Before becoming a trader, one must choose the financial instrument that will be traded. This is not an easy decision, or it is decided in a hurry. A prospective trader should understand the characteristics of all online trading instruments, ranging from stocks, forex, commodities, and so forth. Then choose the most suitable for him.
A “trading instrument” is actually any tradable asset. It could also be a contract that can be bought or sold on the financial market. There are various trading instruments that can be selected for trading, for example:
Shares are ownership of a company. These shares may be traded or become long-term investments. Shares can be traded intraday, for one day, for a week, for a month, or held for years.
- FOREX (Foreign Exchange)
Trading forex means trading one currency with another currency. Traders take profits from rising or declining currencies.
Many types of commodities that can be traded, such as gold, silver, oil, to agricultural products such as, cocoa, wheat, and others.
Bond is a bond that can be traded.
Stock exchange indexes may also be traded.
The option is a derivative of shares. Basically, the option is the right to buy or sell shares at a certain price and up to a certain time limit. This right can be traded. Usually, trading options require fewer funds than direct stock trading.
ETF is a derivative of stock. Usually shaped mutual funds index but can be traded as easily as … Read More