How to Trade PayPal Shares: PYPL Stock Trading Guide

PayPal Holdings Inc. spurned off as an independent publicly traded company from eBay Inc. in 2015, trading on the Nasdaq exchange at $38 per share. Since then, its share price has witnessed significant fluctuations.

This article equips those interested in gaining exposure to PayPal Holdings Inc.'s share prices with the important trading concepts they need to know about PayPal shares and how to trade them.

Main Points:

• PayPal is a major player in the online payments industry, with global reach and a history of acquisitions.
• Trading PayPal share CFDs involves opening long and short positions on PayPal stock price to potentially capitalise on its price movements without owning the actual shares.
• Technical and fundamental analysis can help traders make informed decisions based on PayPal stock price movements.
• While trading PayPal shares involves short-term speculation through derivatives like CFDs, investing in PayPal shares involves buying and holding the stock for long-term gains.

What Is PayPal Share CFD Trading?

PayPal share trading involves opening long and short positions to capitalise on the price fluctuations of PayPal shares.

Through Contracts for Difference (CFDs), “a derivative instrument that mirrors the price movement of financial assets”, traders and investors can gain exposure to the price movement of PayPal shares without owning any shares in the company. In addition, CFDs also enable traders to profit from or incur losses based on the price differences of PayPal shares.

Differences Between Share CFD Trading and Investing in PayPal Shares

CFD Trading and investing in PayPal shares are two distinct yet common approaches to gaining exposure to PayPal stock's price movements.

The differences between CFD trading and investing in PayPal shares are as follows:

• Unlike investing, trading the share CFDs of PayPal Inc. does not make you a shareholder.
• Investing often relies on the expertise of financial experts and advisors, but trading PayPal share CFDs requires an individual’s time, effort, and deep understanding of the fintech markets.
• The main goals of investing are long-term gains and potential dividend returns, but CFD trading typically aims for short-term gains, whether daily, weekly, or monthly.
• Unlike investing, which involves buying PayPal shares, trading share CFDs online involves speculating on PayPal derivative instruments like Contracts for Differences (CFDs).
• Investing in PayPal shares does not involve using leverage, but trading PayPal share CFDs does.

Why Might PayPal Shares Be Important to Traders?

Several factors make PayPal shares of significance in the financial markets:

• PayPal holds 45% market share of the online payment industry in 2024, outpacing competitors like Stripe, Shopify Pay, and Amazon Pay.
• PayPal is more than just a domestic player in the United States. Its global reach spans diverse regions and economic landscapes. Notably, it was the first foreign payment platform approved by the Chinese authorities.
• PayPal's constant exploration of new technologies, such as cryptocurrencies and buy-now-pay-later solutions, keeps it at the forefront of the global payment industry.
• With a history of strategic acquisitions, like Braintree, PayPal has bolstered its offerings and expanded its market presence, potentially increasing its stock value.
• PayPal's widespread recognition and user base create stability that may appeal to risk-averse traders seeking established companies.

Risks of Trading PayPal Share CFDs

• Trading PayPal share CFDs involves leveraging, posing a high level of risk. Therefore, a strong understanding of risk management strategies is crucial to mitigate potential losses.
• Actively trading PayPal share CFDs demands constant monitoring and open position management, which may be time-consuming.
• Frequent PayPal share CFD trading can incur higher transaction costs, commissions, and associated fees, impacting overall returns.
• Trading share CFDs may involve tax considerations as taxes on short-term capital gains may have a bite on your overall returns.

How to Read PayPal (PYPL) Stock Chart

It is crucial to understand what is revealed on the PayPal stock price chart. This includes the following:

• Ticker Symbol (PYPL): This unique symbol, “PYPL”, is the identifier for PayPal's stock on every financial market platform.
• Closing Price (PYPL): This is the last price at which PayPal shares traded during regular market hours.
• Bid-Ask Spread (PYPL): This shows the difference between the highest price (bid price) at which someone is willing to buy PayPal shares and the lowest price (ask price) at which someone is willing to sell PayPal shares. A smaller spread would generally mean more interest in the stock.
• Percentage Changes: This reflects the performance of PayPal stock price relative to the previous day’s closing price.
• Timeframe Selection: This lets you choose between different time horizons (day, week, month) to analyse how PayPal's stock has performed.
• Chart X-Axis: The horizontal line at the bottom of the chart reflects the timeframe you've chosen so you can see how PayPal share price has moved over a specific period.
• Chart Y-Axis: The vertical line at the right side of the chart reflects the current price of PayPal shares in US dollars in any timeframe.

Steps to Trading PayPal Share CFDs

There are some (non exhaustive) steps that can be adopted to begin trading PayPal share CFDs and effectively manage the risk involved. These steps are detailed as follows:

1. Open a CFD Trading Account

   First and foremost, to begin trading PayPal share CFDs, you’ll need to open a trading account with a CFD provider. For example, Plus500 offers services for individual traders and investors through an intuitive online trading platform and a WebTrader app that works on iOS, smartphones, and PCs.

2. Locate PayPal (PYPL) Stock

   Navigate to the instrument section after opening an account and logging in to the Plus500 app or WebTrader platform. In this section, locate and choose PayPal under the US category of Popular shares to open the PayPal stock price chart.

   Alternatively, you can type "PayPal" or "PYPL" into the search bar at the top left of the trading platform.

3. Analyse the Price Movement of PayPal Shares

   Before clicking the buy or sell buttons, it is essential to form concrete ideas on why PayPal shares may decline or appreciate. Traders can arrive at such conclusions by conducting technical and fundamental analyses of PayPal's stock price.

