Experience Trading
on the Go
on the Go
Reading time: 10 minutes
Overview of Amazon
Founded in July 1995 as an online bookstore, Amazon.com Inc. (ticker: AMZN) has morphed into the largest online retailer. It is now a globally recognised US multinational organisation and the fifth largest company in the world, according to market capitalisation (US$2.023 trillion).
Founded by Jeff Bezos, the company’s operations were largely confined to the walls of his garage, containing simple office supplies and a desk made from Home Depot doors. Interestingly, the first ever book sold by Amazon was ‘Fluid Concepts and Creative Analogies: Computer Models of the Fundamental Mechanisms of Thought’, written by Douglas R. Hofstadter.
The company has developed beyond just delivering books. Amazon’s primary operations include providing e-commerce and offering a wide selection of products directly shipped to customers. Additional services include cloud computing, artificial intelligence (AI), digital advertising and digital streaming. With a global workforce of more than 1.5 million, the company has become one of the most familiar organisations in the world.
Contracts for Differences, or CFDs, are cash-settled leveraged derivative financial instruments used by traders and investors globally to speculate and hedge across all major asset classes, including foreign exchange (Forex), Commodities, Stock Indices, Bonds, ETFs (Exchange-Traded Funds), Digital Currencies, and Stocks just like Amazon. Unlike when trading in the physical market – say, when you purchase shares of a company – with CFDs, you do not take physical ownership of the underlying asset; you are trading (either long [buying] or short [selling]) the underlying asset’s price movement.
CFD traders often employ the use of leverage through margin. This means that if you enter long Amazon at $200 for 100 shares, with a margin requirement of 10%, you would need to deposit 10% of the total position size: 2,000 USD = (20,000 total position size * 0.1). This would allow the investor to trade the equivalent position size of 20,000 USD.
With CFDs remaining one of the most cost-efficient ways to trade and hedge in the financial markets, how can you buy Amazon Share CFDs with FP Markets?
The flexibility to choose from a wide range of trading platforms is essential for traders and investors today. At FP Markets, you can invest in Amazon Share CFDs through MetaTrader 4 (MT4), MetaTrader 5 (MT5) and cTrader. The other great thing about trading with FP Markets is the account opening process; it is straightforward and is usually activated within a few hours.
To open an FP Markets trading account, click the ‘OPEN LIVE’ tab in the upper right corner of the main webpage, as shown below:
This will then take you to the Account Application webpage, which, as you can see below, consists of four steps before you can start trading. These steps include entering personal details, configuring your account (e.g. which trading platform you intend to use and leverage) and finally, a declaration.
Once the account application has been completed and approved, you will receive the account details through your registered email address (including the account server, the trading account ID and the password). You can then enter the FP Markets Client Portal and proceed to download your preferred trading platform, as per below:
How do you find the Amazon ticker after your account has been approved and you have downloaded your preferred trading platform?
The process of selecting the Amazon ticker through MT4 or MT5 is similar. You must first ensure that Amazon is added to the Market Watch; you can do this in MT4 by pressing Ctrl+U and clicking ‘Show’, as illustrated below. Hit the ‘Close’ tab and press Ctrl+M to access Market Watch. Then, locate the Amazon ticker and drag and drop the instrument to the chart’s interface on the right, and the chart will open and begin showing updated, real-time prices. This will subsequently allow for chart modifications to suit personal preferences (e.g. background colour, candles or bars, timeframes, and adding technical indicators and drawing tools). The only difference between this process for MT4 and MT5 is that the latter provides a ‘click to add’ function at the lower section of Market Watch, thus negating the need to click to show the security of choice.
Following research, you can buy and sell Amazon in a few ways on MT4 or MT5 (the process is similar).
The simplest way to buy or sell a stock CFD on MT4 is to press F9 to open the order window, as shown below. You are then free to alter settings to suit your trade idea, from trading volume to stop-loss and take-profit levels, as well as type of execution to whether you want to buy or sell the stock.
Examples of long and short positions in Stock CFDs can be found below:
Below is the Amazon price chart on the daily timeframe from MT4.
Whether to invest in Amazon is ultimately up to each investor’s investment strategy and goals.
However, here are some points worth considering. The latest batch of earnings – for Q1 2024, released at the end of April – saw the company’s net sales increase by +13% to US$143 billion, up from US$127 billion in Q1 2023. The earnings report also revealed that Earnings Per Share (EPS) increased to US$0.98 from US$0.31 in Q1 2023, and net income increased to US$10.4 billion.
Amazon is a globally recognised industry leader in e-commerce and Cloud computing. The company is the world’s leading Cloud computing provider through Amazon Web Services (AWS) and controls more than 30% of the market share. Nevertheless, the e-commerce and cloud computing markets are competitive. Amazon faces challenges from other tech giants like Microsoft (ticker: MSFT) and Google (ticker: GOOG), which collectively control over 35% of the Cloud computing industry.
Share dealing involves purchasing and selling a company's physical shares, usually common shares or preferred shares. If you buy 100 shares of Amazon, then, through an investment platform, you will become the ‘beneficiary holder’ of those shares and the investment broker you use will be the ‘nominee shareholder’. This means that you, as the investor, hold the ‘right’ to the shares purchased.
For those new to stock trading, purchasing physical shares means the investor owns a slice of a publicly listed company. The investor is a shareholder, and the invested amount can increase or decrease in value depending on the company’s performance. You may also receive dividend payments and have voting rights.
Investing in Amazon through the futures and options markets is an alternative. Like CFD products, futures and options contracts are also leveraged derivatives. Yet, unlike CFDs, which are traded over the counter (OTC), futures and options are exchange-traded and sometimes involve physical delivery of the underlying asset. CFDs are always cash-settled.
A futures contract allows market participants to buy or sell financial instruments, such as stocks, at a specific price on a future date. In contrast, an options contract provides the holder the right, but not the obligation, to buy or sell financial instruments at a future price on a future date.
Futures and options are also standardised derivatives contracts. Specific specifications, such as physical delivery details and the contract’s expiration date, are clearly outlined.
ETFs are popular pooled investment vehicles that are listed on a stock exchange. As a result, ETFs can be bought and sold like regular stocks. Most ETFs are also passive investments: they track the underlying performance of a group of securities, including bonds, currencies, indices, and equities. For instance, you can have sector-specific and dividend ETFs in the equities space.
The idea behind investing in an ETF is that it helps diversify risk across multiple securities instead of investing in just Amazon. ETFs are also low-cost investments and are often tax-efficient.
Amazon has never paid a dividend.
The primary difference between CFDs and share trading is that the former are often leveraged trades, while the latter tends to be unleveraged. Unlike buying physical shares and owning a slice of the company as a shareholder, with CFDs, you are simply trading the stock’s price movement, as all CFDs are cash-settled derivative financial instruments.
With FP Markets, you can trade Amazon via CFD pricing on MT4, MT5 and cTrader. Most traders tend to opt for MT5.
Access 10,000+ financial instruments Auto open & close positions News & economic calendar Technical indicators & charts Many more tools included
By supplying your email you agree to FP Markets privacy policy and receive future marketing materials from FP Markets. You can unsubscribe at any time.
Source - cache | Page ID - 40540
