How To Buy Data Stocks – Investing In Data Stocks Beginner’s Guide 2021

Fact Checked by Gary McFarlane

The data industry is a massive and complex market that comprises everything from big data and data sciences to analysis and insights. As data and analytics are needed in key industries such as healthcare and telecommunications combined with the rising need for the internet in general, the industry continues to grow. Buying stocks in the data industry is a promising prospect that can prove to be highly beneficial in the long run. It is a market that shows no signs of slowing. 

In this guide, we will be covering everything you will need to know about investing in data stocks in the USA. This will include the stock-buying process, the best brokers that will help you do it, and some pros and cons to buying data stock. 

#1 Broker to Buy Data Stocks – eToro

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How to Buy Data Stocks – Step by Step Guide 2021

If you are just getting started on your journey in the stock market, fret not, we are here to help you take the first steps. Here is a quick step-by-step guide to help you buy your first data stock. 

 

  • Step 1: Register yourself on eToro: To buy a stock of any company, you will need to enrol yourself on a stockbroker platform. We recommend eToro for the great blend of features and security protocols it offers. Type ‘eToro.com’ in your browser and click on ‘join now’ to enter your details.
  • Step 2: Verify yourself: eToro is a regulated platform that employs strict security protocols to protect users’ data. Every new user will need to verify their identity to trade on eToro. You will need to present your photo ID and proof of address to verify yourself.
  • Step 3: Fund your account: Once your account is created and you have verified yourself, the last step is to fund your account before buying stock. Click on ‘deposit funds’, enter the amount you want to put in your wallet, and click on ‘deposit’. You can perform this transaction via credit or debit cards, bank transfers, and eWallets.
  • Step 4: Invest in data stock: You’re ready to buy your first data stock. Simply type a data company’s name in the search bar, click on ‘trade’, enter the amount you want to purchase, and lastly, click ‘open trade’. There you have it – you bought the stock! You can manage all your investments in the portfolio section of your account.

Where to Buy Data Stocks – Choose a Broker

Choosing a reputable broker is perhaps the most necessary step in the stock-buying process. You wouldn’t want an untrustworthy broker handling something as important as your finances. However, with so many brokers in the market, it can be difficult to pick the right one for you. Here is an in-depth review of some of the best brokerage platforms in the market to help you make the right decision.

1. eToro – Best Broker Overall to Buy Data Stocks

Launched in 2007, eToro has grown into one of the largest stockbrokers in the world, currently serving more than 20 million happy customers. Not only does it have an impressive collection of features and tight-knit security protocols in place, but it has also made sure to improve on them consistently to provide the best possible experience to its users. It has a multitude of features for both novice and seasoned traders that have helped it gain such a following.

Security and Privacy

eToro is a regulated platform under the supervision of the SEC. This essentially means that routine audits are conducted and no illegal activities are promoted on the platform. Moreover, it uses 128-bit SSL protection to prevent any hackers from accessing client data. You can rest assured that your information and money are in safe hands. As additional protection, users can enable 2FA, a feature that requires you to input every time a sensitive action needs to be performed. The code will be sent to your registered mobile number. It is advisable that you always enable 2FA.

Fees and Features

eToro happens to be quite an economical platform, making it the preferred choice of newcomers. Another feature lauded by new traders is eToro academy that offers valuable information needed to have a successful trading experience. Users can go through the information at their own pace and brush up their skills before they invest any real money. Another feature called CopyTrading is a social trading system that lets users copy the trading style of seasoned users. Experienced users will find great use in the powerful charting tools that help you craft a great strategy.

eToro Fees

Fee Type Fee Amount
Commission Fee 0%
Deposit Fee $0
Withdrawal Fee $5
Inactivity Fee $10 (Monthly)

Pros

  • It is a regulated platform
  • It offers charting tools 
  • Offers the feature of CopyTrading  
  • eToro academy feature to help beginners 
  • 128-bit SSL encryption protection 
  • 2FA feature acts as added protection 

Cons

  • Lacks MetaTrader support

68% of all retail investor accounts lose money when trading CFDs with this provider.

2. TD Ameritrade – Traditional Broker to Buy Data Stocks

If you are looking for a more traditional stockbroker, TD Ameritrade is the platform for you. It has been around since the 1980s and has seen quite a few name changes since then. It offers a variety of stocks like no other – both old and new and in its own words ‘takes security very seriously’. It is the combination of those two aspects that have kept TD Ameritrade going strong all these years and it shows no signs of stopping.

Security and Privacy

As TD Ameritrade makes it very clear how serious about protecting its users, it becomes a welcoming sign for new investors knowing their information and money is in safe hands. Similar to eToro, TD Ameritrade is also regulated by the SEC, meaning the platform is regularly audited and uses 128-bit SSL encryption to ensure that no data gets incepted by any outsider. As an additional layer of protection, TD Ameritrade offers its user verification prase system. What it does is that it gives you a unique phrase upon creation of your account and you can request any TD Ameritrade employee to give you that phrase to ensure that they are a genuine representative of the company or not.

