6 Effective Online Stock & Share Trading Methods in the Vietnamese Market

Although stock investment is considered one of the top profit-generating channels, many people still do not fully understand what stocks are and how to trade stocks online in Vietnam. This article will help you grasp basic concepts about stocks, the most common trading types in the Vietnamese market, as well as the advantages and disadvantages of each.

What Are Stocks?

Stocks (or also called shares) are financial products with value traded on the market. Stocks can exist in the form of paper certificates, electronic form, or book-entry records (book-entry), confirming the legal rights of the owner over the issuing organization.

Currently, stocks are traded on specialized markets and serve as a foundation for other derivative financial products such as indices, futures contracts, or exchange-traded funds.

Because stock prices constantly fluctuate with market changes, this is an important investment channel with the potential for higher returns compared to traditional investment forms.

How to Trade Stocks: 6 Online Trading Methods

Similar to international stock markets, Vietnam’s market now offers a full range of stocks and derivative financial products. Each type has its own characteristics. Below are the popular products that investors can participate in:

1. Initial Public Offering (IPO) - First-time public issuance(

IPO stocks are those issued by companies to the public for the first time to raise capital. These are usually common stocks )Common Stock( issued in certificate form. IPO shareholders can enjoy the usual rights of the company.

Advantages:

• High potential in the long term
• Opportunity to buy at low prices with high profit potential
• Transparent and publicly available stock prices

Disadvantages:

• Very difficult to purchase stocks at the time of issuance
• Large volatility, higher risk than regular stocks

) 2. Trading Individual Stocks

Trading individual stocks allows shareholders to confirm ownership of a part of the company. There are two main types: common stocks and preferred stocks.

Common stockholders have the right to participate in shareholder meetings, vote, and run for the board of directors. However, they cannot withdraw capital but only transfer ownership.

Preferred stockholders enjoy additional rights such as lower purchase prices and priority payments, but they do not have voting rights or the ability to run for office.

Advantages:

• Reduced costs – only pay when buying or selling
• High profits when investing long-term ###compared to gold, silver(
• Full control over stock selection and trading timing
• High liquidity, easy to trade on the exchange

Disadvantages:

• Difficult to diversify the investment portfolio, increasing risk
• Difficult to buy a variety of stocks with limited capital
• Requires time for research and management
• Easily influenced by personal emotions

) 3. Investing in Stock Indices###

Stock indices are collections of stocks or bonds representing a specific segment. For example, VN30 index includes the 30 strongest stocks in Vietnam (accounting for about 80% of market capitalization), listed on HOSE.

Globally, the S&P 500 index includes the 500 strongest stocks in the US (accounting for 75-80% of market capitalization), listed on NYSE and NASDAQ. The DJIA (Dow Jones Industrial Average) comprises 30 top stocks.

Advantages:

• Diversified investment – buying an index means buying a basket of stocks
• Risk reduction due to market fluctuations
• Cost savings due to fewer transactions
• Saves effort and research time

Disadvantages:

• Cannot achieve super high profits because the basket may include weak companies, pulling the index down

( 4. Exchange-Traded Funds (ETF) - Exchange-Traded Fund)

ETFs are investment funds that hold multiple underlying assets. You can buy and sell ETF shares similarly to trading company stocks.

In Vietnam, FTSE Vietnam ETF was the first established in 2008. Currently, there are 7 active ETFs, with the top 3 accounting for over 90% ###including two foreign funds and one domestic fund(.

Advantages:

• Diversification across many asset types
• Easy trading with low costs, dividend payments
• Some ETFs can be traded with options )Options(

Disadvantages:

• Relatively high commissions )depending on the trading platform(
• Small trading volume leading to high bid-ask spreads
• Some ETFs are heavily taxed

) 5. Stock Futures(

Stock futures are derivative financial contracts where the buyer and seller agree on a stock index price at a future date. At maturity, the seller must sell at the predetermined price.

In Vietnam, futures contracts based on the VN30 index are available with different durations )1 month, 2 months, etc.###.

Advantages:

• Ability to short sell without owning stocks
• Use leverage to increase profits
• Similar trading to Forex, applicable to various investment strategies

Disadvantages:

• Large lot sizes, difficult for small-cap investors
• Continuous monitoring of the portfolio required
• Complex trading methods for beginners

( 6. Stock CFDs - Contract For Difference)

Stock CFD is a trading form where you do not buy the underlying asset (actual stocks) but sign a contract with a CFD provider. You can use high leverage to increase profits, open Long-Short positions similar to Forex trading.

Advantages:

• High leverage – access to large markets with little capital
• 24-hour trading with global tools
• Instant, continuous intra-day trading
• Can trade based on low margin levels

Disadvantages:

• Potential to lose more money than the initial investment if leverage is misused
• CFD owners have fewer rights than common stockholders ###no voting rights(

Stock Trading Platforms in Vietnam

According to HOSE, the top 10 largest domestic brokerage firms in 2020 include: SSI, HSC, VCSC, VNDS, MAS, VPS, MBS, FPTS, MBKE, and BSC. These companies offer products such as stocks, fund certificates, warrants, bonds, and VN30 indices, operating on both HOSE and HNX.

Besides domestic brokers, many international trading platforms operate in Vietnam, offering a variety of financial products such as international stock indices, CFDs )CFD(, cryptocurrencies, commodities, and forex.

Important Terms When Investing in Stocks

Bonus Shares: A method of raising additional capital by splitting stocks. For example, owning 1 share with a face value of 100,000 VND after split becomes 2 shares with a face value of 50,000 VND.

Treasury Shares: When a company repurchases its own shares from the market, reducing the circulating shares and dividend distribution.

ESOP Shares: Preferred shares issued to employees at a lower price to retain talent.

OTC Shares: Unlisted shares on the exchange, potentially overvalued compared to their actual worth.

Bluechip Stocks: Shares of leading, stable companies with growing finances. Examples include stocks in the VN30 and HNX30 baskets.

Penny Stocks )Penny Stock(: Very low-priced stocks with high volatility issued by small companies. They can generate high profits but also pose significant risks of loss.

Defensive Stocks )Defensive Stock(: Stocks of stable companies with low risk, such as essential sectors )electricity, water, pharmaceuticals(.

Derivative Financial Tools: Besides traditional stocks, you can also invest in CFDs, futures, and indices. These tools are more flexible, with markets many times larger, allowing leverage, 24/7 trading, and various investment strategies.

Learning and Preparing to Start Trading

To make money through stock investment, you need to spend time learning about how to trade stocks, technical analysis, market trend updates, and most importantly, accumulating real trading experience.

Many reputable educational sources provide knowledge on stock investment, market analysis tools, and updates on key events affecting stock prices. Combining theory with practice through demo accounts will help you develop effective trading skills.

Start taking action today. Familiarize yourself with trading tools, test strategies on demo accounts, and gradually enter the real market. Success in stock investment requires patience, discipline, and continuous learning.