6 Effective Methods to Play Online Stock Trading in the Vietnamese Market

Although the stock market is considered a potential investment channel, many investors still do not fully understand the different types of securities and how to trade stocks effectively. This article will provide detailed information about the concept of securities, popular investment products in Vietnam, along with the advantages and disadvantages of each type.

What Are Securities?

Securities (or also called stocks) are financial instruments representing ownership or debt of a company. Securities can exist in the form of certificates, electronic formats, or book entries, confirming the legal rights of the holder towards the issuing organization.

Securities are traded on specialized exchanges with their own rules and mechanisms. Because the value of securities constantly fluctuates according to market conditions, stock trading is considered a high-profit potential investment channel compared to traditional investment forms.

Types of Securities Available for Investment in Vietnam

The Vietnamese stock market now offers a comprehensive range of products similar to those worldwide, including common stocks, indices, options, and derivatives. Below are the 6 main ways to trade stocks that you should understand:

1. Initial Public Offering (IPO)(

IPO )Initial Public Offering( is when a company first sells shares to the public to raise capital. These are common stocks, usually issued in certificate form.

Advantages:

• High profit potential over the long term
• Initial purchase price is often low, with potential for high returns
• Stock prices are transparent and publicly disclosed

Disadvantages:

• Very difficult to buy IPO stocks at the time of issuance
• Large price fluctuations, higher risk than regular stocks

) 2. Single Stocks

Single stocks allow shareholders to confirm ownership of a part of the company. Depending on rights, there are two types: common stocks ###with voting rights, candidacy( and preferred stocks )with lower face value, priority payments(.

Advantages:

• Low cost, paid only when buying or selling
• Higher long-term profits compared to gold or silver
• Full control over buy-sell timing
• High liquidity, easy to trade on exchanges

Disadvantages:

• Difficult to diversify a portfolio with limited capital
• High risk if investments are not diversified
• Requires time to research each stock
• Can be influenced by personal emotions when making decisions

) 3. Stock Indexes###

Stock indices are a basket of many stocks or bonds representing a specific market segment. For example, VN30 includes the 30 strongest stocks in Vietnam (accounting for 80% of market capitalization), or S&P 500 includes the top 500 stocks in the US (covering 75-80% of market capitalization).

Advantages:

• Achieves diversification: buying an index means owning many stocks simultaneously
• Reduces risk through investment diversification
• Cost-effective due to fewer transactions
• Saves time, no need to analyze each stock

Disadvantages:

• Cannot achieve super-high profits because weak companies in the basket can drag the index down

( 4. Exchange-Traded Funds (ETF))

ETF ###Exchange-Traded Fund( is an investment fund holding various assets. You can buy and sell ETF shares just like stocks. Some indices are also ETFs )such as S&P 500, DJIA(. In Vietnam, FTSE Vietnam ETF was the first established in 2008, currently with 7 ETFs operating.

Advantages:

• Portfolio diversification
• Easy to trade, relatively low costs, some pay dividends
• Some ETFs can be traded with options or Long/Short orders

Disadvantages:

• Commissions may be high depending on the trading platform
• Small trading volume leading to wider bid-ask spreads
• Some funds are heavily taxed

) 5. Stock Index Futures(

Stock index futures are agreements between two parties on the price of a stock index at a future date. In Vietnam, VN30 futures contracts are available with different maturities )1 month, 2 months, quarterly, etc.###.

Advantages:

• Can short sell without owning the stocks
• Use leverage to increase profits
• Similar to Forex trading, can apply various strategies

Disadvantages:

• Large lot sizes, difficult for investors with small capital
• Continuous monitoring of the investment portfolio required
• More complex for beginners

( 6. Contract for Difference (CFD))

CFD (Contract For Difference) is a trading method where you do not actually buy the underlying asset ###stock(, but instead sign a contract with the provider. Unlike traditional stock trading, CFDs allow high leverage to maximize profits.

Advantages:

• High leverage, access to larger positions with less capital
• 24-hour trading with global tools
• Instant, continuous intra-day trading
• Low margin requirements

Disadvantages:

• Can lose more money than the initial capital if leverage is misused
• CFD owners have fewer rights than common stockholders )no voting rights(

Stock Trading Platforms in Vietnam

According to HOSE, the largest brokerage companies in Vietnam include:

• SSI Securities Corporation )SSI(
• Ho Chi Minh City Securities Corporation )HSC(
• Bản Việt Securities Corporation )VCSC(
• VNDirect Securities Corporation )VNDS(
• Mirae Asset Securities Corporation )MAS(
• VPS Securities Corporation )VPS(
• MBS Securities Corporation )MBS(
• FPT Securities Corporation )FPTS(
• Maybank KimEng Securities Limited )MBKE(
• Bank for Investment and Development of Vietnam Securities )BSC(

These companies offer products including stocks, fund certificates, warrants, bonds, and VN30 indices, operating on both HOSE and HNX exchanges.

Important Terms When Trading Stocks

Stock Bonus: A method of issuing additional shares to raise capital. For example, 1 stock with a face value of 100,000 VND is split into 2 stocks with a face value of 50,000 VND each.

Treasury Stock: A company repurchases its own shares from the market to reduce outstanding shares and distribute dividends.

ESOP Stock: Preferred shares issued to employees at a discounted price to retain talent.

OTC Stock: Unlisted stocks that may have prices higher than their intrinsic value.

Bluechip Stock: Shares of leading, stable companies with significant market impact )such as VN30, HNX30(.

Penny Stock: Very low-priced stocks with high volatility, potential for high profit or loss.

Defensive Stock: Stable, low-risk stocks from essential sectors )electricity, water, pharmaceuticals(.

Derivative Financial Instruments

In addition to traditional stocks, you can also invest in derivatives such as CFDs, futures contracts, and indices. These instruments offer advantages:

• Greater flexibility, much larger markets than stocks
• Use leverage to increase profits
• 24/7 trading
• Apply various investment strategies

How to Learn About Stock Trading

To succeed in stock trading, you need to:

• Spend time learning about different securities products
• Master technical analysis
• Continuously update market trends
• Accumulate practical trading experience
• Use analysis and forecasting tools
• Follow important events affecting stock prices

Starting with understanding different securities thoroughly, comparing their advantages and disadvantages, and developing an investment strategy aligned with your goals are key to success in the world of stock trading.