Journey to Explore the Stock Market for New Investors

In recent years, the stock market has been booming with attractive profit opportunities. When traditional business activities face difficulties, stock investment has become the top choice for millions of investors. To enter this playground smartly, beginners need to master fundamental knowledge about stocks — from basic concepts to trading rules.

What Are Stocks? Understanding from Legal Definitions

According to the Securities Law No. 70/2006/QH1, securities are documents or evidence confirming ownership rights and legal interests of the owner with assets or equity of the issuing organization.

Securities exist in various forms:

• Shares, bonds, investment fund certificates
• Derivative securities (derivatives)
• Warrants, stock purchase rights, deposit certificates
• Other types of securities regulated by the state

Common Types of Securities Investors Need to Know

Shares - The Most Popular Investment Tool

Shares are the most common type of security, confirming ownership of a part of the equity in a company or enterprise. When you buy shares, you become a shareholder of that company.

There are two main types of shares:

• Common shares: linked to business results, dividends are not fixed
• Preferred shares: priority regarding dividends or voting rights

Shares can be issued in paper form (printed with company name, face value, year of issuance) or electronically (stored on computer systems).

Bonds - A Reputable Lending Form

Bonds are securities confirming the rights of the holder and the debt repayment obligation of the issuing organization (company, organization, government). It is similar to a loan, but the issuer commits to paying both principal and interest within a specified period.

When purchasing bonds, you will receive a fixed interest rate, independent of the business results of the issuer. You also do not have the right to participate in management decisions of the company.

Fund Certificates - Collective Investment

Fund certificates confirm your ownership when contributing capital to a public investment fund. The fund is a place that pools capital from many investors to jointly invest in securities or other assets to earn profits.

Whenever investing in a public fund, you must buy fund certificates to prove your share of the capital contribution.

Derivative Securities - Advanced Investment Tools

Derivative securities are contracts that define the rights and obligations of the participating parties. Their value depends on one or more underlying assets (stocks, indices, etc.).

Types of contracts include:

• Options (Options)
• Futures (Futures)
• Forwards (Forwards)

The difference from underlying securities is that trading occurs on the derivatives market, with no limit on issuance volume, settlement in the future, and profits are determined daily.

Warrants - Purchase Rights with Guarantee

Warrants with collateral are securities with collateral assets, usually issued by securities companies. Each warrant is associated with a specific underlying security and allows you to buy that security at a predetermined price on the maturity date.

Share Purchase Rights - Priority Opportunities for Shareholders

Share purchase rights are issued periodically, giving current shareholders priority to buy additional shares at a lower price than the market price. Each outstanding share will come with a purchase right.

Depository Certificates - International Trading Bridge

Depository certificates are created when shares of foreign companies are deposited into a depository bank. This bank then issues depository certificates whose quantity and value depend on the ratio between the issued certificates and the underlying shares.

Stock Market - The Financial Playground

Basic Concepts

The stock market (sàn chứng khoán) is where investors buy and sell securities at exchanges or through brokerage firms.

The stock market is divided into two types:

• Primary market: organizations and funds raise capital by issuing shares for the first time
• Secondary market: previously issued shares continue to be traded among investors, only changing ownership without generating new funds

The Importance of the Stock Market

The stock market plays a key role in the national economy:

• Promotes the development of joint-stock companies through information dissemination, valuation, underwriting, and attracting investors
• Provides investors with criteria to evaluate business operations
• Ensures high liquidity, allowing easy buying and selling of assets
• Helps the government and enterprises attract foreign capital through bond or stock issuance

Basic Stock Market Terms for Beginners

Basic Market Concepts

• Listed company: a company that offers shares to the market, listed on a stock exchange
• IPO (Initial Public Offering): issuing securities to the public for the first time
• Market capitalization: the total value of a company based on its outstanding shares
• Offering price: the listed price of shares during the initial offering
• Securities portfolio: a collection of stock codes in an investor’s account
• Yield / Return rate: total dividends received by the investor from shares
• Annual report: the report issued annually by the issuing company
• Alpha coefficient: return rate adjusted for risk
• Beta coefficient: a measure of the risk of a stock or portfolio
• Price to Book Ratio (P/B): compares market price to book value per share
• Bankruptcy risk coefficient: helps assess risk and forecast the company’s potential for bankruptcy
• Dividend Yield: shows the relationship between received dividends and purchase price of shares

