade not only through a PC, but also using a smartphone).
The Issuer is the company that issued the security.
ISIN (International Securities Identification Number) is an international identification code of a security, a 12-bit alphanumeric code that uniquely identifies the paper.
Ticker (ticker, stock symbol, ticker symbol) – the name of the company, which is its code by which it can be found in the database of the exchange. For example, Gazprom has a Ticker GAZP , Facebook – FB.
IPO (Initial public offering) – initial public offering of shares on the stock exchange.
Quote – price to buy or sell.
IR (Investor Relations) – the company's relationship with investors to attract investment.
Tenfold – shares of the company, which brought an income of 10 times more than the invested funds, the company, increased in price by 10 times. For example, from the end of 2008 to 2015, Amazon's securities increased 10-fold. Desjatikratno may appear within 1 year.
Some brokers work only with Russian exchanges and do not work with European and American, some exchanges work only with legal entities. Of course, there are such brokers who work with both Russian and foreign exchanges, but here comes into force Russian legislation, according to which, to invest in shares of foreign companies, the investor must obtain the status of a "qualified investor" Who is it and how to become them we will tell further.
In order to buy securities of foreign companies, a Russian must obtain the status of a "qualified investor" from a broker. In accordance with Russian legislation, a qualified investor is a market participant who:
- Has higher economic education or qualification certificate of financial market specialist.
- Holds securities and financial instruments in excess of RUB 6 million.
- Has more than 2 years of experience in companies engaged in active operations with securities.
- Makes transactions with securities at least 10 times a quarter. The turnover of such transactions should be at least 6 million rubles.
As you can see, getting the status of a "qualified investor" is quite difficult. However, nothing is impossible.
Brokers offer their clients a service for a small fee. They are on behalf of the client, but at their own expense make transactions with securities for the required amount of 6 million rubles. for 1 – 2 days, which makes it possible to obtain the desired status almost immediately.
However, this is not the only way to overcome the existing restrictions – you can not invest through Russia.
How to bypass restrictions
The current restrictions on investments apply to resident individuals who are located in Russia and make investments from Russia through a broker registered in the Russian Federation.
Therefore, the way out of this situation is quite logical to invest in securities of foreign companies not through Russian, but through a foreign broker and from a brokerage account located not in Russia but abroad.
The essence of the workaround is that an individual enters into an agreement with a subsidiary of a Russian broker, which is registered in Cyprus. There will also be a brokerage account, which will not be subject to Russian law.
Subsidiaries of Russian brokers have offices in major cities of Russia and the CIS, as well as fully Russian-speaking. Therefore, you will not have any problems. This is a normal practice and completely legal.
In addition, this option allows to minimize taxation, as income from operations with securities in Cyprus is not taxed (such income is subject to a zero tax rate).
Most people believe that it is worth buying shares of major companies such as Google, Apple and others. Not to say that this is not the right point of view, but to fully understand the situation, you have to understand that in addition to the existing giants, whose growth is slow, there are thousands of small companies that are developing rapidly.
For example, in early June, the capitalization of Gazprom was 5,866 trillion rubles. Imagine what you need to do to the company to the share price of the company increased 2 times. While a small company in the field, such as retail, it is much easier to grow 10-15 times in the next 2 years.
If 50 years ago only brokers and financiers had information about issuers, now a beginner and a professional have no difference in obtaining information at all, thanks to the Internet. If we talk about a professional, his analysis of information takes about an hour, a beginner it will take a couple of minutes: "Google! Oh, cool, I know Google. I take!".
Very often people choose securities faster than household appliances.
You can buy any number of shares, you can buy all the shares in circulation, but it is important to remember the main principle of investment – diversification – "all eggs in one basket do not add up." This makes up the investment portfolio, which should be at least 5 – 10 companies. This means that you should not spend all your money on the securities of one company. It is better to divide the capital by at least 10, and for every tenth part to buy as many shares of the company as enough.
Minimum Deposit or how much money you need to start trading stocks
Many people are interested in the question of how to buy shares for 1000 rubles, or what is the minimum Deposit set by the broker.
This question is correct, since the prices of shares of some companies are high and it is impossible to buy even 1 share (for example, shares of Norilsk Nickel) for 1000 rubles.
Of course, it is better to start trading on the stock market with a larger amount than with a smaller one, but it is not necessary to do everything at once – you can replenish the Deposit by buying shares during the year or permanently.
To buy shares, you need to give an order to the broker. There are several ways to do this:
- By phone – the service is always paid, the cost depends on the broker.
- Using the exchange terminal – free of charge.
- Using the web page – free of charge.
- With the help of a smartphone – free.
