How to Trade Microsoft Stock

Microsoft: Review

Microsoft is an international tech company with headquarters in Redmond, Washington. The company was founded in 1975 by Bill Gates and Paul Allen. It started with the development of computer hardware and software. You've most likely heard of solutions like Microsoft Windows, Microsoft Office and Internet Explorer. Later, the corporation decided to expand into other markets, such as when it moved into the video game sector in 2001 with the launch of Xbox.

The company operates in plenty of sectors, developing, producing, supporting and selling mobile solutions, data security, social networking, internet browsers, cloud computing services, artificial intelligence and new versions of Windows and Office.

Is It Really a Good Investment?

The company is undoubtedly a blue-chip tech giant known in every part of the world. It's one of the largest tech enterprises with a multinational team located worldwide.

Microsoft is a blue-chip tech giant known in every part of the world, which proved its reliability over the 45 years it's been in the market.

Although Microsoft was created in 1975, it keeps up with the times and covers new markets. The first time it tapped the public market was on 13 March 1986, when it managed to raise $61 million in an initial public offering. At that time, lots of Microsoft investors were happy to put money into the developing company. Even more than 30 years later, Microsoft hasn't lost its attractiveness as a trading and investment option; its stock price keeps rising.

Currently, the stock is listed on the Nasdaq Stock Exchange as MSFT. It's also included in the world's most famous stock index, the S&P 500.

Another important factor why you should invest in Microsoft stock is the company's stability. Although most companies are announcing bankruptcy and tapping the debt market due to the coronavirus pandemic, Microsoft's stock continues to trade at reasonable levels. As a result, it's considered a safe-haven stock during global recessions.

Moreover, you'll barely find any news stories about Microsoft stock plunging because the company can boast a perfect balance sheet and income statement.

How to Buy Microsoft Stock Effectively

There are three main methods to invest in stocks; two of them easily apply to Microsoft shares.

Buy Microsoft Stock with Dividends

Microsoft has one of the most attractive share dividends in the market. Investors are eager to put money in Microsoft because they know they can make a good return. To purchase real stocks, you can either do so directly or via a broker or manager.

To purchase its stock directly, visit Microsoft's website. Computershare is Microsoft's transfer agent that facilitates direct stock purchases. If you decide to use a broker or a financial advisor, the process becomes even more accessible. All you need to do is find a trustworthy brokerage firm, open an account in a few steps and deposit funds.

If you invest in stocks with dividends, you'll need to hold shares for at least several years.

CFDs

A contract for difference, or CFD, is an option to trade shares without materially owning them but merely speculating on the price difference. CFDs won't allow you to buy shares; all you can do is trade on price movements. Are you familiar with forex? If you are, you can quickly start trading CFDs.

When trading CFDs, you don't own real shares but have an opportunity to make profit on price movements.

To trade CFDs, you need to find an online broker. Before you choose one, be sure they provide a demo account that will allow you to practice before you tap the market. Libertex offers a free demo account, where you can check the movements of Microsoft stock, apply indicators as you please and place your first trades.

After you practice your skills, you can use a real account to place orders after you deposit funds. Unlike trading real stocks, you don't need significant funds to enter the market when trading CFDs. Moreover, the broker may provide leverage that will allow you to place larger orders with fewer funds.

All you need to do is choose a timeframe, analyse the market direction and place an order with stop-loss and take-profit levels.

But remember: if you want to show your status by holding Microsoft stock, CFDs won't satisfy that intent.

Microsoft Stock Price: Analysis and Forecast

No matter how you plan to invest in Microsoft shares, it's crucial to analyse the market and make a forecast before you invest.

Fundamental Analysis

Fundamental stock analysis includes many factors. For Microsoft stock, some of the most important of those are:

• Management. If you plan to invest in Microsoft, learn about its headquarters. Any news on hirings, firings or the illness of the CEO will affect the stock's share price.
• Financial data. Also, keep up with the financial data. The balance sheet and income statement are the most significant indicators of the company's health. It's worth mentioning that, historically, Microsoft has almost always shown good results.
• Earnings report. This data is released quarterly. All you need to do is compare the actual data and analysts' forecasts. If the actual data outperforms the estimates, the stock's value will rise.
• Industry news. Microsoft is part of the tech industry, so any significant changes to the industry will affect companies with the most significant stocks in it.

Technical Analysis

To predict market moves, you can use technical indicators you apply if you're familiar with forex trading. The crucial stock indicators are the Awesome Oscillator, Volume and Fibonacci retracements. Compare the previous market moves with the current situation, apply the indicators and catch the signals.

We recommend combining fundamental and technical analysis techniques.

If you don't have confidence in your skills, you can use professionals' analyses. Many analysts provide daily signals on whether to buy, sell or hold stocks. Just be careful and don't blindly rely on their predictions.

How to Reduce Risk Trading Microsoft Shares

Microsoft corporation is a blue-chip company that can provide a good return. Nevertheless, just like with any other asset, MSFT stock can be subject to market volatility. To be prepared, check the tips below.

Hedge

No matter what stock you trade, never put all of your money into one asset. It's also essential to invest in stocks from different industries. Microsoft is in the tech industry, so to diversify your portfolio, you should invest in another sector not affected by similar factors.

Reliable Broker

It's almost impossible to invest in stocks without a good advisor or broker. If you decide to invest in real stocks with dividends, apply for assistance from an experienced, trustworthy advisor, especially if you're a newbie. An advisor will help you invest your funds at the right time and in the right place.

If you trade CFDs, it's essential to find a reliable broker that offers fair rates, promotions and bonuses, and, of course, a fully-equipped trading platform. Libertex provides a platform with a wide range of technical indicators that will help you make a quality forecast.

Risk Management

Think about how much you can invest in stocks, and bear in mind that you should always have funds available in case you find a better opportunity or the market moves in the opposite direction. When trading CFDs, never risk more than 1-2% of your total deposit on one trade.

Analysis

Although Microsoft is a trustworthy company that has proven its stability in the industry, you should always analyse the situation before you enter the market. Combine both technical and fundamental analysis to be sure you take the right steps. Don't rush or rely only on the company's strong position.

The stock market is one of the most volatile financial markets, so you should always be up-to-date. Follow the industry and company news and check economic data. For example, the dramatic fall of WTI oil prices to negative values on 20 April 2020 pulled all stocks down; Microsoft, too. The next day, the stock opened with a gap down and continued falling.

Practice

Your theoretical knowledge won't work if you don't practice. Trading CFDs gives you the opportunity to buy and sell, enter the market on different timeframes and place as many orders as you wish (based on your deposit).

Even if you make the wrong prediction about the price direction, don't give up.

However, if you're going to make mistakes, it's better not to lose your funds. Try a free, risk-free Libertex demo account to practice in mirrored real-market conditions for as long as you need in order to feel the pulse of the market and use a wide range of indicators.

Conclusion

To sum up, Microsoft shares are a perfect investment whether you're buying real stocks with dividends or trading CFDs. For 45 years of existence, the company managed to become one of the leaders in the tech industry. It's unlikely you'll find bad news about the company's stock since Microsoft has weathered global crises and a recession with only minor losses in the past.

Here are the most frequently asked questions about Microsoft stock.