Introduction
Due to several important technological revolutions traders now have a wide array of trading markets from which to choose. For those starting out their trading journey, the choice can be overwhelming as different markets offer vastly different opportunities. Not only are opportunities different but requirements will differ from market to market including things like capital requirements, liquidity, volatility, trading conditions, and trading hours.
A trading market can be seen as a place where securities or assets are exchanged with no fixed price. The world of cryptocurrency has altered this definition somewhat as arguments still fly between experts but the definition suits this article.
Forex Market
By far the largest market in the world and amounting to approximately 6 trillion USD in daily trading volumes the foreign exchange market is favored by many traders, from those starting out to some of the world’s biggest banks. The foreign exchange market, or simply just the forex market, allows parties to exchange foreign currencies at an agreed-upon price. As the forex market has no centralized exchange transactions are said to be done over the counter (OTC).
Often those starting out, or even looking to become a better investor, find that trading on the forex market is preferable as trading occurs around the clock. Further, prices are impacted by central bank interventions and announcements, as well as financial news reports. These events present traders with opportunities to take profits on currencies bought and sold. The market also has low trading costs when compared to other markets allowing traders to make multiple short-term trades without having to pay massive fees. For those starting out many online brokers offer demo accounts linked to the forex market. At Pocket Option demo, by providing such a service we can allow beginners to practice without losing capital and even experienced traders can test strategies.
Stock Markets and Exchange Traded Funds
Stock markets around the globe are some of the oldest markets in existence and are ever popular as they can help investors and traders achieve high capital gains. Stock markets are primarily known for trading in shares that represent portions of publicly traded companies. The relevant stock market, the New York Stock Exchange is the most well-known and facilitates the convenient buying and selling of shares in companies. Stock exchanges will also trade in bonds, indices, and other securities. Profits come to traders when their shares in companies like Google and Apple do well, realizing a profit on their original purchase.
Over the years investors have looked to buy into Exchange Traded Funds, or EFTs, which hold a basket of securities simply referred to as the portfolio. This method of investing which is linked to the stock market but can also have securities in other markets has proven popular with retail investors for their steady returns. The value of the portfolio is not determined by one stock so even if some are not performing the diversified portfolio should still give investors a return.
Cryptocurrency Market
Definitely the new kid on the block as a market and is often in the news for the incredible gains made and losses suffered by investors. This market is volatile, far more volatile than forex thus presenting many opportunities but just as much risk. If you are risk averse this is not the market for you. Unfortunately, the market has been plagued by recent scams which resulted in the values of certain tokens dropping significantly. Like the forex market, news cycles have an impact on price movement but unlike forex, the market is widely unregulated which can pose a significant risk to traders.
The listed markets above represent a few of the available markets traders can dive into. Other markets include the bond market and options trading. Like with everything in investing, it is important you do your research before committing to a market.