With your phone
The easiest way is by using your phone. This method is acceptable only for large investors who ask to buy shares, and a year later call to sell them at a higher price. The process of submitting an order by phone takes place in several stages:
- The client calls a special number (it is indicated at the conclusion of the contract). At the other end of the line, the operator answers, who asks to introduce himself and provide the number of the brokerage agreement. Then, for authentication, the client calls the password.
- After successful authentication, the client voices the order itself. Be sure to specify the type of operation: buy or sell.
- The client then indicates the name of the specific securities and their number (e.g. Sberbank shares (SBER Ticker), 400 pieces).
- After listening to the client's order, the operator announces the current value of the transaction and asks to confirm its execution.
Conversations with the operator are recorded.
The advantage of this method is its simplicity. This is one of the very first ways to trade on the stock exchange, but the world has moved forward, and now the investor wants to monitor the movement of securities prices in real time and be able to respond instantly to any fluctuations.
The exchange terminal means a special program installed by the client. With this terminal, you can independently carry out transactions in real time, monitor the dynamics of quotations, build charts of price movements. Currently, the most popular exchange terminals are:
These programs have wide functionality. Transactions can be made within a few minutes after acquaintance and setup of the terminal. Installing the program on your computer will open in front of you a lot of blocks, buttons, graphs and strange numbers. At first glance it may seem that using these programs is very difficult, but it will take 5 minutes and you will get used to the interface.
Exchange terminals are designed for professional traders, so they have a large set of tools and functions. You just need to start to get acquainted with the two buttons – "buy" and "sell".
Using a web page
Some brokers allow you to trade using a browser. In this case, you do not need to install the program, just open the page in the browser.
With smartphone help
Most brokers have now made trading in the stock market even closer to customers. Now it is enough to download a special application and start trading. Usually it is not difficult to understand the application – everything is intuitively clear.
Types of orders
So, how to submit an order we have understood, now it's time to deal with the types of orders. You can give several types of instructions:
- Sell – order for sale.
- Buy – order to buy.
- Sell Short – an order to sell shares borrowed from the broker (i.e. which you do not have).
Sell. Sale of previously purchased shares.
Buy. The purchase of shares for the purpose of their further sale at a higher price is called the opening of a long position or "game to increase". We are not talking about the length of the time interval between operations. It doesn't matter in this case. Long positions are opened both for several years and for a few seconds. Long positions are characterized by the following sequence of actions:
- Buying stock.
- Waiting for the growth of its price.
- Selling at a higher price.
Sell Short. This operation involves the sale of shares that you do not have, that is, the opening of a "short position". In this case, it also does not matter the length of time. A short position is opened by selling. That is, the client sells shares borrowed from the broker. What's the point of this deal? A trader opens a short position if he is sure that the price will decrease soon. Short positions are also called "downside". For such a "game" is characterized by the following sequence of actions:
- Sale of shares borrowed from the broker.
- Expectation of reducing their cost.
- Purchase of these securities at low prices.
- Return of shares to the broker.
Short positions are suitable only for those traders who earn by speculating, not investing. Investors open only long positions, that is, they play only for the increase.
Types of trade orders, in turn, are divided into types:
- Limited (Limit Order).
- Market (Market Order).
Limited order – a trading order with a clearly defined price at which the client wishes to make a transaction for the purchase or sale of a security. Such applications are submitted when the investor wants to buy a security at a price lower than the one that was formed on the exchange at the moment. In case of sale, on the contrary, a higher price is set. The execution of a limited order does not occur immediately, but only when the price reaches the specified price. This application may not be executed at all, if the price does not reach the desired mark.
All orders have an expiration date until the end of the current trading session (this is the time during which trades are held on the exchange).
For example, on the Moscow exchange trading starts at 10:00 and ends at 18:40 Moscow time (before and after the specified time there are pre and post auctions, but we'll talk about it in one of the following articles). In the us stock markets (AMEX, NASDAQ and NYSE) trading starts at 9:30 and ends at 16:30 new York time.
Market order – a trade order to buy or sell shares at the market price. The execution of such an application is instantaneous.
When making transactions, do not forget about the broker's Commission. The size of the Commission may be different, depending on the broker's tariffs. For example, a well-known American broker has a Commission for one operation of 1 cent per share, but the minimum is $10, which means that you can buy one share and pay a Commission of $10 or 1000 of such shares and pay the same Commission.
A brokerage Commission and Commission for an order may be established. For example, a brokerage fee of $0.07 and Commission for the order - $1.5, that is, buying, for example, 10 shares of $ 30, you will have to pay a brokerage fee of $0.07 + $1.5. In total you will pay $301.57. If the shares go up to, for example, $33, then by selling them, you will again pay a Commission for the operation, thus you will have $328.43.
Some shares are not sold by the piece, and lots. The lot can include 10, 100, 1000 shares – all individually. If you see that the stock is sold in lots, be sure to specify how many shares are included in the lot. Usually it is very simple to do, just enter 1 lot and look at the price, it will be equal to either 1 security, or 10, or 100, etc. the only Exception is the American stock exchange, where the shares are sold only piece.
