6 Effective Methods for Online Stock Trading & Shares at the Vietnamese Market

Although the stock market is considered one of the top profit-making channels, many people still do not fully understand the nature of stocks or the appropriate ways to start trading stocks in Vietnam. This article will help you grasp basic concepts, explore different types of securities products, and evaluate the advantages and disadvantages of each investment form.

Basic Concepts of Securities

Securities are financial products with monetary value traded on the market, confirming the rights of the owner towards the issuer. Securities can exist in various forms: certificates, electronic data, or ledger entries.

They serve as the foundation for derivative financial instruments such as options, futures contracts, or exchange-traded funds, which always fluctuate according to market changes. Therefore, stock trading is viewed as a potential investment channel with the ability to generate higher returns compared to traditional investment methods.

Effective Forms of Stock Trading

Like global stock markets, Vietnam’s current market offers a diverse range of securities products from common stocks to derivatives such as options, exchange-traded funds, or futures contracts. Each product type has its own characteristics that investors need to understand.

1. Initial Public Offering (IPO)(

An IPO )Initial Public Offering( is a stock issued by a company for the first time to raise capital from the public. These are common stocks, usually issued in certificate form, granting owners standard rights of the company.

Advantages of IPO:

• Strong growth potential in the long term
• Low purchase price with high profit potential
• Transparent and publicly available price information

However, there are also limitations:

• Difficult to buy during IPO due to high demand
• Large price fluctuations, higher risk than regular stocks

) 2. Single Stocks###

Single stocks allow investors to own a part of a company. There are two main types: common stocks and preferred stocks, distinguished by the rights of the holders.

Common stockholders have the right to attend shareholder meetings, vote on policies, and run for management positions. However, they cannot withdraw capital but can transfer their shares.

Preferred stocks offer additional benefits such as lower purchase prices and priority payments. But, owners do not have voting rights or management participation.

Advantages of this form:

• Low transaction costs, only pay fees when buying or selling
• Higher long-term yields compared to gold or other assets
• Full control over stock type, trading timing, and profit targets
• High liquidity, easy to trade on exchanges

Disadvantages:

• Difficult to diversify a portfolio with limited capital
• Require thorough research and analysis
• Susceptible to emotional influences, leading to poor decisions

( 3. Stock Index)

A stock index is a collection of stocks or bonds representing a specific market segment. In Vietnam, VN30 includes the 30 strongest stocks, accounting for about 80% of the market capitalization on HOSE. Globally, S&P 500 comprises 500 top US stocks accounting for 75-80% of market cap, or DJIA with 30 stocks weighted by average.

Benefits of investing in indices:

• Automatic diversification — buying VN30 means owning 30 top companies
• Reduces long-term market risk
• Cost savings due to fewer transactions
• Less effort compared to selecting individual stocks

Limitations:

• Cannot achieve extremely high profits because the index may include underperforming companies, dragging the entire index down

4. Exchange-Traded Fund (ETF)(

An ETF is a fund that invests in various underlying assets. Investors can buy and sell ETF shares similarly to trading company stocks. On the exchange, ETFs are often marked with a green symbol.

Some stock indices are also ETFs, such as S&P 500 or DJIA. In Vietnam, ETF markets started developing in 2008 with FTSE Vietnam ETF, now with 7 active ETFs, including 3 major funds )including foreign and domestic funds### accounting for over 90% of total scale.

Benefits of ETF investment:

• Diversify investment across multiple assets
• Easy trading with low costs, periodic dividend payments
• Some ETFs support options trading or Long/Short orders

Limitations:

• Brokerage fees can be high depending on the trading platform
• Low trading volume leading to high bid-ask spreads
• Some funds are subject to high taxes

( 5. Stock Futures)

Stock futures are agreements between two parties to set the price of a stock index at a future date. These are derivative financial instruments, where at expiration, the seller must sell at the predetermined price even if the market price changes.

In Vietnam, there are VN30 futures contracts with maturities of 1 month, 2 months, or 6 months (with codes like VN30F1M, VN30F2M, VN30F2006…).

Advantages of Stock Futures:

• Enable short selling without owning the actual stocks
• Support leverage to increase profits
• Allow various investment strategies

Disadvantages:

• Large contract sizes make it difficult for small investors
• Require continuous portfolio monitoring
• Complex trading mechanisms for beginners

6. Contract for Difference (CFD)(

CFD is a trading form where investors do not own the underlying asset but sign a contract with the provider. Unlike actual trading, CFDs allow high leverage to generate significant profits from a small margin.

With flexibility, CFDs are ideal for professional traders wanting to implement Long-Short orders similar to Forex trading.

Advantages:

• High leverage enables access to markets with less capital
• 24-hour trading, global tool access
• Instant, continuous intra-day trading
• Low margin, flexible trading

Disadvantages:

• Risk of losses exceeding initial investment if leverage is misused
• Limited rights compared to actual stocks )no voting or candidacy rights(

Stock Trading Venues in Vietnam

Currently, Vietnam has a robust system of brokerage firms capable of serving investor needs. According to HOSE statistics, leading companies include SSI, HSC, VCSC, VNDirect, Mirae Asset, VPS, MBS, FPTS, MBKE, and BSC.

These firms widely offer stocks, fund certificates, warrants, bonds, and VN30 indices, operating on both HOSE and HNX exchanges.

Besides domestic exchanges, investors can also participate in international licensed markets offering diverse products such as international indices, stock CFDs, and other financial instruments. These platforms often provide intuitive analysis tools and user-friendly interfaces suitable for beginners.

Important Terms When Starting Stock Trading

Stock Bonus - A method of issuing additional shares to raise capital. For example, a stock priced at 100,000 VND can be split into 2 shares of 50,000 VND each, helping the company raise more funds and stimulate price increases.

Treasury Stock - The company repurchases its own shares from the market to reduce outstanding shares, thereby optimizing dividends and preventing takeovers.

ESOP Stock - Preferred shares issued to employees at preferential prices to retain talent or optimize taxes.

OTC Stock - Stocks not listed on official exchanges. Since they are unlisted, their prices can be inflated beyond their true value.

Bluechip Stock - Stocks of leading, stable companies with strong financial growth. Examples include stocks in the VN30 or HNX30 baskets.

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

Defensive Stock - Stocks of stable, low-risk sectors such as water, electricity, or pharmaceuticals.

Financial Derivative Instruments - Besides stocks, investors can trade CFDs, futures, or indices. These tools are generally more flexible, have broader markets, support leverage, 24/7 trading, and enable various strategies.

Learning and Developing Trading Skills

To succeed in stock trading, investors need to dedicate time to learning technical analysis, staying updated on market trends, and gaining practical trading experience.

Reliable educational sources provide knowledge on stock investment, market analysis tools, updates on events affecting prices, and support in developing trading skills.

Start with a demo account to practice skills without real financial risk. Through continuous practice, you will improve your analytical ability, risk management, and decision-making accuracy. As the saying goes: “Practice makes perfect” — perseverance and continuous learning are keys to success in stock trading.