Basic Trading Orders

• LO Order (Limit Order): buy/sell order at a specified or better price
• MP Order (Market Order): buy at the lowest selling price or sell at the highest buying price currently
• ATO: order to determine opening price, applied before 9:15 (specifically on HCM exchange)
• ATC: order to determine closing price at 14:45 (applies to both HN and HCM exchanges)
• PLO: buy/sell order at the closing price after the ATC session (specifically on Hanoi exchange)
• Break: when the stock price rises sharply beyond a certain price range
• Long (buy up) / Short (sell down): trading styles in derivatives
• Stock filtering: using criteria such as upward momentum, accumulation, market cap, or liquidity to find suitable stocks
• Safety margin: the difference between market price and intrinsic value

Stock Price Types

• Face value: the amount printed on the bond or share at issuance
• Market price: the actual buying/selling price on the trading platform
• Listed price: the initial listing price during the first trading session
• Matching price: the price at which buy/sell orders are matched
• Opening price: the previous day’s closing price
• Floor price: the lowest price during trading
• Ceiling price: the highest price during trading
• Settlement date: T+3, three days after the transaction (excluding holidays). When buying, funds are transferred after 3 days; when selling, proceeds are transferred after 3 days
• Price trend: the market has 3 types — up (Uptrend), down (Downtrend), sideways (Sideway)

Other Important Definitions

• Index (index): a stock index calculated from a list of stocks based on certain weights. For example, VNIndex represents the entire HOSE, VN30 is an index of the top 30 stocks by market cap and liquidity
• Margin (Ký quỹ): margin trading allowing investors to borrow money from securities companies to buy stocks
• Trading volume: the number of shares traded within a period
• Short selling: investors sell securities they do not own by borrowing from others and buy back later
• Price fluctuation: on HOSE ±7%, on HNX ±10% compared to the reference price (the previous day’s closing price)

Market Participants

• Issuer: issues securities to raise capital
• Investor:
  • Individual investor: uses personal funds to participate for additional income
  • Institutional investor: investment companies, insurance companies, financial companies, commercial banks with large capital scale
• Securities company: supports management, consulting, brokerage, underwriting
• Related organizations: State Securities Commission, stock exchanges, credit rating agencies, securities computing service companies

Principles of Stock Market Operation

To develop sustainably, the stock market must follow 5 basic principles:

• Competition principle: issuers compete to sell securities, investors compete to buy at good prices and high profits
• Fairness principle: all participants must comply with the same regulations
• Transparency principle: issuers must regularly, publicly, and fully provide information about securities
• Intermediary principle: transactions between investors and issuers must go through securities companies
• Centralization principle: transactions only occur on official exchanges under strict government supervision

Trading Hours

The exchanges (HOSE, HNX, UPCOM) operate within:

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

How to Read Stock Price Tables

When participating in trading, the price table is an essential tool that beginners need to understand:

• Green color: price increased compared to reference price
• Red color: price decreased compared to reference price
• Yellow color: price unchanged compared to reference price

How to Buy and Sell Stocks

Investors have 2 ways to execute buy/sell orders:

• Manually place orders on trading software
• Place orders through a securities broker

How to Open a Securities Account

Before starting trading, investors need to:

Choose a suitable securities company

• Compare transaction fees of different companies
• Check margin ratio and interest rate
• Select a reputable company with a long operational history

Where to open an account You can open an account:

• Directly at a securities company
• At a commercial bank
• Through a securities brokerage firm

Required information

• Permanent address
• Contact email
• Regular phone number
• Bank account details

Post-opening process The securities company will provide you with:

• Securities account number
• Deposit instructions
• Account ready for trading when it has at least 500,000 VND

Important Notes When Trading Stocks

Understand the market structure

In Vietnam, there are 3 main stock exchanges:

• HCMC Exchange (HOSE): general securities trading
• Hanoi Exchange (HNX): securities trading for earlier issued stocks
• UPCOM: trading point for unlisted public companies

Additionally, many international stock exchanges operate in Vietnam. Each has its own advantages and disadvantages, but regardless of the exchange chosen, you must:

• Select a reputable exchange with a long history
• Verify that the exchange is managed by domestic securities authorities or international regulators (ASIC, FCA, SEC, CySEC,…)

Master basic orders

When just entering the market, beginners should focus on learning 3 basic orders:

• ATO (At the Opening)
• ATC (At the Closing)
• LO (Limit Order)

After mastering these, you can learn advanced orders like MP, MTL, MOK, MAK…

Continue learning and updating knowledge

To profit from the stock market, investors need to:

• Study more in-depth knowledge
• Accumulate practical experience
• Be sensitive to market fluctuations
• Keep updated with economic, policy, and company information

Next Steps for New Investors

Basic stock knowledge is an important foundation, but practice is the key to success. Start with small transactions, research each company you want to invest in, and develop your own trading strategy.

Your journey in the stock market will open many opportunities for sustainable profits if you have knowledge, discipline, and strong psychology.