Stock trading for beginners is the first lesson you need to access global stock markets, potentially building wealth with a few clicks. Before diving into this investment world, it’s crucial to understand the terms and mechanisms of the stock market. In this article, we’ll define stocks, stock trading, and guide you towards the best stock trading companies in Saudi Arabia and the UAE, helping you take your first steps towards professionalism. Follow along!
What are Stocks, and What is Stock Trading? Stocks, also known as shares, represent partial legal ownership in companies. Companies offer stocks for sale in the stock market, making stockholders real partners in the company. There are two main types of stocks: preferred shares and ordinary shares.
- Preferred Shares: Come with fixed dividends representing a percentage of the capital. Owners of preferred shares have priority in profit distribution but lack voting rights in company decisions.
- Ordinary Shares: Have variable dividends representing a share of the company’s profits, fluctuating based on earnings or losses. Owners of ordinary shares have voting rights in company decisions, and sometimes a portion of profits is retained for expansions, increasing the company’s stock value in the market.
Stock trading takes place on the stock exchange, known for being less risky and more stable compared to Forex and cryptocurrency markets. Well-known global stock exchanges include NYSE, LSE, JPX, and the Saudi Stock Exchange (SSE).
How to Start Learning Stock Trading for Beginners from Scratch for Free? Step 1: Understand the Basics Learn the meanings of terms, understand the fundamentals of dealing with stocks, the types of stocks, and how the stock market and exchange work.
Step 2: Set Your Investment Goal Define your investment goal—short-term gains or long-term wealth. Assess your risk tolerance and decide if you prefer ordinary or preferred stocks based on risk and profit potential.
Step 3: Determine Your Investment Capital Decide the amount of money you want to use for trading. Start with a relatively small amount to avoid significant losses. Only invest money you can afford to lose without affecting essential commitments.
Step 4: Choose Your Trading Platform Select a suitable trading platform for your investment type and create a trading account. Many platforms offer free demo accounts for practice before engaging in real trading. Popular platforms include Meta Trader with MT4 and MT5 versions.
Remember, stock trading for beginners requires continuous learning and practice. Begin with caution and gradually increase your involvement as you gain experience.
Step 5: Choose the strategy you want to implement from among (technical analysis / fundamental analysis / historical price analysis), then train on it for free on the demo account. The demo account comes with virtual credit; you won’t need to pay any money for training. It is advisable to train with an amount equal to or close to the specified amount for real investment to avoid any surprises when starting real trading.
Step 6: Start buying stocks, engage in real trading, and make profits. Here are some tips to help you:
- Begin trading with small amounts until you grasp the basics of the market.
- Avoid investing all your money in one company; aim for diversification.
- Stay away from investments you don’t understand well or those with violent price fluctuations.
- Steer clear of stocks that seem unusually cheap; they often involve scams.
- Learn from your mistakes; everyone makes errors, and everyone is susceptible to losses.
- Read also: The best strategy for day trading | Pros and cons of the top 10 strategies.
How to Buy Stocks Online:
- Choose the brokerage company you want to trade through, considering factors such as the type of investment, ease of use, services provided, fees, and more.
- Open an account on the platform by entering basic information such as name, age, country, and email. Since we are now talking about buying stocks, we will skip discussing the training account and refer to opening a real account.
- Start depositing funds into your real trading account wallet using credit cards, bank transfers, or debit cards.
- As we discussed the stock trading method for beginners, begin researching companies and investments that suit your current investment size. When you find stocks that fit, place a purchase order, specifying the number and type of stocks you want and the set price per share. You can choose between individual stocks and exchange-traded funds (ETFs).
- Individual Stocks: Own shares in a single company, usually with higher risk and potentially higher returns.
- ETFs: Own a group of companies and depend on a specific market index such as the S&P 500. Typically, they involve lower risks and potentially lower returns.
- Monitor your investment closely through the platform’s website or app and enter buying, selling, or stopping operations as needed.
Pros and Cons of Stock Trading:
- Stock trading is considered one of the best ways to save and make profits simultaneously. Choosing the right stocks for investment can help maintain the value of your money and achieve significant profits in both the long and short term.
- Participate in making a positive change in economic growth by helping companies and investments expand and increase their actual value in the market through returns.
- Stock trading allows you to invest in multiple companies in various fields, reducing the risk of loss and aiding in diversifying investment portfolios.
- Stock trading doesn’t require physical movement; you can do it online from anywhere. This feature helps save time and energy and increases focus during dealing on the stock market.
Drawbacks of Stock Trading for Beginners:
- High Risks:
- Stock trading involves high risks of losses, especially for beginners and inexperienced traders. Therefore, trading requires a lot of research, scrutiny, and training.
