Trading currency pairs
Forex, also called foreign exchange market, is an international currency market that comprises the operations done with the floating and fixed currencies around the word. Basically, Forex is for a currency the same as real-estate is for a house. Whenever you go to exchange your currency for another one, you automatically deal with the Forex market. The specific thing about this market is that there is no central force that could handle or control the market. Forex is not controlled by any monopoly, be it a government, international agency, bank, IMF, or whatever it may be.
Traders love to speculate on currency pairs because Forex is the most liquid market in the world. You should know that the daily trading volume exceeds $5 trillion, which makes it by far the largest market in the world. Another great advantage that Forex traders love is the availability of the market – it’s open 24 hours from Monday to Friday late at night.
Today, trading currency pairs is available to all people (there used to be a restriction, and only companies with large capital were allowed to trade). To open a trade, brokers such as FiNMAXFX are ready to help. The Forex broker provides a platform on which you can open and monitor trades.
FiNMAXFX allows traders to trade shares of the world's largest companies. Dealing with stocks is quite different when compared to Forex pairs or commodities, which is why traders should know the right approach. The reason is that the main trends are set by large companies (pension funds, investment companies, hedge funds and others). Why do these companies show so much interest in the stock market? Well, it’s because the stock market is quite predictable, less subject to market noise and perfectly fulfills long-term trends.
Simple traders also have the opportunity to invest in stocks. Shares are prone to explicit trend movements, but their main advantage is that trends are much easier to forecast than, for example, Forex ones. Behind the trend, there are certain companies with specific financial indicators that clearly show the company's market condition, as well as their prospects. In many respects, the date of publication of quarterly reports is extremely important for traders, because the latter can determine trends.
Commodity futures or commodities are one of the oldest assets to invest in. For hundreds of years, people have been selling wheat, corn, sugar, oil, etc. The main feature of such assets is their physical existence. That is, we do not buy paper, but invest in concrete, real goods. On the one hand, this is an important advantage, but on the other hand, it imposes a number of specific capabilities that must be taken into account.
The first feature is the susceptibility to cycles. For example, almost every year on the eve of the cold season, the energy sector is becoming more expensive. The reason here is not that the energy supply goes up or down, but that there is an increased demand for it.
The second aspect of commodities is the simplicity of forecasting the trend, especially on medium-term contracts. Because the work is done with physical objects, commodities are influenced by the external environment. Therefore, if the summer is arid, it is obvious that the harvest of wheat, coffee and other crops dependent on summer moisture will be weak. Therefore, you do not need to be a genius of analysts to argue that this will inevitably lead to an increase in the price of these assets.
Trading stock indices
Stock indices serve as a catalyst for the economy of the whole country, specific industries, and in general it shows to what degree a particular sphere of the market is developed and what potential it has. Working with stock indices, as a trading tool, is important because it gives advantages which other types of assets lack. In particular, the trader has the opportunity to work with more precision. In most cases, the indices are made in such a way that they can characterize the country's economy, the development of economic sectors, comprise similar companies and so on. Thus, a trader can pick up the indices that he understands most accurately.
An important characteristic of the indices is the possibility to forecast with high accuracy. This is due to the fact that in most cases there is a definition of a number of large companies, and it is much easier to forecast a particular industry than to deal with all the subtleties of a specific firm. For example, the S&P 500 is calculated taking into account the shares of 500 largest firms in the US.
Trading precious metals is one of the great opportunities of the modern commodity market. The most common assets in this area are gold, platinum and silver. Online platforms allow you to trade precious metals both on a long-term basis and short-term contracts. I would say that both trading opportunities are highly efficient. It is not by chance that most profitable investment strategies are based on metals. When we talk about positions opened for several weeks, then gold, silver, and other metals are quite predictable since the list of factors affecting their quotes has long been known to traders.
The peculiarity of precious metals is that they are popular for both ordinary traders and large investment and state companies. Often a strong influence is exerted by large companies that prefer to invest money in jewelry, which causes an increase in demand, which results in a higher price. Ordinary market participants, without large deposits, also affect the quotes, creating short-term and medium-term trends. This is especially true in times of lower volatility, when large players either leave the market or pause.
It should be remembered that all precious metals are closely related to other assets. For example, gold is traded with a clear peg to the US dollar, so a change in the value of the US currency will certainly affect the positions of the metal.