   
   

   Technical Analysis of PayPal Stock Price

   Technical analysis of PayPal's stock chart involves two fundamental techniques; reading chart patterns and using trading indicators.

   
   
   • Chart Pattern Analysis: Chart pattern analysis on PayPal's stock chart uses trendlines or horizontal lines to identify emerging patterns based on historical data. These patterns help forecast future price movements of PayPal shares. By recognising these patterns, traders can anticipate potential market shifts and make informed trading decisions.
   • Technical Indicators: Technical indicators are statistical analyses applied to prices and volumes. They provide actionable insights into PayPal stock market trends and potential reversals. The most common technical indicators include Moving Average Convergence Divergence (MACD) and relative strength index (RSI).

   Fundamental Analysis of PayPal Stock

   Beyond technical analysis, fundamental analysis uncovers a company's intrinsic value, including its financial health and market positioning.

   The key fundamental metrics of PayPal Holdings Inc. are the following:

   • Revenue: This represents the total income PayPal generates from its business activities. It is a critical indicator of the company's financial health and growth potential.
   • Net Income (or Loss): This measures the profitability of PayPal Holdings and its ability to generate shareholder value.
   • Earnings per Share (EPS): This measures the profitability of PayPal Holdings on a per-share basis.
   • Price-to-Earnings Ratio (P/E): This ratio helps investors determine the market valuation of PayPal Holdings earnings. A higher P/E ratio indicates that PayPal's share price is overvalued, while a lower ratio might suggest it is undervalued.

4. Execute and Manage Trades on PayPal Share CFDs

   After forming a bullish or bearish bias, it's crucial to understand the different order types available to trade PayPal shares effectively.

   To open a position on PayPal share CFDs, traders may use market orders or pending orders.

   • Market Order: This allows immediate trade execution at the current market price.
   • Pending orders: You can set predefined entry points to buy or sell PayPal share CFDs.

   To close a position, traders may decide to close a trade manually or consider the following:

   • Stop-Loss Orders: A stop-loss order is a pre-programmed exit strategy that automatically exits trades to limit further loss.
   • Trailing Stop Orders: This alternative stop order adjusts automatically to lock in profits at predetermined levels as the market moves in your desired direction.

   These different order types enable traders not only to initiate trades but also to manage their positions effectively.

Risk Management Practises for Trading PayPal Share CFDs

Effective risk management is crucial when trading PayPal shares. Here are some key practises to consider:

1. Risk/Reward Ratio: This ratio helps traders evaluate potential returns against risks. By aiming for a favourable risk/reward ratio, you can minimise potential losses while maximising potential gains.
2. Hedging Strategies: This involves taking an offsetting position to protect against potential losses. For instance, if you initially held a long position and now expect the share price “might” drop, you could hedge by taking a short position. This way, any loss in the long position could be compensated by gains in the short position, thereby minimising your overall risk.
3. Diversification: Trading other fintech stocks can help to smoothen out returns and reduce the impact of PayPal's stock volatility on your margin.
4. Demo Accounts: Traders can utilise a demo trading account to test various trading strategies without risking real capital. This experience can be invaluable in understanding market dynamics and refining your approach before trading real money.

Why Trade PayPal CFDs with Plus500

• Plus500's user-friendly platform lets you trade PayPal share CFDs from the comfort of your desktop, iOS and Android.
• With a robust suite of technical analysis tools and an integrated economic calendar on the Plus500 trading platform, traders can analyse PayPal's stock chart and make informed trading decisions.
• Plus500 prioritises swift order execution, ensuring your trades are filled precisely at predetermined entry and exit points.
• With Plus500’s competitive spreads, your trading costs can be reduced, but keep in mind that other fees may apply.
• Plus500 provides leverage for trading share CFDs, which allows you to control larger positions with less capital, hence amplifying potential profits. However, it is essential to remember that leverage can also result in significant losses.

Conclusion

Trading PayPal share CFDs provides an opportunity to gain exposure to the price fluctuations of PayPal stock without owning the actual shares. By opening a trading account, analysing the fundamental and technical indicators of PayPal stock, and implementing effective risk management practices, traders can make informed decisions on when to buy or sell PayPal share CFDs.

Frequently Asked Questions

Where Can I Trade PayPal CFDs?

You can trade PayPal share CFDs through online trading platforms like Plus500 without being a PayPal shareholder. Plus500 offers leverage, low spreads, and advanced trading tools to manage risk when trading PayPal share CFDs.

What Are PayPal Trading Hours?

On the Plus500 trading platform, traders can monitor PayPal share price movements in real-time and trade on weekdays from 01:00 PM UTC to 08:00 PM UTC. Please note that trading platform hours may vary based on the specific operator.

Is PayPal Overbought or Oversold?

To determine whether PayPal is overbought or oversold, technical indicators like the Relative Strength Index (RSI) can offer insights into whether PayPal might be overbought (above 70) or oversold (below 30).

Which Are Some Popular Fintech Stocks?

Popular fintech stocks include Coinbase (COIN), PayPal (PYPL), Visa (V), MasterCard (MA), and Robinhood (HOOD).

Who Holds the Most Shares of PayPal Holdings Inc.?

As of July 2024, the top 3 largest shareholders of PayPal Holdings Inc. are Vanguard Group, BlackRock (BLK) and State Street Corp. (STT).

What Strategies Can Be Used for Trading PayPal Share CFDs?

Different strategies for trading PayPal share CFDs include day trading, swing trading, and position trading.