How To Buy Microsoft Stock
Welcome to Trading Brokers step by step guide to buying Microsoft stock. Here you will find an easy to understand explanation of trading Microsoft stock. This includes how to buy Microsoft shares online, what you need to trade Microsoft stock and how to open a trading account with a stock broker so that you can buy Microsoft stock online today.
Maybe you have heard of buying Microsoft 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 Microsoft stock can help you along your journey.
Overview of Microsoft
The global technology conglomerate, Microsoft Inc., was founded in 1975 by the duo of Bill Gates and Paul Allen. It started by producing microprocessors and software for the earliest personal computers at the dawn of the PC revolution. The company later went into the licensing of operating systems to PC makers including then tech giant, IBM.
Today, Microsoft is headquartered in Seattle, Washington and has evolved from operating software development to productivity software, server software, and internet services production, amongst others. It has also ventured into video gaming (hardware and software), PC hardware and accessories, search engine services, smartphones, social media and cloud computing, with varying degrees of success in each.
Microsoft’s business is divided into three lines or major segments, namely:
- Productivity and Business Processes;
- Intelligent Cloud; and
- More Personal Computing.
This division is based on both product type and customer demographics.
Productivity & business processes
This line covers products designed to boost better communication, productivity and information processes for businesses and individuals alike. Products in this category include the Office Commercial and Office Consumer (with specific services such as OneDrive, Skype and Outlook for each). Then there is LinkedIn and Dynamics.
This is currently Microsoft’s largest and fastest-growing revenue source. Intelligent Cloud comprises Microsoft’s server and cloud services for public and private purposes. Specific products in this category include Azure, GitHub, SQL Server, Windows Server, amongst others.
However, particular mention must be made of Azure, which has achieved significant strides in the cloud computing space such as its clinching the $10 billion contract for the Joint Enterprise Defense Infrastructure (JEDI) deal awarded by the US Department of Defense (DoD) over and above biggest rival, AWS.
More personal computing
We can regard this as the segment targeted specifically at the end-user. This division, according to Microsoft, aims at “harmonizing the interests of end users, developers, and IT professionals.”
Specific products under it include the flagship Windows operating system, the PC and accessories (including Microsoft’s laptop and tablet, Surface), its gaming business, the Xbox, and its search engine, Bing.
Investing in Microsoft
Investing in Microsoft stock is when you buy Microsoft shares to own them outright, usually with a view to holding them for the long term. Investors would usually look to buy Microsoft stock in order to try and make a profit when the Microsoft stock price increases in value.
Trading Microsoft stock
Trading Microsoft stock is when a trader speculates on the movement in the Microsoft stock price without actually owning the shares in Microsoft. Traders tend to buy and sell Microsoft stock on a more frequent basis, usually speculating on daily, weekly or monthly price fluctuations.
You can buy and sell Microsoft 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 Microsoft stock is via CFDs (contracts for differences). When trading Microsoft CFDs, you do not actually invest in Microsoft shares, meaning you are not tied to them. You are only speculating on the rise or fall of the Microsoft 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 Microsoft will rise or short (sell) positions if they thought that the Microsoft 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 Microsoft 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 Microsoft 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. Microsoft investors can use futures trading to speculate on the price movement of Microsoft 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.
Microsoft spread betting
Spread betting is a financial derivative that enables traders to speculate on Microsoft 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 Microsoft stock price movement (either up or down) and then pay or receive the difference between the opening and closing price of the bet.
Microsoft options are financial instruments that are derivatives based on the value of Microsoft’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 Microsoft 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.
Microsoft is included in various ETF’s with shares in the U.S. ETF market. Traders who are interested in trading other companies alongside Microsoft, may consider ETFs.
Where to buy Microsoft 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, JFSA, FSCA, IIROC, ADGM FRSA
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 Microsoft 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 Microsoft stock with relative ease. The cost involved to get started makes trading Microsoft 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 Microsoft stock to try and earn profit from the variation in Microsoft’s stock price. When trading Microsoft CFDs you can speculate long and short on prices rising or falling without actually needing to invest in Microsoft 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 Microsoft’s stock for a more long-term hold.
Buying Microsoft 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 Microsoft, it is important you understand the dynamics that affect the Microsoft stock price.
Factors that move the Microsoft stock price
Microsoft is listed on the NASDAQ as “MSFT.” Many issues and factors affect Microsoft’s stock. However, those outlined below will have the most effect on Microsoft’s performance as a company, and therefore its stock, in the mid-to-long term.
Microsoft has particularly found it difficult to gain traction in newer technologies. Its Bing is barely managing to survive in the search engine space. Microsoft also got it wrong with smartphones – both on the hardware (Lumia and Nokia) and software (Windows Phone OS). Its gaming business, Xbox, while performing quite well, is playing only second fiddle.
Although the company seems to get it with cloud computing, in the future, it still has to devise a strategy to get it right with new frontiers such as machine learning.
COVID-19 & WFH
The COVID-19 pandemic highlighted the need for remote working. Even after the pandemic, several businesses have seen the need to continue the trend. Microsoft has some benefits to reap from this. In fact, it has increased (and will continue to grow) the demand for Microsoft products and services particularly cloud.
Then, there will likely be more PC purchases, thereby increasing demand for the Windows OS; and consumers locked at home will want to relax with the Xbox console.
The future is ‘cloud’, and companies that get it right here will unlock huge revenues. Microsoft is not doing bad at all in this segment. It even beats Google to a larger share of the market. However, how well Microsoft gains and maintains control can significantly affect its future as a company.
Microsoft is a giant – with over 110,000 employees. However, it is also a fast ageing one. Thus, bureaucracy is creeping in and can be crippling to innovation.
This can affect Microsoft’s continuous growth – which seems to have slowed – thereby impacting its stock price.
How to trade Microsoft stock online?
If you have taken the time to read through the above, you should hopefully have an understanding of how to trade Microsoft stock online. Here is a summary of the key steps:
1. Decide if trading Microsoft stock is for you
Trading Microsoft 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 Microsoft stock online.
2. Educate yourself
Before trading Microsoft 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 Microsoft 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 Microsoft stock broker
In order to trade Microsoft 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 Microsoft
If you have made it this far then you may be ready to start trading Microsoft stock online! The next step is to research Microsoft 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 Microsoft 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 Microsoft stock
Once you feel ready to trade Microsoft stock online, you can analyse the market to help decide if and when you will place your trades. After placing a trade on Microsoft, you will need to keep track of how it performs and manage it according to your trading plan. Some investors will keep hold of Microsoft trades for the long-term, whereas traders may buy and sell Microsoft stock on a daily basis.
Is trading Microsoft stock right for me?
Trading Microsoft 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 Microsoft 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 Microsoft 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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