How To Buy IBM Stock

How To Buy IBM Stock

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

IBM is a multinational technology and technology consulting company with headquarters in New York. Discussed here are the factors that affect its stock.

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

Overview of IBM

Founded back in 1911, International Business Machines (IBM) is an American technology conglomerate that specialises in computer hardware and software production and infrastructure, hosting, and consulting services.

Headquartered in Armonk, New York, IBM was responsible for some of the groundbreaking innovations that defined life in the 20th century. The company helped introduce the ATM, hard-disk drive, magnetic stripe technology, and SQL programming language.

It was heavily involved in some other critical projects, such as helping NASA with its space exploration efforts. Today, IBM continues to innovate, currently holding the highest number of patents of any US company.

Popularly referred to as the Big Blue, the company employs over 350,000 employees spread across at least 170 countries. IBM has produced employees who went on to win awards such as the Nobel Prize, Turing Award, and the National Medal of Technology, amongst others.

Business Segments

IBM operates across five core business lines. They include Global Technology Services, which provides IT infrastructure and platform services. The Cloud and Cognitive Software houses its software products, providing cloud, data, and AI services to clients.

Global Business Services is in charge of consulting and application management services. Amongst other things, the Systems segment designs advanced semiconductor technologies and provides infrastructure platforms. Finally, the Global Financing segment offers financing and remarketing services.

Some notable IBM subsidiaries include the open-source software distributor, Red Hat, consulting giant, PwC, and Lotus Software.

What Moves the IBM Stock?

International Business Machines Corp. is listed on the NYSE under the ticker IBM. It is a crucial component of the DJIA and the S&P 100.

New Technology

IBM was a pioneer of today’s computing, developing critical products/services that drive modern technology. However, it failed to ride the wave of newer technologies like personal computing. Still, the company has only managed to play second fiddle in emerging technology such as big data, Internet of Things (IoT), robotics, cybersecurity, and virtual reality.

However, it is not all gloom for IBM. The company has made some notable inroads into machine learning, artificial intelligence, and blockchain. For instance, its Deep Blue computer did defeat the world’s reigning chess champion in 1992. Also, IBM’s Watson defeated champions of Jeopardy. Watson is now being deployed to other sectors, such as healthcare. IBM is also fast-emerging a significant player in enterprise blockchain.

One good thing is that all these new areas are taking more significant shares of its overall revenue year after year.

Expansion and Slow Growth

Most of IBM’s business lines have struggled to experience any meaningful growth in recent years. Some keep contracting, and this has reflected in its finances. Revenue has gradually dropped over time. At best, it has been stagnant. At some point, it had over 20 excessive quarters of declining revenue. If the company fails to transform the state of these divisions, its future might be significantly affected.

Financials

IBM has been generous with its dividend payments, paying about half its profits to investors every financial year. This provides an excellent opportunity for income investors even though some analysts have regarded it merely as a ploy to lure investors to its slow-moving stock.

Analysts have also argued that most of the funds would have been better deployed in expansion efforts such as acquiring promising software startups, rather than on shelling out dividends. Nevertheless, IBM still appears to have a strong cash position.

On the other hand, some particular attention needs to be paid to IBM’s finances. The company has accumulated some sizeable amount of debt. Naturally, this should not be a cause for alarm. However, in the face of falling (or at best, stagnant) revenue, it is an important consideration to make.

Restructuring

IBM is a legacy company. Many of its divisions have failed to catch up with the future. The need for revamping is leading to restructuring efforts. For instance, the company has announced that it would be spinning off its technology consulting business to focus on future tech like cloud and artificial intelligence. That is, IBM, as we know it, will become two companies.

This new structure will allow IBM to focus on high-growth areas and relieve itself of lagging business sectors.

Bureaucracy

As companies grow and become industry giants, bureaucracy and hierarchy tend to set in. This is precisely the same case with IBM. However, this will never help the company compete in the ever-changing and fast-growing tech space (cloud computing, artificial intelligence, blockchain, and others) where huge companies try to operate like startups.

Before investing in IBM

IBM plays in the high-growth tech world and still has opportunities for real growth. However, it still has to deal with legacy issues (such as bureaucracy) drawing it back down.

Investing in IBM

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

Trading IBM stock

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

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

IBM CFDs

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

IBM futures

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

IBM spread betting

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

IBM options

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

IBM 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.

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

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

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

How to trade IBM stock online?

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

1.     Decide if trading IBM stock is for you

Trading IBM 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 IBM stock online.

2.     Educate yourself

Before trading IBM 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 IBM 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 an IBM stock broker

In order to trade IBM 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 IBM

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

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

Is trading IBM stock right for me?

Trading IBM 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 IBM 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 IBM 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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