The Coca-Cola Company (NYSE: KO) needs no introduction. As one of the world's leading soft drink companies, Coca-Cola’s other well-known brands include Fanta, Fresca, Dasani, Costa Coffee, Minute Maid, Powerade, and Vitaminwater, among others.
If you want to trade the potential upside in Coca-Cola shares, this guide unpacks everything you need to know about placing your order from Australia.
About the company
Asa Griggs Candler founded the Coca-Cola Company in 1892 after spending $1,750 to purchase John Pemberton's popular recipe for the beverage. The company has offices in Atlanta, GA, with supply chain networks spanning the globe.
The company controls a number of household brands including Sprite, Fanta, DASANI, Sweppes, and Minute Maid.
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Step 1: Pick who to trade with
To trade Coca-Cola shares, you're going to need to sign up for an account with a broker. There are dozens of broker options for you to review, but we recommend choosing a firm with the following features.
There is no reason to pay commissions to your broker. With the rise of the commission-free model, there are several leading brokers offering no-commission trades. Commissions can eat into your profits if you're trading a small account. Signing up with a zero-commission broker lets you build your small account faster.
Fractional share trading
If you want to purchase Coca-Cola shares, your broker should offer you fractional share trading for small and mid-cap shares. You can trade fractional shares of Coca-Cola using fractional shares without risking your entire account balance and giving you the flexibility to invest in additional names.
Low account fees
Brokers compete with each other for your business. As a result, you'll find brokers all have different fee schedules. Compare each brokers’ required minimum balance, transaction costs, and inactivity fees before signing up.
With margin trading, you're essentially borrowing money from your broker to buy shares. For instance, most brokers allow margin accounts to "leverage" their position by 3:1 or 6:1 for certain shares. That means if you have $1,000 in a trading account with a 6:1 Margin, you can purchase up to $6,000 of shares. If the price falls though, you may have to put in additional funds to cover any maintenance margin required by the broker.
Real-time data and charts
The charts that come with your trading platform usually have a 15-minute delay on prices. If you want live market data for day trading, it comes at an additional cost. Charts from eSignal and TradingView offer you alternatives with more features and indicators to enhance your trading capability.
Step 2: Fund your account
Brokers will accept deposits using debit cards and bank wire transfers. Note that it might take several days before you can actually trade while the broker verifies your identity and clears your funds. However, once you are on their system, further deposits will be a lot faster.
Step 3: Decide how much you want to invest
When you fund your trading account, do it with money that won't jeopardise your financial position if you take a heavy loss. Losing your life savings in a single trade could spell financial disaster. Never risk more money in trading than you can afford to lose.
Step 4: Choose between a share of stock or ETFs
After funding your account, it's time to choose your trading asset. Coca-Cola shares are available to purchase, but it gets expensive quickly.
If that's the case, you can always purchase an exchange-traded fund (ETF). ETFs are trading vehicles containing several companies.
The ETF price moves based on the average price action of all shares in the holding. ETFs are a great way for traders to spread risk, avoiding heavy volatility conditions in the market.
ETFs with exposure to Coca-Cola include iShares U.S. Consumer Staples ETF (IYK), Consumer Staples Select Sector SPDR Fund (XLP), and Vanguard Consumer Staples ETF (VDC).
Step 5: Set up your order
After funding your account, you’ll implement one of the following order types to help you buy your Coca-Cola shares.
This order is the most common type but can be risky. It gets you into KO share at the next quoted price. Therefore, your trade plan might have you entering KO at US$80. However, the broker might fill your order at US$85, depending on how the market is moving. The US$5 extra you end up paying is your "slippage."
Professional day traders prefer limit orders. The limit order creates a line in the sand where you don't pay more than a specified amount for the share. Let's say you set a limit order to buy KO shares at US$80. If the share reaches this price, your order fills, and you won't get any slippage.
This order lets you sell when you reach your price target. If you get in KO at US$80 and set your stop limit to US$90, the broker gets you out of the position when the price reaches this target.
This order type helps traders limit risk. Let's say you're buying KO at US$80. You set the stop loss at US$75, and if the price dips to this level, the broker automatically liquidates your position in the share. This risk management tool can help you avoid taking a catastrophic loss.
Step 6: Execute your order
After selecting your order type, open your trading platform and place your order. Enter the ticker symbol, then complete the fields for the number of shares you want to buy and the limit price you're willing to pay. After that, click the buy button to enter KO share and click the sell button when you achieve your price target. The broker will sell your shares and send your realized profits to your trading account.
Coca-Cola stock has grown steadily since the 2008 financial crisis. Before the pandemic hit in 2020, the stock was trading at an all-time high. However, the pandemic caused a big sell-off in the stock, pushing it back to 2012 levels though the share price has since recovered.
We recommend staying on top of market catalysts like earnings reports, press releases, and newsletters, as they will contribute to price volatility and trading opportunities in KO stock.
Disclaimer: We put our customer's needs first. The views expressed in this article are those of the writer alone and do not constitute financial advice. Advertisers cannot influence editorial content. However, Finty Australia and/or the writer may have a financial interest in the companies mentioned, direct shares or an ETF. Finty Australia is committed to providing factual, honest, and accurate information that is compliant with governing laws and regulations. However, do your own due diligence and seek professional advice before deciding to invest in one of the products mentioned. For more information, see Finty Australia’s editorial guidelines and terms and conditions.