Trade Global Stocks with AIFundBTC

What You’re Really Buying When You Trade Stocks

A stock – also called a share or equity – represents ownership in a publicly listed company. When you buy a stock, you’re taking a stake in that company’s future and its potential to generate profits.

Traders and investors can benefit from stocks in two main ways:

1. Receiving dividend payments paid out by the company.
2. Gaining from price increases in the stock itself.

The second method is where the action really is. Stock prices can rise sharply in a single day — sometimes by 10%, 20%, or more. That’s exactly why active traders, especially day traders, aim to capitalise on quick price swings by opening and closing positions within hours or even minutes.

Stocks Traders Are Watching Right Now

Stock popularity shifts with the market. This year, tech giants like Amazon, Apple, Microsoft, and Intel might be in the spotlight. Next year, energy stocks like ExxonMobil, Baker Hughes, Chevron, or Schlumberger could take centre stage.

The most traded large-cap stocks often feature in major indices. In the US, you’ll find them in the Dow Jones Industrial Average (DJIA) or the Nasdaq 100. In the UK, look to the FTSE 100. Germany has the DAX 30, France the CAC 40 — and nearly every country has its own flagship index to keep an eye on.

How Stocks Move the Indices Market

Even a single stock can shake up an entire index — especially in tight-weighted indices like the DJIA, which only includes 30 companies. A steep drop in one heavyweight can pull the whole index down for the day.

In broader indices like the S&P 500, one stock is less likely to move the whole market — but it can still impact its sector. That ripple effect can influence bigger movements. Smaller, sector-specific indices are even more sensitive, where one strong or weak performer can shift the index noticeably.

Real-World Stock Trade Example

Let’s say our trader Joe is tracking the semiconductor space — and he’s focused on GPU giant Nvidia. After reviewing earnings reports and market trends, Joe believes Nvidia will crush expectations this quarter.

He decides to buy 200 Nvidia shares through his favourite CFD broker. The stock is currently trading at $520. Buying the shares outright would cost $104,000 — but thanks to CFDs and leverage, Joe only needs to put down a 0.25% margin. That means he controls $104,000 worth of stock with just $260.

If Nvidia’s earnings come out strong and the stock jumps 10%, Joe would make $104. But if Nvidia disappoints and drops 5%, Joe takes a $52 hit.