How to Trade Alphabet Shares: GOOG Stock Trading Guide

Alphabet Inc., one of the largest companies globally, is a member of the FAANG group. FAANG represents the five leading American tech stocks: Meta (META), Apple (AAPL), Amazon (AMZN), Netflix (NFLX), and Alphabet (Google’s parent company).

Given its significance, Alphabet attracts interest from traders seeking opportunities within the US stock market. This article outlines the essential steps for those looking to trade Alphabet stocks.

Main Points:

• Alphabet has several share classes available for trading.
• Among the different classes of Alphabet shares, the class C shares (GOOG) do not have voting rights but retain Google's historical price data since its IPO in 2004.
• Contracts for Difference (CFDs) instruments allow traders to speculate on the price movements of Alphabet stocks without outright ownership.
• One must open a trading account with a CFD provider like Plus500 to trade Alphabet share CFDs.
• Effective trading of Alphabet stocks requires a combination of technical analysis and fundamental analysis.

Understanding Alphabet Inc. Class C Stock (GOOG)

In 2004, Google went public through an Initial Public Offering (IPO) on the Nasdaq stock exchange. Its shares were traded under the ticker symbol "GOOG" at an initial price of $85 per share.

Subsequently, Google reorganised and became a subsidiary of Alphabet Inc. Although Alphabet Inc. issues three different classes of shares, the class A shares (GOOGL) with voting rights for regular investors, the class B shares for Alphabet founders and executives with 10 times voting rights and the class C shares (GOOG) without voting rights for regular investors. The class C shares retained the historical price data of Google from the time it went public on the Nasdaq in 2004. Hence, traders interested in seeking opportunities in Alphabet shares' rising and falling prices can trade Alphabet class C shares (GOOG).

How to Trade Alphabet Class C Shares (GOOG)

CFDs are derivative instruments that track the price of financial assets like Alphabet stocks, potentially enabling traders to profit from rising and falling markets. When trading Alphabet share CFDs, you enter into a contract with a broker to exchange the difference in the price of Alphabet stock from when the contract is opened to when it is closed. Therefore, by trading Alphabet class C shares (GOOG) through Contracts for Difference (CFDs), traders and investors can profit or lose from the price movements of Alphabet shares without owning the shares.

Steps to Trade Alphabet Class C Share CFDs (GOOG)

Trading Alphabet (GOOG) shares CFDs require specific steps for effective risk management and informed decision-making. Here’s how to get started:

1. Open a CFD Trading Account

   To trade Alphabet shares CFDs, you can open a trading account with a CFD provider. For instance, Plus500 provides an intuitive online trading platform and a WebTrader app compatible with PCs and smartphone devices.

2. Access Alphabet (GOOG) Stock Chart

   To locate and access the Alphabet stock price chart on the Plus500 app or WebTrader platform. Navigate to the instrument section and select Alphabet under the US category of popular shares. Alternatively, you can type "Alphabet" or "GOOG" into the search bar at the top left of the trading platform.

3. Analyse the Price Movement of Alphabet’s Shares

   Before executing any trades, it’s crucial to analyse why Alphabet shares could be a buy or sell. This analysis can be conducted through both technical and fundamental approaches.

   • Technical Analysis of Alphabet Stock Price

     This involves analysing the historical price data of Alphabet shares by using chart patterns or technical indicators.

     • Chart Pattern Analysis: This involves using trendlines or horizontal lines to identify patterns based on historical data. Recognising chart patterns like support & resistance, candlestick patterns and symmetrical triangle formations may help traders anticipate the future price movements of Alphabet shares.
     • Technical Indicators: These are statistical analytics of prices and volumes plotted over price charts. They offer insights into market trends and potential reversals. Common indicators include moving averages, relative strength indexes (RSI), and Bollinger bands.

   • Fundamental Analysis of Alphabet Stock

     This involves analysing the intrinsic factors that can determine the rise or fall of Alphabet shares, such as:

     • Revenue: This reflects Alphabet Inc.'s health and growth by revealing the total income generated from its various segments and subsidiaries, including Google LLC.
     • Net Income: This measures Alphabet Inc.'s profitability after subtracting all expenses. It reflects Alphabet's ability to generate shareholder value.
     • Earnings per Share (EPS): This measures Alphabet's profitability on a per-share basis. As such, it can easily be compared with other tech stocks.
     • Price-to-Earnings Ratio (P/E): This ratio helps investors determine whether Alphabet's earnings are overvalued or undervalued.

4. Execute and Manage Trades on Alphabet Shares CFDs

   After developing a bullish or bearish outlook on Alphabet stock, utilising the right order types is essential to initiate trades and manage existing positions effectively.

   Traders can open a buy or sell trade on Alphabet share CFDs either by using a direct market order at the current market price or by using a pending order above or below the current market price.

   Traders can also close their existing positions manually at the current market price, or by using automated stop orders like stop-loss orders, stop-limit orders and trailing stop orders.

Example of Alphabet GOOG Share CFD Trading

Assume you decide to buy 100 shares of Alphabet stock at an ask price of $30.00. The total transaction cost would be; (100 shares * $30.00) = $3,000

If a CFD provider offers a leverage of 1:5, requiring a 20% margin, the initial capital requirement will be significantly reduced to just $600.00. This lower margin requirement allows traders to leverage their positions, which can result in higher returns but also higher losses.

In this example, if we account for a spread of 5 cents, the stock price must increase by at least 5 cents to $30.05 to break even.

Suppose the price of Alphabet stock increases to a price of $40.00, the profit per share will be: $40 − $30 = $10

For 100 shares, the total profit will be: 100 shares × $10 = $1,000

On the other hand, if the price of Alphabet stock decreases to a price of $20.00, the loss per share will be: $30 − $20 = $10

For 100 shares, the total loss will be: 100 shares × $10 = $1,000

Trading Hours for Alphabet (GOOG) Shares

Alphabet class A shares (GOOGL) and class C shares (GOOG) trade on the NASDAQ stock exchange. The standard trading hours* for GOOGL and GOOG shares on NASDAQ are from 9:30 AM to 4:00 PM Eastern Time (ET). However, they can also be traded electronically before and after these market hours during pre-market or after-hours sessions.

On the Plus500 WebTrader platform, traders can monitor the real-time price movements of Alphabet class C shares (GOOG) and trade them on weekdays from 01:30 PM UTC to 20:00 PM UTC.

*Please note that trading platform hours may vary depending on the individual operator.

Should You Trade Alphabet (GOOG) Shares CFDs with Plus500?

Reasons why you should trade Alphabet shares CFDs with Plus500 include the following:

• Plus500 provides an intuitive platform for trading Alphabet shares CFDs seamlessly on desktop or mobile devices (iOS/Android).
• Plus500 trading platform ensures that your trades are executed promptly at your specified entry and exit points.
• You can take advantage of Plus500 competitive spreads on Alphabet shares CFDs, although it's essential to remain mindful of potential additional fees.
• By utilising the trading platform's technical tools and economic calendars, you can also gain valuable insights into Alphabet's share price movements.

Conclusion

Trading Alphabet Inc. (GOOG) share CFDs enables traders to participate in the price volatility of Alphabet shares without actually owning the shares. By leveraging fundamental and technical analysis of Alphabet stock and implementing sound risk management techniques, traders can make informed decisions about entering and exiting positions on Alphabet Inc.