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How to Trade Microsoft Stocks
How to Trade Microsoft Stocks

How to Trade Microsoft Stocks

The stock market is always volatile. That’s why it’s essential to find blue-chip companies that will ensure your stability. Everyone on the earth has heard the name Microsoft. It has proven its reliability over the past few decades. Let’s consider how to enrich your portfolio with Microsoft stocks.

Microsoft: Review

Microsoft is an international tech company with headquarters in Redmond, Washington. The company was founded in 1975 by Bill Gates and Paul Allen. It started with the development of computer hard and software. You have definitely heard about solutions like Microsoft Windows, Microsoft Office, and Internet Explorer. Later, the corporation decided to expand into other markets. For example, in 2001, the company entered the video game sector, launching Xbox.

The company operates in plenty of sectors, developing, producing, supporting, and selling up mobile solutions, data security, social networking, internet browsers, cloud computing services, artificial intelligence together with new versions of Windows and Office.

Is It Really a Good Investment?

The company is undoubtedly a blue-chip tech giant known in every part of the world. It is one of the largest tech enterprises with a multinational team located worldwide.

Microsoft is a blue-chip tech giant known in every part of the world, which proved its reliability being in the market for 45 years.

Although, Microsoft was created in 1975, it goes with the times and covers new markets. The first time it tapped the public market was on March 13, 1986, when it managed to raise $61 million from the initial offering. At that time, lots of Microsoft investors were happy to put money in the developing company. Nevertheless, Microsoft didn’t lose its attractiveness even more than 30 years later. The stock price keeps rising.

Currently, the stocks are listed on the Nasdaq Stock Exchange as MSFT. The stocks are also included in the most famous stock index - S&P 500.

Another important factor as to why you should invest in Microsoft stocks is their stability. Although most companies are announcing bankruptcy and tapping the debt market due to the coronavirus pandemic, Microsoft stocks keep trading at reasonable levels. As a result, they are considered to be one of the safe-haven shares in times of global recession.

Moreover, you will barely find any news telling you about the plunge of Microsoft shares as the company can be proud of a perfect balance sheet and income state data.

How to Buy Microsoft Stocks Effectively

There are three main methods to invest in stocks; two of them easily apply to Microsoft shares.

Buy Microsoft Stocks with Dividends

Microsoft has one of the most attractive share dividends. Investors are eager to put money in Microsoft as they know they can get good profits. To purchase real stocks, you can either do that directly or via a broker or manager.

To purchase stocks directly, visit the Microsoft website. Computershare is Microsoft's transfer agent that provides purchases. If you decide to use a broker or a manager, the process becomes even more accessible. All you need to do is to find a trustworthy brokerage firm; open an account in a few steps and deposit funds.

If you invest in stocks with dividends, you will need to hold shares for at least several years.

ProsCons
Real shares. It’s a great chance to own shares of a mammoth multinational corporation.Long-term investment. If you want to get rewards immediately, this type of investment is not for you as it requires at least several years to gain rewards.
Low risks. Despite the stock market being volatile, it only slightly affects the share price in the long term.Lower benefit. Microsoft is one of the companies that pays high dividends, the general reward may be lower than when trading CFD, for example.
Investments in future. Investors put money into stocks of such blue-chip corporations as Microsoft as they want to be sure of long-term benefits, no matter what happens in three or five years.Complicated analysis. Buying real stocks, it’s essential to determine the perfect price to enter the market. As a result, you have to analyze plenty of factors.

CFD

CFD, or contract for difference, is an option that allows you to speculate on the price difference. While trading CFD, you don’t own real shares but have an opportunity to get rewards on price movements. If you are familiar with forex trading, you can easily trade CFD. However, even if you’ve never traded in forex, you still won’t have difficulties.

Trading CFD you don’t own real shares but have an opportunity to get rewards on price movements.

To trade CFD, you need to find an online broker. Before you choose the broker, be sure it provides a demo account that will allow you to practice before you tap the market. Libertex offers a demo account, for free, where you can check the movements of Microsoft shares, apply the indicators you like and place your first trades.

After you practice your skills, you can use a real account and place orders. Remember about depositing money. Unlike trading real stocks, you don’t need significant funds to enter the market. Moreover, the broker may provide good leverage that will allow you to place big orders.

 All you need to do is choose a timeframe, analyze the market direction and place an order with stop loss and take the profit levels.

ProsCons
Small budget. You don’t need significant funds to place an order.Short-term investment. It’s unlikely you will place a CFD order for one year or so. Usually, traders choose short- and medium-term timeframes.
Win strategy. You can both buy and sell CFD shares depending on the market conditions.High risks. Although, Microsoft shares are one of the most stable, the market, especially within the small timeframes, is highly volatile.
Time to think. There is no hurry. You can analyze the market, check fundamental and technical factors and only after that place an order. If you are not sure, you can always slip the trade. 

