How To Buy Facebook Stock

How To Buy Facebook Stock

Welcome to Trading Brokers step by step guide to buying Facebook stock. Here you will find an easy to understand explanation of trading Facebook stock. This includes how to buy Facebook shares online, what you need to trade Facebook stock and how to open a trading account with a stock broker so that you can buy Facebook stock online today.

Founded in February 2004, Facebook, the social media giant, became listed on the NASDAQ on May 18, 2012. Since, the company has grown to become the most popular social media platform with at least 2 billion users.

Maybe you have heard of buying Facebook 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 Facebook stock can help you along your journey.

Overview of Facebook

Facebook, Inc. is a global technology conglomerate, the sixth-largest by market valuation. It is one of the successful “dorm room startups,” co-founded by Mark Zuckerberg and his college peers in their Havard dorm room.

The company’s product line includes the eponymous social networking site and app, Facebook, the photo and video sharing platform, Instagram, and the duo of Messenger and WhatsApp, its instant messaging apps. Other subsidiaries include the virtual reality company. Oculus; the publisher monetization platform, LiveRail; the server security platform, PrivateCore and CrowdTangle, a platform for content discovery and social monitoring.

Facebook is a giant. The flagship Facebook platform boasts of over 2.7 billion users, of which 1.7 billion are active daily. Instagram has over a billion users, 50% of whom are daily users. WhatsApp has also gone on to amass 2 billion users, of which 1.6 billion are at least active every month.

Facebook’s growth has been both organic and inorganic. Its flagship platform, Facebook, and the associated Messenger have, however, experienced sporadic growth. Nevertheless, beyond these, its growth has been mostly organic since it acquired Instagram and WhatsApp in multi-billion-dollar deals. Others including Oculus, Onavo, and LiveRail. Notably, the company has done well to integrate all of these services.

The business side

Facebook, Inc. generates most of its money from selling advertising services to marketers. Businesses pay for their ads to be displayed to several million users on its platforms, Facebook, Instagram, and Messenger. The fee to be paid depends on the number of impressions or number of clicks done by users.

It is quite challenging to determine the amount of money generated by each business unit since Facebook does not reveal its filings. However, it is known that WhatsApp is not generating revenue yet.

Investing in Facebook

Investing in Facebook stock is when you buy Facebook shares to own them outright, usually with a view to holding them for the long term. Investors would usually look to buy Facebook stock in order to try and make a profit when the Facebook stock price increases in value.

Trading Facebook stock

Trading Facebook stock is when a trader speculates on the movement in the Facebook stock price without actually owning the shares in Facebook. Traders tend to buy and sell Facebook stock on a more frequent basis, usually speculating on daily, weekly or monthly price fluctuations.

You can buy and sell Facebook stock online through various methods including spot markets, futures contracts, options contracts, spread bets, CFDs (contracts for differences) and ETFs (exchange-traded funds).

Facebook CFDs

One of the most popular ways to trade Facebook stock is via CFDs (contracts for differences). When trading Facebook CFDs, you do not actually invest in Facebook shares, meaning you are not tied to them. You are only speculating on the rise or fall of the Facebook 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 Facebook will rise or short (sell) positions if they thought that the Facebook 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 Facebook 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 Facebook 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.

Facebook futures

Futures contracts are an agreement to buy or sell a specified asset at a certain date and price. Facebook investors can use futures trading to speculate on the price movement of Facebook 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.

Facebook spread betting

Spread betting is a financial derivative that enables traders to speculate on Facebook 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 Facebook stock price movement (either up or down) and then pay or receive the difference between the opening and closing price of the bet.

Facebook options

Facebook options are financial instruments that are derivatives based on the value of Facebook’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 Facebook market price.

Facebook ETFs

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.

Facebook is included in various ETF’s with shares in the U.S. ETF market. Traders who are interested in trading other companies alongside Facebook, may consider ETFs.

Where to buy Facebook 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.