Fees and Features

The platform has a genuinely affordable fee structure, making it accessible to most traders. As for features, you get an impressive variety of investment options on TD Ameritrade, from stocks and mutual funds to bonds. Other than that, it regularly participates in Initial Public Offers (IPOs). This makes TD Ameritrade an excellent platform for anyone wanting to manage multiple investment options on a single platform or wanting to build a diverse portfolio. There is another useful feature called automatic dividend reinvestment that automatically reinvests your dividends based on previous patterns to help create a consistent stream of income and compound your interest. This is a great tool if you are looking to increase the value of your portfolio.

TD Ameritrade Fees

Fee Type Amount
Commission 0% (on US stocks) 
Withdrawal Fee $0
Deposit Fee $0
Inactivity Fee $0

Pros

  • 128-bit SSL encryption security
  • It is an SEC-regulated platform
  • Offers a wide range of markets
  • Uses a user verification phrase for protection 
  • Automatic dividend reinvestment helps compound your interest

Cons

  • Leveraged positions have a bit high fees
  • The user interface may be difficult to understand 

68% of all retail investor accounts lose money when trading CFDs with this provider.

3. Robinhood – Easy to Use Platform to Buy Data Stocks

Robinhood is a fairly new stockbroker in the market that has garnered an impressive userbase of over 13 million customers. It is only available in the USA and on mobile, which makes it a little restrictive, but it has clearly found an audience among traders, especially novice traders who find the platform extremely easy to use. Traders with more money also find the platform appealing because of the protection it offers.

Security and Privacy

Despite being a newer stockbroker, Robinhood has done quite well when it comes to implementing security protocols. Users are covered by the SIPC insurance in case the platform gets compromised. The insurance covers up to $500,000 and offers ‘excess of SIPC’ as an additional cover. It covers balances up to $10,000,000. This is a rare feat and a huge draw for big whales to the platform. There is a multisig verification feature that acts as additional protection for sensitive actions on your account. 

Fees and Features

Other than the debit and credit card fees, Robinhood is quite affordable. It has a simple and sleek user interface that is enjoyed by beginner traders. Other than that, it provides cash management services that in simple words are cash backs on daily purchases. They are also greatly appreciated by users of Robinhood. The only limitation it suffers from is the geographical boundaries, being a USA-only platform and being restricted to mobiles only. Most people today use mobile phones but many still rely on their browsers for trading activities. Many have dedicated laptops or computers for that. It will not be easy for them to shift it to a mobile they use for most other activities.

Robinhood Fees

Fee Type Amount
Trading Fee 0%
Credit/Debit Card Fee 3.99%
Spread Fee Variable

Pros

  • SIPC insurance covers up to $500,000
  • Excess insurance outside of what SIPC covers
  • Multisig feature for protection 
  • Sleek interface
  • Available as a mobile app
  • Is easy to use
  • Cashback available on daily purchases 

Cons 

  • Some advanced features are missing
  • Seasoned traders may find it too simplified

68% of all retail investor accounts lose money when trading CFDs with this provider.

Buy Data Stocks – Broker Price Comparison

If you find the above breakdown a bit confusing, here is a simple comparison of the fee structure of all the platforms to help you make an informed decision.

 

Broker Commission Deposit Fee Withdrawal Fee Inactivity Fee
eToro 0% $0 $0 $10 monthly (after 12 months inactivity)
TD Ameritrade 0% (on US stocks)  $0 $0 $0
Robinhood $0 on up to 50 shares. Up to $5.95 on more than 50 shares $0 $0 $0

What are the Different Kinds of Data Stocks? 

Many new traders are under the impression that all stocks are the same. That is not the truth. While there are quite a lot of ways to invest in a company, the most prominent three are stocks, Exchange-Traded Funds (ETFs), and Contract For Difference (CFDs). Let us take a look at them in brief.

Stocks

Stocks are the most common way to invest in a company. When you purchase a stock. I.e., a share of a company, you buy a small fraction of it, which means you become part-owner of that company. This makes you eligible to earn quarterly or yearly dividends. A dividend is a portion of the profit distributed amongst its investors. Additionally, you become eligible to vote in the company’s matters upon purchasing a certain number of shares. Shares are a great way to gain long-term and direct exposure to a company of your choice.

ETFs (Exchange-Traded Fund)

An exchange-traded fund is a great way to get exposure to a number of companies in one go. A fund manager or brokerage will group related assets of companies to facilitate easy investment for you. Unlike stocks, ETFs carry much lower risk. If one of the stocks decreases in value, the loss can most likely be mitigated by the other assets in your bundle. However, also unlike traditional stock, you do not own any underlying assets with ETFs.

CFDs (Contract For Difference)

Both stocks and ETFs categorize as long-term investments. If you are looking for a short-term deal, a contract for difference may be the one for you. When you invest in a CFD, instead of purchasing a stock, you instead speculate whether its price will go up or decline. CFDs are speculative investments and the trading happens over a short period of time. You don’t own any assets. It should be noted that CFDs are leveraged instruments and carry a high risk.