But remember that if you want to show your status holding Microsoft shares, CFD will not satisfy that intent.

Microsoft Stocks Price: Analysis and Forecast

No matter how you plan to invest in Microsoft shares, it’s crucial to analyze the market and make a forecast before you invest.

Fundamental Analysis

The fundamental stock analysis includes plenty of factors. However, some are more important for Microsoft stocks:

  • Management. If you plan to invest in Microsoft, learn about its headquarters. Any news on the hiring or firing, or illness of the CEO will affect the shares’ value.
  • Financial data. Also, keep up with the financial data. Balance sheet and income statement are the most significant indicators of the company’s health. It’s worth mentioning that Microsoft always shows good results.
  • Earnings report. This data is released quarterly. All you need to do is compare the actual data and analysts’ forecasts. If the actual data outperforms the estimations, the stocks will rise.
  • Industry news. Microsoft is part of the tech industry. Thus, any significant changes to the industry will affect the companies that occupy the most significant shares within it.

Technical Analysis

To predict the market moves, you can use technical indicators you apply to forex trading in case you are familiar with forex. The crucial stock indicators are Awesome Oscillator, Volumes, and Fibonacci retracements. Compare the previous market moves with the current situation, apply the indicators and catch the signals.

We recommend combining fundamental and technical analysis.

If you don’t believe in your skills, you can use analysis of professional analysts. Many analysts provide daily signals on whether to buy, sell, or keep a hold on stocks. However, you should be careful and not to blindly rely on their predictions.

How to Reduce Risks Trading Microsoft Shares

Microsoft corporation is a blue-chip company that can provide good rewards. Nevertheless, as any asset, MSFT stocks can be the subject of market volatility. To be prepared, check the tips below.

Hedge

No matter what stocks you trade, never put all of your money into one asset. Also, it’s essential to invest in stocks from different industries. Microsoft is related to the tech industry. Thus, to diversify your portfolio, you should invest in another sector that is not affected by similar factors.

Reliable Broker

It’s almost impossible to invest in stocks without a good advisor or a broker. If you decide to invest in real stocks with dividends, apply for the assistance of an experienced, trustworthy advisor, especially if you are a newbie. An advisor will help you to invest your funds at the right time and in the right place.

If you trade CFD, it’s essential to find a reliable broker, which offers fair rates, promotions and bonuses and of course a fully equipped trading platform. Libertex provides a platform with a wide range of technical indicators that will help you to build a good forecast.

Risk Management

Think about how much you can invest in the shares. Remember you should always have funds in case you find a better opportunity or the market moves in the opposite direction. Trading CFD, never risk more than 1-2% of the deposit for one trade.

Analysis

Although, Microsoft is a trustworthy company that has proven its stability in the industry, you should always analyze the situation before you enter the market. Combine both technical and fundamental analysis to be sure you take the right step. Don’t rush and don’t rely only on the strong position of the corporation.

The stock market is one of the most volatile financial markets. The situation changes rapidly. Thus, you should always be up-to-date. Follow the news about the industry and the company and check the economic data.

For example, the dramatic fall of the WTI oil prices to negative values on April 20, 2020, pulled stocks down. Microsoft wasn’t an exception. The next day the stocks opened with a gap down and continued falling.

Practice

Your theoretical knowledge won’t work if you don’t practice. Trading CFD, you have a chance to buy and sell, enter the market on different timeframes, and place as many orders as you wish (considering your deposit).

Even if you make the wrong prediction about the price direction, don’t give up.

However, it’s better to make mistakes while keeping your funds. Try a Libertex demo account with no charge using real money. Practice as long as you need in order to feel the pulse of the market and use a wide range of indicators.

FAQ

Here are the most frequently asked questions about Microsoft stocks. Let’s answer them.

Does Microsoft Pay a Dividend?

Yes. Moreover, the company has been paying dividends yearly since 2004. The company’s dividends have been significantly surging since 2015.

Does Microsoft Have a Direct Stock Purchase Plan?

Yes, the direct stock purchase plan along with the dividend reinvestment program is available via Computershare, Microsoft's transfer agent.

How to Buy Microsoft Stocks?

You can do that either directly from the Microsoft website or via a broker or stock advisor. Remember about CFD. You won’t own real shares, but you can trade on the price difference.

Conclusion

To conclude, Microsoft shares are a perfect investment no matter if you are buying real stocks with dividends or trading CFD. For 45 years of existence, the company managed to become one of the leaders in the tech industry. It’s unlikely you will find news about its company shares crashing as the company has gone through global crises and a recession with minor losses.

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
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