5 Essential Steps to Start Buying Stocks in Vietnam

Want to participate in the stock market but don’t know where to start? Here is a comprehensive guide to help you understand the process of buying stocks online, from choosing a broker to building a diversified portfolio. By following these 5 steps, even complete beginners can confidently step into the world of stock trading.

Step 1: Choose the Right Stock Broker

First, you need to decide on the investment method that suits you. Currently, there are two main options: investing through a fund or direct investment via a broker.

With a mutual fund, you delegate asset management to professionals but usually have to accept higher fees and a large minimum capital. Conversely, when buying stocks through a broker, you have full control over your buy and sell decisions. The second option is much more popular among individual investors.

The market currently has hundreds of online stock brokers. When choosing, pay attention to these criteria: the company must be licensed by reputable regulatory agencies, offer competitive trading fees, support various analysis tools, and have a user-friendly trading platform. Additionally, ensure it supports diverse and secure deposit and withdrawal channels.

Step 2: Open a Stock Trading Account

After selecting a broker, proceed to register an online account. This process requires:

• Providing an email and phone number, then creating a secure password
• Filling out personal information and answering questions about trading experience
• Verifying identity with ID documents and proof of income

Verification usually takes 1-2 business days. During this waiting period, you can practice with a demo account to familiarize yourself with the interface and strategies. Demo accounts offer conditions identical to the real market but without using real money, which is very useful for beginners.

A helpful tip is to start with a small amount of money and carefully compare the fees of different providers before officially depositing funds.

Step 3: Choose the Type of Securities to Buy

Now comes the most important part: deciding which stocks to buy. You need to analyze the market, evaluate financials, and forecast price trends. The market offers three main product types:

Company Stocks: You directly own shares of a specific company. To buy this type of security, spend time researching the company’s financial health, valuing it reasonably, and setting target prices. The advantage is that individual stocks often appreciate faster than ETFs. You can also own multiple stocks to reduce risk.

Mutual Funds or ETFs: These tools allow you to own a basket of stocks with a single transaction. For example, buying an ETF tracking technology means you own small shares in many tech companies. The main benefit is diversification, reducing concentration risk.

Derivative Securities: Including CFDs, Futures, Options, and swaps. These allow you to profit from both rising and falling markets but come with higher risks and are suitable for experienced investors.

Each type suits different strategies. Value investors prefer analysis and selecting individual stocks. Beginners with low risk tolerance should choose funds. Active investors seeking opportunities may opt for derivatives.

Step 4: Use Strategic Trading Orders

When buying stocks, how you place your orders also determines the outcome. There are four common types:

Market Order: Execute buy or sell immediately at the current price. Ensures order fulfillment but does not guarantee a specific price, especially for volatile securities.

Limit Order: Specify a particular price at which you are willing to buy or sell. The order only executes when the price reaches your target. This guarantees the price but not the order execution.

Stop-Loss Order: Automatically sell when the price drops to a certain level, helping to cut losses or protect profits.

Trailing Stop-Loss: The stop level moves with the market, allowing you to automatically lock in profits when the trend changes.

For highly volatile stocks, use Limit Orders. For stable stocks, Market Orders are more effective.

Step 5: Build a Diversified Investment Portfolio

The final step for success in stock investing is diversification. You should not put all your capital into a single stock or industry.

A simple way to achieve this is by investing in major indices like the S&P 500, representing the top 500 US companies. This saves time on analyzing each company but still provides risk dispersion. You can also expand by investing in indices of multiple countries.

Additionally, diversify asset types. For example, during COVID-19, while the stock market declined, gold prices surged. A diversified portfolio helps minimize losses.

This technique is especially important because it is an effective way to reduce risk. However, diversification does not mean buying everything. Choose quality securities. The easiest option is to invest in indices or funds, as these portfolios are pre-selected by professionals.

Kickstart Your Stock Investment Journey

Buying stocks is a great path for beginners to start investing. This article has outlined the 5 essential steps to start buying stocks online safely and effectively.

Each step plays a vital role in your investment journey. From choosing a broker, opening an account, analyzing securities, to using appropriate trading orders and building a diversified portfolio—all contribute to long-term success. Hopefully, this guide will help you confidently step into the world of stock trading with a solid knowledge foundation.