Best Ways to Buy Data Stocks

Now that you have a general idea of the types of stocks, let us take a look at their pros and cons and the investment situation they are best suited for when it comes to investing in data stock.

Invest in Data CFDs

If you don’t wish to b tied to long-term investments and own assets in the market, CFD might be the right option for you. You can engage in multiple short-term investments in a short period of time. While you stand to earn big with CFDs, you should also remember that they are leveraged instruments and carry a high risk. So, only go forward with CFDs if you truly understand the risks associated with leverage.

Invest in Data ETFs

Every trader has a different level of tolerance when it comes to taking risks in the market that depends on your goals, strategy, and financial situation. If you don’t wish to take high risks and are looking for a safer, long-term investment option, ETFs offer a great opportunity. While they don’t provide direct exposure to data stock, they do give you partial exposure. You can create a long-term stream of income via ETF stocks. 

Invest in Data stocks

To this day, stocks remain the go-to method for investors wanting to build their wealth and get long-term exposure to a company. If you firmly believe that data stocks are going to grow in the future, you can certainly invest in stocks. When the price rises, you stand to gain big as compared to if you invested in ETFs. The opposite is also true, meaning if the value of the stock decreases, there won’t be other assets to mitigate the losses.

Is Buying Data Stocks a Good Investment? 

Let us take a look at the prospects of investing in data stock and what are the pros and cons associated with them.

Massive industry that is everywhere

The data industry is massive in and of itself, but it is also the one powering other key industries such as healthcare and telecommunications. As so many others depend on it, it is an industry that is not likely to get slow in the near future. The global data analytics market alone bought in $22,998.8 million in revenue in 2019, and that number is only expected to go up.

Teaming up with strong companies 

Today, big companies like Netflix and Alphabet rely heavily on the data industry to run their operations and make decisions. By tying itself with such massive corporations, the data industry ensures that it stays afloat and relevant in the long run. 

Buying Data Stocks – What are the Risks?

Here are some of the aspects you should consider before buying data stock.

Not known about by the general public 

A downside to investing in the data industry is that it is not that well known by the general public. So you cannot rely on word of mouth to hear about a company you want to invest in like you would with other markets such as alcohol or water. 

Complex industry that requires research

The data industry is enormous and complex and you simply cannot go into it with surface-level knowledge. It is necessary that you perform your own research and continue to keep yourself updated with the happenings of the data industry to make the correct decisions. You will need to learn about its subdivisions as well as the other industries it powers to understand its workings. 

How to Buy Data Stocks With eToro

Buying your first stock can be an intimidating experience. Most platforms make it even harder by throwing the financial jargon at you. To help you buy data stock with ease, we have come up with a detailed and comprehensive guide. It will help clear all your doubts and simplify the process for you.

Step 1: Open an account with eToro

The only prerequisite to buying any stock is to have an account on a stockbroker platform. It’s important that you select yourself a high-quality broker as it will handle something as important as your finances as well as have access to your information. We recommend eToro as it offers top-notch security along with a multitude of features. Type ‘eToro.com’ in your browser, click on ‘join now’ and fill in your details in the form that appears. 

Step 2: Verify your account

eToro is a regulated platform that takes the security of its users very seriously. Thus, every new user has to verify themselves to be a part of the eToro family. The verification process is extremely easy and instantaneous. You just to present a photo ID such as your driving license or passport along with proof of address like a utility bill or bank statement to verify your identity.

Step 3: Fund your account

Once you complete the verification process, the next step will be to put money in your account. Think of this as putting money in your wallet before you go out shopping. To fund your account, click on the option to ‘deposit funds’, enter the amount you wish to put in your account, say ‘$100’. Finally, click on ‘deposit’ to finish the process. The transaction can be performed using credit or debit cards, bank transfers, and eWallets such as PayPal.

Step 4: Buy Data Stocks!

Type the name of a company in the data market into the search bar, click on ‘trade’, enter the amount you wish to buy, and click on ‘open trade’. You bought the stock. You can view all your investments in the portfolio section of your account.

Conclusion

The data industry is more powerful than ever and it is only going to get stronger in the future. Investing in the data industry is a profitable prospect but don’t go in without doing your own research. It is a complex industry that requires investors to have more than the basic knowledge of its workings. Make sure to keep yourself updated on the happenings of the industry to make the right decisions. 

Best Platform to Buy Data Stocks – eToro

1
$50Exclusive promotion
Our score10
  • Buy over 800 stocks with 0% commission
  • Social trading network
  • Copy over 12 million traders and investors
0% Commissionstart TradingOur score 10

FAQs

What is a Data CFD?

What is a Data ETF?

What’s the Future of Data Stocks?

ETFs vs CFDs

Where can I Buy Data Stocks in the USA?

About Atreyee Chowdhury PRO INVESTOR

Atreyee Chowdhury works full-time as a Content Manager with a Fortune 1 retail giant. She is extremely passionate about writing and helped many small and medium-scale businesses achieve their content marketing goals with her carefully crafted and compelling content. She loves to read, experiment with different cuisines, travel, and explore the latest content marketing and L&D trends in her free time.