How To Buy DraftKings Stock
Welcome to Trading Brokers step by step guide to buying DraftKings stock. Here you will find an easy to understand explanation of trading DraftKings stock. This includes how to buy DraftKings shares online, what you need to trade DraftKings stock and how to open a trading account with a stock broker so that you can buy DraftKings stock online today.
Maybe you have heard of buying DraftKings stock online or through a friend. Perhaps you are looking to trade and are curious about the different options available to you. Whether you are looking to speculate, invest or just learn more, this guide on how to buy DraftKings shares can help you along your journey.
Overview of DraftKings
If you are not into sports or sports betting, you may not know exactly what DraftKings (NASDAQ:DKNG) does as a company. DraftKings was started in 2012 in Massachusetts as a daily fantasy sports or DFS website to compete with the likes of FanDuel. Since its inception, DraftKings has taken over as the number one DFS site in the world, calculated by user entries and total entry fees. It currently has millions of active users.
In terms of being a publicly traded company it is relatively new as well, debuting in April of 2020 via a SPAC IPO reverse merger. SPAC IPOs have become a very popular vehicle for bringing private companies to the publicly traded markets. Other examples of these mergers in 2020 include the electric truck maker Nikola (NASDAQ:NKLA) and digital real estate company Opendoor.
DraftKings is one of the industry leaders in daily fantasy sports and online sports betting, two sectors that are absolutely booming right now. The stock has performed well as shares of DraftKings have returned 320% so far to investors who were able to buy-in at the original IPO price. DraftKings peaked in late September 2020 as the stock hit all-time highs of $64.19, but have since seen a bit of a correction.
DraftKings is well positioned to be the premier name in online sports betting and daily fantasy sports moving forward, thus making them a popular choice amongst stock traders who have a love for the game.
Investing in DraftKings
Investing in DraftKings stock is when you buy DraftKings shares to own them outright, usually with a view to holding them for the long term. Investors would usually look to buy DraftKings stock in order to try and make a profit when the DraftKings stock price increases in value.
Trading DraftKings stock
Trading DraftKings stock is when a trader speculates on the movement in the DraftKings stock price without actually owning the shares in DraftKings. Traders tend to buy and sell DraftKings stock on a more frequent basis, usually speculating on daily, weekly or monthly price fluctuations.
You can buy and sell DraftKings stock online through various methods including spot markets, futures contracts, options contracts, spread bets, CFDs (contracts for differences) and ETFs (exchange-traded funds).
One of the most popular ways to trade DraftKings stock is via CFDs (contracts for differences). When trading DraftKings CFDs, you do not actually invest in DraftKings shares, meaning you are not tied to them. You are only speculating on the rise or fall of the DraftKings stock price. A CFD is a financial contract, typically between a broker and a trader, where one party agrees to pay the other the difference in the value of a security, between the opening and closing of the trade.
A CFD trader can go short or long, set stop and limit losses and apply trading scenarios that align with their own personal objectives. Traders would open long (buy) positions, if they think the stock price of DraftKings will rise or short (sell) positions if they thought that the DraftKings stock price will fall. The difference in price between the entry and exit price is the traders realised profit or loss, excluding any broker commission and fees.
For example, if you think DraftKings shares are going to increase in price, you could buy a share CFD on the company. You will exchange the difference in price between when your position is opened and when it is closed, earning a profit if the shares increase in price and making a loss if they decrease in price.
On the contrary, if you think DraftKings shares are going to decrease in price, you could sell a share CFD on the company. You will still exchange the difference in price between when your position is opened and when it is closed, earning a profit if the shares decrease in price and making a loss if they increase in price.
Futures contracts are an agreement to buy or sell a specified asset at a certain date and price. DraftKings investors can use futures trading to speculate on the price movement of DraftKings stock in order to try and make a profit. Traders would look to go long (buy) a futures contract if they believe the price will rise or short (sell) a futures contract if they believe the price will fall. The difference in price between the price at the start and expiry date of the futures contract is the profit or loss from the contract.
DraftKings spread betting
Spread betting is a financial derivative that enables traders to speculate on DraftKings stock falling or rising without taking ownership of the underlying asset. If the trader makes a correct prediction and the asset does move in that direction, they could make a profit, minus any broker fees. On the other hand, if the price moves against their prediction, they would incur a loss.
