This article will seek to give you a little more information on the trading markets available and help you to identify which market may be best suited to you and your requirements.
Stocks and Shares; The stock market
The stock market is undoubtedly the most well-known market to the average investor. The stock market will allow an investor to buy and sell shares in publicly traded companies.
You can make money on the stock market either by receiving a dividend payment from the stock you own. A dividend is where the company will pass on a share of its income to the investors who hold shares in that company. Alternatively, you can make money by selling your shares for a higher price than you paid. While it sounds simple enough understanding the intricacies of the stock market and the companies you are investing in can be difficult. There are many factors that dictate the price of a share and share prices can decrease in just the same way that they can increase.
When it comes to the stock market there will be companies that are deemed ‘safe, medium, or high risk’ when it comes to investing. Be sure that you have carried out your research and that you are comfortable with the level of risk that you are undertaking when trading.
Forex Exchange (Forex)
Forex trading or FX trading is one of the most traded markets in the world. Trillions of dollars worth of transactions are carried out every day by traders, companies, and individuals. FX trading essentially enables investors to speculate on the changes in exchange rates. It is the conversion of one currency into another and making a profit (or loss) from that conversion. This differs from the stock market as on the stock exchange you are buying an asset, a share in a company. When trading on the FX market you are buying a currency by selling it against another. It can be a volatile market and can present difficulties for new traders who are trading with professional and highly trained traders employed by large multi-million dollar companies.
A cryptocurrency is a digital or virtual currency that is thought to be virtually impossible to counterfeit owing to the fact it is secured by cryptography. It is a decentralized currency meaning it is not linked to any state or government and records of your ownership are held by secured databases. Cryptocurrency trading is essentially trading cryptocurrencies and speculating on the price movements of the particular cryptocurrency. There are a number of different cryptocurrencies with Bitcoin perhaps being the most well-known. Cryptocurrency trading has gained enormous traction over the years and traders have made some incredible profits from cryptocurrency trading. That said the crypto market is known to be volatile and traders can fall victim to heavy losses. Unlike the stock exchange, crypto can be traded 24 hours a day, and keeping on top of the bitcoin price (or cryptocurrency of your choice) is essential. It is also recommended that you chose the currency you wish to trade in carefully, sticking to some of the more well-known currencies and that you trade on approved exchanges such as Etoro.
Commodities trading is the buying and selling of raw materials such as oil, gold, copper, flour, or corn. Typically a commodities trade will involve the trading of future contracts, where you agree to buy or sell a specified commodity for a certain price on an agreed date. Although it can sometimes involve the physical trading of goods. Commodity traders will make money by speculating on how the commodities' prices will fluctuate. Commodity prices are known to experience wide fluctuations as a result of supply and demand. For example, should there be a drought or adverse weather condition that globally affects crops you might expect to see wheat prices rise as a result of a potential supply issue. Although some commodities such as gold are viewed as ‘stable’, commodities are thought to be more volatile than stocks and staying on top of current affairs worldwide is essential when trading in commodities.
This is a contributed post.