How to Buy and Trade Amazon Stocks
When you want to order something, what is the first company that comes to mind? There is a high chance that it’s Amazon. Even in times when the borders are closed, and people all around the world are isolated at home, Amazon keeps working.
Amazon: Short History
Amazon is a multinational technology company operating worldwide with its headquarters in Seattle, Washington. The corporation was founded in 1994 by Jeff Bezos but has already managed to cover such sectors as e-commerce, cloud computing, digital streaming, and artificial intelligence. Although, it has not existed as a multinational corporation, it keeps up with such giants as Google, Microsoft, and Apple.
Is It Worth It to Invest in Amazon Stocks?
In 2019, the company gained the title of the world’s largest e-commerce retailer for their online revenue. The same year, the company became the second-largest employer in the US after a series of businesses’ acquisitions such as Whole Foods. Amazon provides plenty of products. They include amazon.com, Amazon Web Services, Prime Video, Amazon Music, Fire Tablets, Fire TV, Echo and Alexa, Kindle E-readers and Books.
Besides last year's rewards, Amazon managed to stay afloat amid the current crisis. If you look at the chart, you will see that the AMZN stocks were plunging from the middle of February to the middle of March – the peak of the coronavirus outbreak. Nevertheless, in the middle of March, the stocks rebounded and moved up, reaching new highs. Currently, the company has been trading at levels never seen before.
How to Buy Amazon Stocks?
There are two primary ways to invest in Amazon. You can choose between real shares and CFD trading.
Amazon stocks are traded on the NASDAQ stock exchange under the AMZN ticket. If you want to become a holder of Amazon stocks, you can either apply to a brokerage firm or a financial advisor.
When buying stock via a broker, all you need to do is find a reliable firm, open an account, find Amazon stocks on the list, decide how much money to invest, and place an order.
There are two types of orders you can place. There are market and limit orders. Placing a market order, you will be able to buy stocks at the current market price. Using a limit order, you can determine the maximum price at which you are ready to buy. If the stock price exceeds your limit, your order will be canceled with no loss.
The one thing you should consider when purchasing real stocks is the high price.
However, there is such an option as fractional share investing. It means you can buy a fraction of the shares and increase your holdings over time.
A financial advisor is another option you can use to buy stocks. When trading through a brokerage firm, you are responsible for all your decisions and can get a piece of advice only from experts on the internet. It can become a challenge for a newbie trader. A private financial advisor can help you with your investment decisions. Although, the risks will still be on you, an advisor can assist you with what and when to invest.
If you are not sure how to structure a portfolio or what stocks to trade, an advisor is a good option for you.
The third way is to buy shares directly from the company without assistance. You can open an account with Computershare and do financial operations. For more details you should visit the Amazon website.
Investment in the future. Although, stocks are a risky asset, if you buy shares of such stable companies like Amazon and keep them for an extended period of time, you have a chance to receive a great reward in the future.
But you should remember that the company doesn’t pay dividends. You can benefit only from its constant growth.
Delayed rewards. No matter what stocks you trade, you will have to hold them for at least three to five years.
As you can see, the value of Amazon rises day-to-day. That means if you decide to sell your stocks as soon as you see a small decline in the price, it may lead to lost opportunities. It’s unlikely you will want to sell stocks and see how they keep rising after a rebound.
Professionalism. If you decide to purchase real shares, you can improve your skills as stock investment requires complex analysis and persuasive skills.
Complicated analysis. To buy real shares, it’s not enough to open an account and place an order. You should analyze an industry, the company's internal and external factors, economic data, previous market movements, and apply technical indicators that will determine the price.
Lower risks. As we said above, purchasing real stocks, you make a long-term investment. The market volatility is visible in small timeframes. From a long-term perspective, it is smoothed.
Moreover, Amazon is one of the blue-chip companies that proves its reliability even in times of crises.
Big funds. To purchase the company’s shares, you will need to have a significant amount of money. That’s why there is an option of fractional share investing.
The contract for difference, or CFD, is an option to trade stocks without material owning of them but speculating on the price difference. CFDs won’t allow you to buy shares. All you can do is trade on the price movements. Are you familiar with forex? If you are, you can quickly start trading stock CFD.
CFD trading is done through a brokerage firm as well. Again, there are only a few steps to start trading CFD. Find a trustworthy broker, open an account, choose AMZN stocks, and place an order.
The main advantage of CFD trading is a win-win strategy. You can both buy and sell shares even if you don’t own them.
The main advantage of CFD trading is that you can gain rewards, not only buying shares but selling them even if you don’t own them. If you see the stocks are declining, you can wait until they meet a bottom and buy on the rebound. Vice versa, if you noticed the stocks are overbought and are trading at significant highs, you can wait until they rebound down and sell.