Broker
Rating
Regulated
Min. Deposit
Founded
Max. Leverage
1.

ASIC, BVI, CBI, FFAJ, JFSA, FSCA, IIROC, ADGM FRSA

Min $100 Deposit

2006

1:400

Review Trade! Trade!
Terms & conditions apply
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 71% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
2.

FCA, CFTC, NFA, BaFin, FINMA, ASIC, FMA, MAS, FSA, FSCA, DFSA, JFSA, METI, MAFF

Min $250 Deposit

1974

1:200

Review Trade! Trade!
Terms & conditions apply
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.
3.

ASIC, CySEC, IFSC, DFSA

Min $5 Deposit

2009

1:888

Review Trade! Trade!
Terms & conditions apply
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 78.28% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
4.

ASIC, CySEC, FSA, SCB

Min $200 Deposit

2007

1:500

Review Trade! Trade!
Terms & conditions apply
Between 74-89% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
5.

ASIC, FCA, DFSA, SCB, CySEC, BaFin, CMA

Min $200 Deposit

2010

1:30

Review Trade! Trade!
Terms & conditions apply
CFDs and FX are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Why trade Facebook 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 Facebook stock with relative ease. The cost involved to get started makes trading Facebook 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 Facebook stock to try and earn profit from the variation in Facebook’s stock price. When trading Facebook CFDs you can speculate long and short on prices rising or falling without actually needing to invest in Facebook 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 Facebook’s stock for a more long-term hold.

Buying Facebook 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 Facebook, it is important you understand the dynamics that affect the Facebook stock price.

Factors that move the Facebook stock price

Listed in May 2012, Facebook trades on the NASDAQ under the “FB” ticker. Ever since, it has generated returns in several percentiles. However, some factors are bound to affect its stock price performance. Some of these are outlined below.

Regulatory scrutiny

Facebook seems to be a frequent target of regulatory and governmental scrutiny, especially anti-trust and competition regulation. The company appears to maintain a comfortable monopoly in its space. Thus, it has the capabilities to undercut the competition.

This may not also be good for the end-user. Businesses who advertise on Facebook have to make do with high advertising costs since they are the largest social media platform. Experts even posit that Facebook might eventually become an auction-based ads platform.

Politics

Facebook has also found itself in very questionable positions as regards issues surrounding politics. Its platform has been used to access people’s data and breach their privacy. It has been used to influence elections in controversial manners, as the Cambridge Analytica saga – arising from the 2016 elections – has shown.

The company has similarly been put on the spot for the 2020 elections, making it a regular media target. Furthermore, Facebook has been serially accused of subtly “encouraging” hate speech. However, all these, it turned out, may influence its stock in the mid-to-longer term.

Competition

Despite the seeming preeminence of Facebook, please make no mistake, it also faces increasing competition levels from other social media apps. For one, a good number of teens and millennials now prefer Twitter and Snapchat to it. Although Instagram still holds the forte, that may not always be the case, as we have seen with the rise of TikTok.

How to trade Facebook stock online?

If you have taken the time to read through the above, you should hopefully have an understanding of how to trade Facebook stock online. Here is a summary of the key steps:

1.     Decide if trading Facebook stock is for you

Trading Facebook 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 Facebook stock online.

2.     Educate yourself

Before trading Facebook 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 Facebook 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 Facebook stock broker

In order to trade Facebook 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 Facebook

If you have made it this far then you may be ready to start trading Facebook stock online! The next step is to research Facebook 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 Facebook 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 Facebook stock

Once you feel ready to trade Facebook stock online, you can analyse the market to help decide if and when you will place your trades. After placing a trade on Facebook, you will need to keep track of how it performs and manage it according to your trading plan. Some investors will keep hold of Facebook trades for the long-term, whereas traders may buy and sell Facebook stock on a daily basis.

Is trading Facebook stock right for me?

Trading Facebook 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 Facebook 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 Facebook 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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