From A to Z: Mastering Stock Market Knowledge for New Investors

Why Should You Learn Stock Market Knowledge?

In recent years, the stock market has grown rapidly and become an attractive investment option for millions of people. When production and trade face difficulties, many investors have shifted to stock trading to seek profit opportunities. To participate in this market intelligently, new investors (F0) need to understand the rules of the game and master basic stock market knowledge. This article will help you familiarize yourself with fundamental concepts, thereby building a suitable trading strategy.

What Is the Stock Market?

According to the Securities Law No. 70/2006/QH1, securities are documents or certificates confirming the legal rights and benefits of the owner regarding assets or equity issued by an organization.

Stock market knowledge begins with understanding the main types of securities:

Shares: This is the most common type of security. Shares confirm ownership of a part of the company’s capital. There are two main types: common shares (linked to business results, dividends are not fixed) and preferred shares (fixed dividends, limited voting rights). Shares can be in paper form or electronic.

Bonds: These are debt certificates, confirming the right to receive interest and principal repayment from the issuer (company, organization, or government). Investors who buy bonds will receive fixed interest, regardless of business performance.

Fund Certificates: Evidence of ownership when you contribute capital to a mutual fund. This fund pools capital from many investors to invest together in securities or other assets.

Derivative Securities: Contracts whose value depends on the underlying asset (stock, index). Includes options, futures, and forward contracts.

Warrants: Securities secured assets that allow investors to buy the underlying security at a predetermined price at maturity.

Share Purchase Rights: Issued to prioritize current shareholders with the right to buy new shares at a lower price than the market.

Depository Certificates: Created when shares of foreign companies are deposited at a depository bank.

How Does the Stock Market Work?

Basic Concept

The stock market (stock exchange) is where investors buy and sell securities through a trading floor or brokerage firms.

Stock market knowledge requires understanding that the market is divided into two types:

• Primary Market: Where securities are issued for the first time, raising new capital for organizations
• Secondary Market: Where investors trade already issued securities, ownership is transferred

Important Roles

The stock market plays a key role in the economy:

• Promotes the development of joint-stock companies through transparency, valuation, and capital raising
• Helps investors assess business operations and financial health
• Highly liquid, facilitating easy transactions
• Supports government and enterprises in attracting foreign capital

Important Concepts and Terms

Market Terminology

To master stock market knowledge, you need to know:

• Listed Company: A company that issues shares on the exchange
• IPO (Initial Public Offering): First-time securities issuance
• Market Capitalization: Total company value (share price × number of outstanding shares)
• Bid Price: The listed price of the initial offering
• Portfolio: All stock codes in your account
• Yield or Return Rate: Profit received from dividends
• Annual Report: Financial information published annually
• Alpha Coefficient: Return rate after risk adjustment
• Beta Coefficient: Measure of stock risk
• Price to Book Ratio (P/B): Comparison of market price and book value
• Dividend Rate: Relationship between received dividends and purchase price

Basic Trading Orders

When trading, you will use different orders:

• LO (Limit Order): Buy/sell at a specified price or better
• MP (Market Price): Buy at the lowest selling price or sell at the highest current price
• ATO: Trading at opening price (only on Ho Chi Minh Stock Exchange, before 9:15 AM)
• ATC: Trading at closing price (on both Hanoi and Ho Chi Minh exchanges, 2:45 PM)
• PLO: Buy/sell at the closing price after ATC (only on Hanoi exchange)

Other trading terms:

• Break: Price surpasses a significant resistance level
• Matched Price: Actual transaction price
• Long (Bullish): Expecting the price to rise
• Short (Bearish): Expecting the price to fall
• Stock Screening: Using criteria to find suitable codes
• Safety Margin: The difference between market price and intrinsic value

Price and Reading Methods

You need to understand different prices:

• Par value: The amount written on the security at issuance
• Market price: The buying/selling price on the exchange
• Listing price: Price during the first trading session
• Opening price: Price at the previous session’s close
• Floor/ceiling price: Lowest/highest price of the day
• Settlement date (T+3): 3 days after matching order, when funds or securities are credited to the account

How to read the price table: Green = price increase, Red = price decrease, Yellow = no change (compared to reference price)

Essential Trading Concepts

• Index (Index): A statistical measure from a list of stocks based on certain ratios. Vnindex represents the entire HOSE, Vn30 includes the top 30 stocks by market cap
• Margin: Margin trading, borrowing money from a securities company to buy stocks
• Trading Volume: Number of securities traded within a period (e.g., one day)
• Short Selling: Selling securities you do not own by borrowing from others
• Price Fluctuation: On HOSE ±7%, on HNX ±10% compared to reference price

Market Participants

• Issuer: Issues securities to raise capital
• Individual Investor: People with capital participating in trading to earn additional income
• Institutional Investor: Investment firms, insurance, finance, banks trading with large capital volumes
• Securities Company: Supports management, consulting, brokerage, underwriting
• Related Organizations: Securities Commission, stock exchanges, credit rating agencies

Operating Principles

The stock market follows 5 basic principles:

1. Competition: Issuers compete to sell securities, investors compete to buy at good prices
2. Fairness: Everyone follows common regulations, no special privileges
3. Transparency: Issuers must disclose information fully and regularly
4. Intermediary: Transactions between investors and issuers via securities companies
5. Centralization: Transactions only occur on the exchange, monitored by state agencies

Trading Hours

The three exchanges—Ho Chi Minh City (HOSE), Hanoi (HNX), and UPCOM—operate within the following hours:

• Morning: 9:00 - 11:30
• Afternoon: 13:00 - 15:00
• From Monday to Friday (excluding weekends and holidays)

How to Conduct Transactions

Open a Securities Account

Before trading, you need to:

1. Choose a reputable securities company with reasonable fees
2. Note margin ratio and interest rate
3. Open an account directly at the securities company, bank, or through a broker

Required information: Permanent address, email, phone number, bank account

Post-account opening process:

• The company provides an account number
• Instructions on depositing money into the account
• Minimum 500,000 VND to start trading

Two Ways to Place Orders

• Manually place orders via trading software
• Place orders through a broker

Important Tips for Trading

Regarding the trading platform:

• Vietnam has 3 main exchanges: HOSE (Ho Chi Minh City), HNX (Hanoi), UPCOM (unlisted companies)
• Additionally, many international exchanges operate in Vietnam
• Always choose reputable, long-standing exchanges managed by domestic or international securities authorities (ASIC, FCA, SEC, CySEC)

Regarding trading skills:

• Beginners should master 3 basic orders: ATO, ATC, LO
• Then learn advanced orders: MP, MTL, MOK, MAK…

Next Steps

To succeed in stock trading, remember:

• Stock knowledge is an indispensable foundation
• Learn from experience and monitor market fluctuations
• Start small, manage risks wisely
• Continuously update information and develop skills

Wishing you success in your stock trading journey!