- Market Study Requirement:
- A thorough and in-depth study of market conditions, surrounding circumstances, and company performance is necessary before purchasing stocks.
- Liquidity Challenges:
- Liquidity, meaning selling or converting stocks into cash, can be challenging for beginners, especially with small and unfamiliar companies, which beginners often turn to in the early stages of trading.
- Trading Fees:
- Some platforms and brokerage firms impose fees on stock trading operations.
- Time-Consuming:
- Stock trading requires numerous small buying and selling operations and the application of different strategies over an extended period to reach the necessary level of expertise for significant trades.
Major Stock Trading Companies in Saudi Arabia and the UAE:
Global Trading Companies Available in the Gulf:
- AVATRADE:
- Licensed by ADGM (Abu Dhabi), it is one of the best stock trading platforms offering a demo account. The minimum deposit for real trading is $100.
- evest:
- Licensed by VFSC (Vanuatu), provides stock and digital currency trading services. Offers a demo account, and the minimum deposit for real trading is $250.
- Exness:
- Licensed by FCA (Cyprus/Britain), it is one of the best platforms for beginners. The minimum deposit for real trading is $10.
- XTB:
- Licensed by Cyprus, Dubai, DIFC, Britain, and DFSA. Provides a demo account, and the minimum deposit for real trading is $100.
Local Stock Trading Companies in Saudi Arabia:
- Aljazira Capital
- Alahli Capital
- Samba Capital
- HSBC Saudi Arabia
- Riyad Capital
Local Stock Trading Companies in the UAE:
- Abu Dhabi Commercial for Securities
- Nour Capital
- Dubai National for Securities
- Shuaa Capital
- HSBC UAE
How to Open a Forex Stock Account:
In general, to open a stock trading account in Forex, follow these steps:
- Choose a Forex trading company that suits your investment nature and size, ensuring it is:
- Licensed by a local or international regulatory authority.
- Reputable and experienced in stock trading to avoid scams.
- Supports a robust trading platform like MetaTrader.
- Has relatively low or no trading operation fees.
- Provides excellent support services 24/7, including tools like technical analysis, charts, demo accounts, etc.
- Create a real trading account on the chosen company’s website or app.
- Provide the required details such as name, date of birth, mobile number, residence country, email, and national ID or passport image.
- Confirm your account information through a confirmation message on your mobile or email.
- Now that you have an account, deposit an amount of money into your trading account wallet to start buying stocks. Deposit through bank transfer or credit cards.
- Begin purchasing the stocks you want to invest in and start trading.
After discussing the general steps for opening a stock account and how to trade stocks for beginners, let’s focus specifically on Equiti trading platform. Equiti is one of the stock trading companies based in the UAE, with offices across the Emirates. Established in Jordan in 2008, Equiti expanded to own multiple offices in the UAE. The company holds licenses from FCA, VFSC, and operates on the MT4 and Web platforms. Equiti provides the following services:
- Withdrawal and deposit via Visa, MasterCard, Wire, Neteller, and Skrill.
- Ability to create a demo account on the platform.
- Trading in Forex, stocks, indices, commodities, and CFDs.
- No withdrawal fees.
- Deposits starting from $500.
- Islamic trading services and Islamic accounts.
- Assistance tools like analytical tools, competitive charts.
- A simple interface available in Arabic, English, French, Spanish, and Chinese.
- Operates under the supervision of 6 regulatory authorities.
- Holds licenses from Dubai and British authorities.
- Provides 24/7 customer support via chat, voice calls, or email.
- Offers four types of trading accounts: Standard, Premium, Commission-Free, and Islamic.
Frequently Asked Questions about Stock Trading for Beginners:
- What are stocks and their types?
- Stocks represent ownership shares in companies and investments, giving the owner partial ownership in the company. There are two main types of stocks: preferred stocks and common stocks.
- How does stock trading work?
- Stock trading involves buying and selling stocks on the stock exchange. Traders seek to buy stocks when prices are low and sell them when prices rise to profit from the difference. This differs from speculation, where speculators don’t own the stocks but rather speculate on price changes, whether up or down.
- What is the importance of trading in the stock market?
- On a personal level, trading is an excellent way to save money and preserve its value while making reasonable profits. On a broader scale, trading contributes to economic growth, prosperity, and the expansion of investments in the markets.
- How can beginners trade stocks?
- Choose a licensed and reliable trading company, then create a demo account. Select a suitable trading strategy and practice it extensively with virtual funds. Afterward, create a real trading account, deposit funds, and start buying and trading stocks.