How to invest in Apple from the UK

About Apple

Apple is a technology company whose business model includes the design and manufacture of electronic products, software and online services. It also includes the commercialization of these products, since the company itself owns more than 400 stores worldwide.

Since its founding and the success of Apple II in 1976 until today, Apple went from being a garage company to what it is today: one of the top 5 and largest companies in the technology sector along with Google, Facebook, Microsoft and Amazon. Apple being the first company to reach a market capitalization of more than 1 trillion dollars.

Apple products and innovation

Being Apple a technology company, it has a serious commitment to innovation. That is why year after year we see how Apple creates new products or improves existing lines. Just look at the evolution of the iPhone, iPad or Mac, to which we can add the Apple Watch and Apple TV.

In addition to this and framed in its business internalization model, Apple developed its own processor called Apple M1 which will be used in all its devices, thus eliminating the dependence it had on chips manufactured by Intel.

With the Apple M1, the company has promised that all its devices will make a quantum leap, starting with Macs. Although it is certain that they will then start using their Apple M1 in all other devices.

The secret of Apple's business

In addition to what was exposed in the previous point, much of Apple's success is given by its marketing strategy. This strategy goes from the most basic: creating the need for the product; to the most important: building customer loyalty.

Apple takes the latter to the point that its customers are its best marketing and there is no need to give much explanation about this. After all, we all know an Apple user who recommends and defends to the death all Apple products.

The success of Apple products and the Apple brand is fully reflected in its stock price. This is how Apple's share price went from $ at the time of its IPO, to the prices we have today.

And given the nature of Apple as a company, it is only natural that its share price will continue to rise over time.

What types of instruments can you trade?

About Index Funds

This is the best option for people who can invest in the long term, mostly for beginners, because it is inexpensive, diversified, and safer.

Contrary to what it may seem, it is not easy to beat the market (yes, you have surely heard of investors who obtain huge profits).

But putting aside some remarkable cases (like Warren Buffett's), not everything is as good as it sounds: when someone brags about having beaten the market, they have probably done so for a short time, or charges so many commissions that it ends up being better for you to index (whit minimal commissions). Besides, take into account that past performances do not ensure a future one.

With index funds, you won't be concerned about that: although in the long term, they frequently beat active managers, and the charges are minimal.

About Contracts for Difference

If you have entered this broker before, you must have noticed that the initials CFD appear all the time. Before we come back to this, we must say that cryptocurrency trading on this broker is only CFD if you are short-selling.

We will also explain terms like leverage and “going short”, in case you are considering day trading cryptocurrency or more advanced operations.

The good thing about this broker is that it lets you bet both “in the black” and “in negative”. In a hypothetical case: you have the certitude that the Apple will fall, so you clearly think “if it is going to depreciate, I'll just wait until it does”. Nevertheless, if you are convinced that it is going down, why not making some profits out of it?

You can do that by “going short”. More or less, it functions like this:

  • You ask for a loan of, let's say, 100 units of Apple, which total price at that moment is $ 5,000 (obviously, these figures aren't real)
  • You earn $ 5,000 by offering them at their price in the market
  • The Apple devaluates from $ 50 to $ 30
  • You obtain the 100 units again, but their total current value is now $ 3,000
  • You give back the 100 units to whom made the loan in the first place
  • You will have made $ 2000, since you keep the difference

Consider that it sounds much more tricky than it really is: we can summarize this whole operation by saying that by trading in Apple you can also make money if you anticipate the downs.

How does leverage work

Do you know what leverage is? Just in case, we'll put it simply: trading lets you invest more money than you can have in a given time. For instance, if you get in with $ 100 and you choose to leverage x2, the amount of your investment will be $ 200.

About leverage, Take Profit and Stop Loss

Assuming that, for example, you are positive that Apple price is going up, and that you have $ 1,000 for “going long”, you should know that you can increase your investment and make more money.

You could go to your bank, ask for a credit, put an asset as collateral, wait for it to be accepted and receiving the money, send the money to your broker, confirm that it arrived, and then purchase Apple… However, when you finish doing all that, probably Apple would be already at a much higher price, and it wouldn't be a good idea to invest.

Leverage is like a credit, and you will only have to click a few times! You will be able to operate with much higher amounts than what you actually have on the platform. Before trading, you will find the leverage options as in the screenshot:

apalancamiento

When operating with other assets you can use more leverage. This is because cryptocurrencies are usually medium-long term investments. However, leverage is used primarily for short-term operations or day trading. But let's see how leverage works.

You begin with $ 1,000 and pick leverage x2, then you would have $ 2,000 to invest (the extra $ 1,000 to reach $ 2,000 are “borrowed” from the broker).

A few days pass and turns out that you were right: Apple price raises its price by 20% and your money has appreciated reaching $ 2,400. But you don't want to take too much risk, so it's time to sell.

You will have to pay back the $ 1,000 of leverage and the net profit would be $ 400 (since the other $ 1,000 was your initial investment).

By starting with $ 1000 and getting $ 400, you'll be earning 40% of your investment.

But there's always a downside. If all goes as you planned and the price rises, you will make money. However, if the asset decreases, you will also lose more money in the blink of an eye.

Let's imagine that the asset didn't increase by 20%, but it decreased also by 20%, you won't lose $ 20 but double, $ 40. That is why to operate with leverage it is essential to know about Take Profit and Stop Loss.

Take Profit is used as a form of reducing risks when trading. When you enter, you can set a profit limit and ask that your position is automatically closed when the asset reaches a price. 

If you purchased Apple shares at $ 100, you request the broker to close when it reaches $ 120. That way, you make sure you won't change your mind and decide to keep waiting in case it keeps going up, which could make you lose it all.

Stop Loss is even more important, mostly if you trade with leverage, since a small loss with leverage can have a significant impact on your wallet. Consider that the broker will recommend a limit for Stop Loss, but it is better to place it closer to current price than that.