Fast rewards. Unlike holding real shares, trading CFD allows you to receive potential profits within one day.
High risks. If we compare real stocks and CFDs, the CFD trading is riskier because it’s unlikely you will hold a position for many years.
The idea of CFD trading is to catch market sentiment, trade within a maximum of several months, and then get the benefit. If you trade on small timeframes, the volatility is enormous there, but it doesn’t matter as Amazon stocks are quite stable.
Ability to trade in all market conditions You win both ways. The trading is based on the option to place orders both to sell and buy. Thus, you don’t have to wait for a perfect opportunity when the shares fall to buy them. You can open a trading platform and start trading immediately.
Short-term investment. You can consider it as either an advantage or a limitation, depending on your aims. If you plan to invest in your future, CFD trading won’t provide you with such an option.
Low funds. You don’t need lots of money to place your first order and trade Amazon stocks. Moreover, a reliable broker can offer you leverage that will increase your funds.
Amazon Stocks: Analyze and Forecast
To predict the movement of Amazon shares, you don’t need exceptional tools. If you are familiar with two types of analysis – technical and fundamental - you won’t have difficulties. However, it is worth considering what factors are more critical for AMZN shares.
If you are familiar with technical and fundamental analysis, you won’t have difficulties predicting the stock price.
We will start with the fundamental analysis that determines whether stocks are oversold or overbought:
- Earnings report. It’s a crucial part of the analysis of any stocks. Earnings figures are released quarterly to show the company’s performance. On October 25, 2019, Amazon shares opened with a huge gap down after the third-quarter earnings fell a day before.
- Industry news. Amazon has one of the largest shares in the tech industry. It means that significant events in the industry will affect the company’s performance.
- Management. To be sure the company’s value didn’t change, it’s vital to know about its internal issues. Hiring and firing, mergers and acquisitions will affect the company’s stability. To be up-to-date, you can read news about the company.
To use technical analysis while predicting market moves of Amazon shares, we recommend using Fibonacci retracement, Awesome Oscillator, or Volumes.
The technical analysis requires lots of practice. Before you enter a real market and start spending your cash, it’s worth practicing on a demo account. Libertex offers a modern trading platform with all-new indicators that will make your analysis more accurate.
How to Reduce Risks Trading Amazon Shares
Although, Amazon shares are one of the most stable in the market, you should be ready for unpredictable events that may affect them.
Amazon belongs to the tech industry. That means you should put your funds in the stocks of another sector in case the market moves against you. Also, it’s essential to keep some funds in reserve. If the market moves in the opposite direction to your predictions, you should always have the opportunity to open another trade to return money or to invest in a better option.
Hedge through diversification. Choose stocks from different industries and split your funds.
Choose a Trustworthy Broker
It’s crucial to find a broker who will offer fair commissions, reasonable rates, and attractive rewards. At the same time, the broker should provide a convenient trading platform with plenty of technical indicators and settings. Take a look at platforms with a demo account to see all the tools you need to build a comprehensive analysis.
Analyze as a Professional
It’s essential to be able to make your own predictions and not rely on forecasts of others. Above, we have mentioned the factors of fundamental analysis you should consider when predicting the price of Amazon stocks.
Before you put your funds in either real shares of CFD, you should analyze how much money you have, how much you should invest, and how much potential profits or losses you will get.
A purchase of real shares requires bigger funds than CFD trading. Nevertheless, you shouldn’t risk more than 1-2% of your deposit amount. Keep money in case the market moves in the opposite direction or to catch a better opportunity.
There are still questions that remain unanswered.
Does Amazon Pay Share Dividends?
Although, Amazon has existed for 25 years, the company believes it shouldn’t pay dividends. Amazon investors can get profits from the constant growth and development of the company.
Does Amazon Have a Direct Stock Purchase Plan?
Yes. In August 2019, the corporation launched a Direct Stock Purchase Plan. You can open an account with Computershare and buy, sell, or hold Amazon shares.
How to Buy Amazon Stocks?
If you want to buy real shares, you can do that either via a brokerage firm, a financial adviser, or directly from the company.
To conclude, Amazon shares are one of the most attractive investments among professional investors. For 25 years, the company has been proving its reliability. The company’s stocks rise in value daily and confirm their investment attractiveness. Moreover, Amazon stocks provide exciting opportunities for CFD trading.
However, before you enter a real stock market, you should practice your skills. A Libertex demo account gives you a chance to master your predictions at no cost. Open a demo account and start your big investment path.
Why to trade with Libertex?
- access to a demo account free of charge
- technical assistance to the operator 5 days a week, 24 hours a day
- leverage up to 1:500
- operate on a platform for any device : Libertex and Metatrader 4 and 5