Which markets to trade

Once you have decided to jump into trading in financial instruments must make a choice of which markets to trade. Markets are mainly divided into five markets stocks and bonds
ETFs, futures, options and forex. In short we will examine the characteristics of each of them, to take them into account when choosing your trading.

Market shares
This is perhaps the most famous market that new traders face. A general participation of such a market is expressed in purchasing shares example of Apple and expect that the price will rise in a certain period of time. Owning shares of a company can bring you additional income in the form of dividends.

The market for ETFs or Exchange Traded Funds
The second major market for trade is closely related to the shares are ETFs. ETFs are financial instruments whose shares are traded on stock exchanges. The principle of ETFs is that they follow the performance of a particular index of securities, the price of a sector or market price of commodities like oil, gold and others. Trading this type of fund, each investor can diversify their portfolio, thus reducing the risk of losses. Moreover, ETFs are attractive to investors because of their lower cost (than if the securities are purchased separately).

The market for futures and commodities
Futures are slightly more complex than stocks or ETFs. And there is a greater risk in trading futures or commodities. A futures contract is a derivative instrument, representing an agreement between two parties to buy or sell an asset at a predetermined price for delivery at a future date. When the dealer buy a futures contract, he expects the price of the underlying asset to increase in the future, which will allow him to profit.

Market options
Drew Options are derivative. The option is a security which gives the buyer the right but not the obligation, to buy or sell an underlying asset or instrument at a predetermined price on or before a certain date. The seller has a corresponding obligation to execute the transaction – which is to sell or buy – if the buyer exercises the option. So options are naturally more complicated than buying stocks or futures.

Forex
Forex (FX) is the market where currencies are traded. The Forex market is the largest and most liquid market in the world with an average value traded above $ 1.9 trillion per day and includes all the world’s currencies. If trade Currency sounds interesting, then maybe currency trading is for you.