Financial spread betting is similar in ways to CFD trading except that you are betting a fixed amount per point on the DraftKings stock price movement (either up or down) and then pay or receive the difference between the opening and closing price of the bet.
DraftKings options are financial instruments that are derivatives based on the value of DraftKings’s stock. Traders usually enter into calls when they expect the price of the underlying asset to increase, and puts when they expect the price to decrease. Option contracts come with an expiration date before which the holder needs to exercise their option to buy or sell an underlying asset at an agreed-upon price. The stated price on an option is known as the strike price.
Buyers can choose to exercise their calls and puts or not whereas sellers are obligated according to the buyer decision. Therefore, the sellers (writers) can be exposed to more risk than buyers whose losses can be limited to the premium paid for the contract in the instance they do not exercise the contract. On the other hand, sellers could lose more depending on the DraftKings market price.
Exchange Traded Funds (ETFs) enable traders to invest in a basket of securities that trade intraday like individual stocks on an exchange, and are typically designed to track the performance of an existing market or group of markets.
Each ETF is usually focused on a specific sector, asset class, or category. ETFs can be commonly used to help diversify an investment portfolio and create a mini-portfolio, or, for the active trader, they can be used to try and take advantage of price movements.
DraftKings is included in various ETF’s with shares in the U.S. ETF market. Traders who are interested in trading other companies alongside DraftKings, may consider ETFs.
Where to buy DraftKings stock?
Stock trades are processed via a stock exchange, where a stock broker represents each investor. The majority of investors will nowadays use an online stock broker to buy and sell stocks through a stock trading platform which will enable them to connect to the stock exchange. You can see a selection of our best stock brokers below with whom you can open an account to trade stocks online.
ASIC, BVI, CBI, FFAJ, FSA, FSCA
Min $100 Deposit
FCA, CFTC, NFA, BaFin, FINMA, ASIC, FMA, MAS, FSA, FSCA, DFSA, JFSA, METI, MAFF
Min $250 Deposit
ASIC, FCA, DFSA, SCB, CySEC, BaFin, CMA
Min $200 Deposit
ASIC, CySEC, IFSC, DFSA
Min $5 Deposit
Why trade DraftKings stock?
Trading the stock market has become a popular investment activity for many people, especially with the technology that we have these days making it more accessible than ever. There are a vast number of trading brokers, trading platforms and trading apps available for buying and selling DraftKings stock with relative ease. The cost involved to get started makes trading DraftKings stock accessible to traders of all experience levels from across the globe.
The availability of leverage has also contributed towards the increase in aspiring traders. Leverage allows traders to hold a position size greater than they would have been able to without it. E.g. An account balance of $1,000, could take a position size of $5,000 with 1:5 leverage. Whilst this can increase potential profits, it also greatly increases risk. It is therefore of the upmost importance that you have a clear understanding of the significant risks involved with online trading, especially when using leveraged positions.
The majority of traders would look to buy and sell DraftKings stock to try and earn profit from the variation in DraftKings’s stock price. When trading DraftKings CFDs you can speculate long and short on prices rising or falling without actually needing to invest in DraftKings shares. This can make it a more convenient trading method for anyone who has a trading account with an online broker. Alternatively, long term investors may purchase traditional shares in DraftKings’s stock for a more long-term hold.
Buying DraftKings stock can also be a way to diversify a trading portfolio and to hedge against shares in other stocks or investments in other asset classes such as forex, commodities, precious metals and cryptocurrencies.
However, before investing in DraftKings, it is important you understand the dynamics that affect the DraftKings stock price.
Factors that move the DraftKings stock price
Whether you are in for the short, mid or long-term, it is vital you know those factors that can affect DraftKings stock price. We will look at some of the important factors that you need to consider if you are looking to invest in DraftKings.
Sports betting and fantasy sports are extremely popular right now which may make it seem like the industry is a good place to invest your money. But is it? Firstly, sports betting is established but is still battling legalization in multiple states across America, including big ones like California and Florida. Not a great start. While DraftKings has made headlines by establishing physical and online sportsbooks across the country in major metropolitan areas like Illinois and New Jersey, their total addressable market remains capped in the United States until legalization is pushed through state legislatures.
The current state of the economy can have an impact an the DraftKings stock price. If the economy is doing well and people have surplus cash, they may consider investing in fantasy sports games. On the other hand, if there are more unemployed people without excess cash, the game may suffer as a result.
