How to Buy & Trade Apple Stock

Apple: The Journey to the Top

Knowing some of Apple's history is essential to understanding why it's worth investing in this company's stock.

In 1976, Steve Jobs and Steve Wozniak established Apple Computer Company, renaming it Apple Computer Inc in 1977. The company's first tech revolution was the Apple II personal computer. Four years later, the company went public with a market cap of $1.2 billion. However, when both founders left the company in 1985, its share price plunged to $2.

Apple managed to recover, adding colourful Macs and the PowerBook laptop. But it ran into failure with the Newton tablet and the PowerPC. That resulted in Jobs returning to the company in 1997. The lead-up to the 2000s was a boom for the company. It released such products as the iMac Power, the Mac G4 Cube and Mac OS X, which helped raise its stock's value.

The 2000 tech bubble crash pulled the stock's price down before it rebounded by 2003. However, the company's stock saw another decline during the financial crisis of 2008. Nevertheless, Apple Inc recovered, increasing the stock's value through 2011 when Steve Jobs left the company due to illness, dying several months later. These events led to the stock's plunge.

By 2020, Apple's share price had climbed to about $300.

Apple Stock: How to Analyse It and Forecast Its Price

If you're familiar with analysing the stock market, you won't have any difficulties analysing Apple shares. There are several basic factors that affect all companies' stocks, and Apple is no exception.

To invest effectively in Apple stock, it's essential to know how to analyse the market.

Fundamental Analysis

Basic fundamental analysis includes looking at a company's:

• Management. If you read the history of the company carefully, you already know the primary factor that affected and will always affect the stock price of any company: its top management. Dismissals, illnesses and other unpredictable circumstances among senior management lead to price drops. To avoid missing out on possible price fluctuations, learn the name of Apple's CEO and read the news regularly.
• Industry news. Apple Inc is part of the tech industry, so any events that may shake this sector will affect the company's value.
• Global news. It may seem strange that global news can affect the value of Apple, but significant market events like stock market sell-offs or a financial crisis will definitely pull Apple's stock price down.
• Earnings report. Every quarterly, all publicly traded US companies must provide data on their earnings. This report shows traders and investors how the company performed for the previous three months. Any decline in the earnings report signals difficulties for the company, which pushes the stock's price downward. If you trade CFDs, you can check analysts' estimates and compare them to either previous or actual data.

The factors mentioned above will cover all your needs if you trade. However, if you're an investor, you'll need to do in-depth research to find out the:

• Price-to-earnings ratio. This ratio will show you how much you would spend to earn $1. To understand whether Apple stock is overvalued or undervalued, you'll need to compare the ratio with its peers. For example, if the ratio is much higher, the shares are overvalued, meaning the stock's price is likekly to fall soon. To calculate the ratio, divide the market value per share by earning per share.
• Return on equity. ROE reflects the return on assets. To calculate it, divide net income by a stakeholder's equity. A low value is a sign the stock is overvalued.

Technical Analysis

Whether you're a trader or an investor, technical analysis will help you evaluate if a stock is overvalued or undervalued. To analyse a stock's price, you can use the indicators applied in forex trading.

We recommend implementing Fibonacci retracement, the Awesome Oscillators and Volume.

If you're a professional trader, you won't have difficulties applying indicators on the chart. But if you're a beginner, you might want to use a free Libertex demo account that duplicates real-market conditions in a risk-free environment to avoid losing your money while you experiment with trading.

Another index that may help you gauge the entire stock market's sentiment is the CBOE Volatility Index or VIX. It presents market volatility based on the price that investors are ready to pay for the stocks of companies in the S&P 500 Index. At the beginning of 2020, Apple's shares accounted for 4.9% of the S&P 500 Index's total value.

Invest Effectively in Apple Stock

There are several ways to engage with Apple stock. Let's learn the basics and determine the pros and cons of each one.

Buy Apple Stock with Dividends

The first option is to buy real shares of Apple, which are traded on the Nasdaq stock exchange under the ticker AAPL. Since 2012, Apple has paid dividends to its shareholders.

If you want to buy Apple stock, you'll need to find a reliable brokerage firm because the company doesn't provide a direct purchase programme. When you find a trustworthy broker (it can even be an online brokerage firm), open an account. After that, determine the number of shares you want to buy.

We can't recommend how much money you should spend, but we can say that you should think about the risk-reward ratio regardless of which market or asset you're involved with. The last step is to add money to your account and place an order. Remember that you can buy either at the current market price or a price you set through a limit order, meaning the order will execute only if the price reaches the level you choose.

No matter what market you trade in, think about the risk-reward ratio.

Although it seems pretty simple, this method has some weaknesses.

CFD Trading

CFD stands for contract for difference. It's an opportunity to trade assets such as stocks, metals and oil without owning them. Essentially, you just speculate on the price difference. If you've ever tried trading in the forex market, CFD trading won't be too difficult.

CFDs are an opportunity to trade assets such as stocks, metals and oil without owning them.

The idea is simple: you follow the market and buy or sell through a broker. The steps are the same as for investing in real shares, starting with opening an account on a broker's website. Any reliable broker provides a demo account that can help you gain experience if you've never traded CFDs. Libertex offers a demo account for free.

After you register an account, you need to analyse the market. We previously discussed factors that affect a stock's value. They're simple compared to investing in real shares. The next step is to open a trade. If you're trading in a demo account, it's free to place a trade. When you're ready to enter the real market, add funds to your account and place a trade.

As with anything in this world, CFDs have their pros and cons.

Why Apple Stock Is a Good Investment

If you still doubt whether Apple stock is a good investment, let's review what we've covered in this article. Apple Inc is a blue-chip company that has proven its reliability over the years. The company suffered both bad and good times but managed to survive amongst vast competition and make it through several financial crises. Moreover, if you look at the price chart, you'll see that the company's value has increased over time.

Reduce Risks Trading Apple Shares

Although Apple is an attractive investment, you should know how to deal with undesirable market volatility that may affect the company's stock.

• Hedge. No matter how stable a company is, you should hedge your risks by diversifying. Don't put all your eggs in one basket. It's better to either choose another market such as forex or commodities or invest in stocks from another industry.
• Analyse. Before entering the market, analyse the situation using both fundamental and technical analysis. If you feel you don't have enough knowledge, you can read educational articles on Libertex's website.
• Work with a reliable broker. Whether you're investing in stocks or trading CFDs, choose a company that has confirmed its reliability over the years with tons of happy clients.

Conclusion

Apple is one of the most famous companies in the world. Despite struggling at times, it has managed to prove its reliability and consolidate a considerable market capitalisation. Apple's stock has continued to rise in value over time. So, if you plan to invest in real shares or trade CFDs, Apple would be worth considering adding to your investment portfolio.

If you're a newbie, you may want to opt for CFDs, which may be easier to trade than investing in real shares. To improve your skills, try a Libertex demo account that mirrors real-market conditions without the risks.

Here are answers to some of the most frequently asked questions about Apple stock.