Reasons to Invest in French Stock Market and Types of Market Orders

 (photo credit: INGIMAGE)
(photo credit: INGIMAGE)
France is the 6th leading economy of the world and the 3rd biggest economy in the EU. The country houses 40 out of 500 world’s largest corporations, including some of the prominent airlines, insurance, energy, and cosmetic companies. Therefore, it is an appealing investment destination for international investors, especially for the Europeans.
On Strategy Stocks, you get a chance to enter the French stock market and buy Amazon share or any other popular securities with ease. Visit their website and start investing directly on the internet. Besides trading, the platform offers analysis tools and other functional features that are extremely helpful.
Compelling reasons to invest in the French stock market
  • The majority of France’s public companies trade on Euronext Paris Market. This is Europe’s 2nd largest stock market. As a lot of trade gets done here, investments are extremely liquid.
  • Unlike small exchanges, you can easily and quickly find buyers for your shares. Therefore, your investment is safe.
  • French companies are well-set with a huge market share and returns on your investment are steady.
  • No concerns about volatile swings as experienced in an emerging economy like Brazil and China.
  • Experts consistently review and research the French stocks, so your share picks and decisions are good.
  • French Government closely regulates the stock market, so no worries about getting scammed when you invest in the France stock market.
  • Foreigners can add international exposure to diversify their portfolio.

Downsides of investing in the French stock market
France is a relatively safe market for stock investment, but there are some risks attached. France is affiliated with the European Union. Therefore, all the countries in the coalition are financially correlated as well as liable for each other’s issues, up to a specific range.
France is a rich and stable country in the EU, so it has a lot to lose. Currently, Spain and Greece are coping with debt payment issues and the possibility that France could have to bear the cost increases.
France has a socialist business environment. The government regulates the business too closely and the taxes are high. Employees enjoy several benefits like long vacations, short work weeks, and a liberal retirement plan.
Therefore running a business in France can be costly. These factors can affect the profit margins, so shareholders get less money than what they could from investing in countries with capitalist economies.
Lastly, the French share market holds a majority of large and settled companies. It is great for a steady income, but there is no room for growth. The chances for your investment to break the border are probably not possible. Developing markets are volatile and risky, but offer a possibility for great returns.
Understand a different kind of market orders accessible in French stock market
You can sell or buy a security on the French stock exchange depending on your strategy and preferred price point. When you place market orders, there are transaction costs. Therefore if you ignore this and place an order, then it can turn into a costly error. Therefore understand the different stock market order types before investing in the French share market.
Order execution is based on -
  1. The price - The purchase orders with high rates and the sell orders with low rates are done first.
  2. The arrival order - Generally, ‘first come, first serve’ rule is supported.
The order must include the following details before submitting it on the stock exchange.
  • Type of transaction - buy or sell
  • Value code identity [ISIN] or financial product name
  • The number of security to trade
  • Order type
  • Order validity period
  • Price conditions
The orders get listed in the order book. All buy & sell orders for securities get listed and sorted according to its price.
Know the primary order types
1. Ordre au marché [Market order]
You can buy and sell during the trading term, at the best available price. It gets done at a few price points to cover the requested or offered quantity. It is more popular as it quickly executes the requested or offered quantities irrespective of price conditions. The downside is it lacks price control.
2. Ordre à la Meilleure limite [Best limit order]
The order gets the best bid limitations as it gets done after the implementation of market orders. If the possibility to get the order done at one price then the order gets executed instantly. In case, the order is insufficient, the best limit order transforms into a limit order.
For example, you set the best limit order for 100 shares. The best bid for 80 shares is $100, so the order for 80 shares will be made at $100. The remaining 20 shares will get exercised only when the seller sells them at the same rate i.e. $100.
3. Ordre à cours limité [Limit order]
The investors set the buying or selling price of a security. If the security price reaches the set price within the validity order period, the transaction gets done either totally or even partially depending on the quantity available. The limit order allows setting and controlling your execution price.
4. Ordre à Seuil de déclenchement [Stop order]
A trader sets the limit price and the order gets executed only when share price crosses it. A stop-sell order gets executed if the share price falls before a specific limit.
For example - If a sell order of 400 securities is placed at $80 and price drops then a threshold of $80 is accepted for only 250 stocks. The remaining 150 stocks will be evaluated based on the order book.
Tip - Stop sale [threshold is below the current security rate] and stop purchase order [threshold is above the prevailing stock price] are useful to mitigate the risks.
5. Ordre à plage de déclenchement [stop-limit order]
A stop order is given a threshold trigger but in a stop-limit order, the trigger threshold is limited to a specific set-value. If the threshold trigger is reached then the buy or sells order gets triggered to a specific limit.
For example - on a buy order, if the share increases $70 [threshold] up to $74 [limit], it means beyond $74 you are uninterested in share buying.
Refine your strategy based on stock market behavior. Avoid costly errors associated with transaction costs, and take full advantage of the bullish market condition. In France, there are strategic or tactical orders and complex orders about which you can gain more information on the internet.