There can also be uncontrollable factors such as the COVID-19 pandemic. The ongoing effects of COVID-19 on professional sports had dampened investor outlook throughout, with many investors taking their profits and seeking companies with more stability during these uncertain times. However, there was an increase in the number of players due to many more people being at home.
Moving forward, as states begin to turn their attention to legalizing sports gambling, we could see DraftKings surge. The Massachusetts-based company has also opened numerous partnered sportsbooks as well including one at the world-famous Wrigley Field in Chicago. They have also teamed up with multiple sports franchises to be the official sports betting partner of teams like the Philadelphia Eagles, the Chicago Cubs, and the Boston Celtics. Finally, DraftKings even announced a partnership with Peermont Hotels to launch PalaceBet, a mobile and online sportsbook based in South Africa. If DraftKings can continue to spread internationally, investors may consider DraftKings a part of their portfolios for the long-term.
As the moment, DraftKings is an industry leader in daily fantasy sports. Anyone looking to invest in DFS is likely to consider them as the most viable option. However, if there is a significant shakeup in the fantasy sports world and a new big player was to take over, this could have an impact on the DraftKings stock price.
BetMGM (NYSE:MGM), Caesar’s Entertainment (NASDAQ:CZR), and FanDuel are all direct competitors in the sports betting market, as well as Penn National Gaming (NASDAQ:PENN) which recently launched its BarStool Sports betting app. But the global digital sports betting industry is estimated to be worth well over $150 billion, which means the major players that have the first-mover advantage will be way ahead of the field.
How to trade DraftKings stock online?
If you have taken the time to read through the above, you should hopefully have an understanding of how to trade DraftKings stock online. Here is a summary of the key steps:
1. Decide if trading DraftKings stock is for you
Trading DraftKings stock online carries an element of risk and can take more time than other forms of investing. You will need to research the company, manage your positions, follow market news and decide how to react to it. It is important to understand the risks and dedication that comes with trading DraftKings stock online.
2. Educate yourself
Before trading DraftKings stock, it is imperative to learn as much as possible about investing and trading online. Any mistake could prove to be costly. There is an abundance of free educational materials provided by many online brokers that can help you to improve your trading skills and knowledge.
Most brokerages will also provide a free demo trading account so that you can practice trading DraftKings stock online with virtual funds in order to familiarise yourself with the trading platforms and practice your trading strategies until you feel confident enough to open a real trading account.
3. Choose a DraftKings stock broker
In order to trade DraftKings stock online, you will need a broker account and trading platform to execute your trade positions through to the market. When choosing a broker, there are a few important things to consider such as regulation, commission fees, platforms, tools, education, funding options and customer support.
If you do not have the time to research brokers, you can see a list of our best brokers that we have already prepared to help traders. If you would like to know more, you can also view our detailed guide on how to choose a trading broker.
4. Research DraftKings
If you have made it this far then you may be ready to start trading DraftKings stock online! The next step is to research DraftKings to help increase your knowledge in the company. The best brokers should have this information conveniently displayed for you within their trading platform.
5. Have a trading plan
Some of the most important factors that can help determine DraftKings stock trading performance can be the trading plan and discipline. It is important to have a solid trading plan personalised to your own needs that includes the money management and trading strategy that you will use. Most experts and professional traders would try to not let negative emotions such as fear, anger and greed affect their trading strategy.
6. Buy and sell DraftKings stock
Once you feel ready to trade DraftKings stock online, you can analyse the market to help decide if and when you will place your trades. After placing a trade on DraftKings, you will need to keep track of how it performs and manage it according to your trading plan. Some investors will keep hold of DraftKings trades for the long-term, whereas traders may buy and sell DraftKings stock on a daily basis.
Is trading DraftKings stock right for me?
Trading DraftKings stock is a popular choice for long-term investors and active traders. It can be suitable for scalping, day trading and swing trading. Traders who would usually trade forex, trade indices, trade commodities, trade cryptocurrency, may look to diversify their portfolio.
However, it is important to understand the significant risks involved with trading DraftKings stock online, especially when using leveraged positions. Most experts would suggest trading on a demo account with virtual funds to begin with.
This can be a useful way to familiarise yourself with how to trade DraftKings stock and using trading platforms whilst allowing you to practice your trading strategies until you feel confident and produce consistent results. Most stock brokers provide unlimited demo accounts free of charge.
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