"Only a broker earns on the stock exchange" - this phrase is often used by "experts". In fact, this phrase is taken out of context. Previously, American brokers charged a 10% Commission, which by modern standards is a huge income. But then the brokers provided information to people on the phone and advised clients that it is better to acquire, over time, brokers have begun to impose to the clients everything. After the arrival of the Internet, everything changed due to an increase in the flow of customers and an increase in transactions and turnover. Today, the brokerage Commission is measured in cents and rubles, not 10% of the investment.
So, if you decide you want to buy shares, you need to go through a few steps:
Step 1. First of all, think about what goals are in front of you in life. As Warren Buffett said, "Someone is sitting in the shade because someone once planted a tree". Remember that to make money on investments, you do not have to work hard and hard, while you get a part of a large company. We determine what income we want to receive, calculate the budget, calculate possible expenses.
Step 2. Choosing a broker. It is advisable to choose a Russian-speaking company to communicate with the broker was clear and simple. Contract. Refill your account. By the way, most brokers now provide an opportunity to do everything online.
Step 3. Choosing a security to buy, we analyze the company and the prospects for profit growth of the selected company.
Step 4. We give an order for the purchase of a specific amount of the selected security.
And so, you became a happy shareholder, for example, Severstal. But where are your shares? With the advent of the Internet and over-the-counter trading, all shares are traded in uncertificated form. This means that you will not get your hands on paper certificates, as it was before.
When you register with a broker, you will be provided with information about the Depository – the company that keeps records of clients ' assets. This is nothing more than a custodial account, i.e. a place to store information about your assets. After the purchase of the security, within 2 days, your name is entered into the custodial account and the custodial Bank as the name of the new owner of the security.
Traders who trade within one day do not have time to get into the list of shareholders. Each broker can have its own Depository, but the Central Depository uniting all is the same for all.
A fee is charged for the services of the Depository. Not always it is transferred to the client, sometimes it is paid by the broker himself. But, for example, the broker VTB Depositary Commission is charged to the client.
If you want to obtain documentary evidence of ownership of securities, you can order an extract from the broker.
Many people are concerned about the question, what will happen if the broker closes? The question is rather hypothetical, as if the company is reliable, it will work. But even if the broker closes, you will not lose your shares, as they are stored in the Central Depository, which does not depend on intermediaries.
How to receive dividends
A nice "bonus" when owning shares is dividends (this is part of the company's profit divided between shareholders in a certain proportion).
Dividends are paid depending on the dividend policy of the company: some companies pay once a year, some – 2 times a year, there are companies that pay dividends 4 times a year.
In order to receive dividends, you do not need to own shares throughout the year, it is enough to have them at the time of closing the register of shareholders. The dates of the accounting days are freely available.
Not all companies pay dividends, so if it is important for you to receive dividends, before buying shares of a particular company, study the information about dividends.
If you have purchased shares in a dividend paying company, you do not need to do anything to receive them. You are already listed as a shareholder of the company, so the money will go directly to your brokerage account.
At the beginning, the Issuer announces the date and amount of dividends (Declaration Date), 2 working days before the closure of the register ends the period when you can buy shares to receive dividends (Ex-dividend date). After that, there are days of closing the register (Record date) – that is, dividends will be received by those shareholders who owned shares on the specified day. A month or two after the close of the registry, the company announces the date of payment of dividends (Payment date).
Usually the day after the day of closing the register, the company's shares fall by the amount of payments. Sometimes this does not happen, and sometimes stocks fall even more if there is some unfavorable news background.
The sales process is no different from the purchase process. The order for the sale of shares can be submitted in the same ways:
- On the phone.
- Using the exchange terminal.
- Using a web page.
- With the help of a smartphone.
After the sale, the funds are credited to your brokerage account. From the brokerage account you can withdraw funds to your personal Bank account. If you plan to re-direct the money to buy shares, you can not make a withdrawal, and make a purchase immediately.
By the way, if you buy shares in different currencies (for example, the ruble and the us dollar), you will have several currency accounts. When withdrawing, it is advisable to have personal Bank accounts in these currencies, as you will be charged an additional fee for conversion.
Most European brokers offer a single trading account for all currencies and markets. The conversion takes place at the current Forex rate, which is more profitable than Bank rates.
Now you know how the stock market works in General.
In other articles you will find a more detailed explanation of all the terms used in this article, learn about all the nuances that can not be described in one article, learn about issuers and stock exchanges, read investment strategies, news, reviews and more.
Knowing how you can provide for yourself and your family, how to make a successful career, you just have to start acting.
Do not trust your money to anyone, you and only you can most competently dispose of them. The main thing is knowledge and experience.