Due to continuing technology and trading innovations, there is now an increasing amount of different trading methods that can be used. But which markets are the ones you should be looking to invest and trade within at the moment?
The best markets in which to invest should have a range of qualities for you to look out for, such as a mix of growth, value, income and less correlation to existing markets.
The stock market is simply the market which sees the buying and selling of shares of a company and probably the simplest market to be involved in and good for beginners. Today trade stocks in the US though you would need to have a starting capital of around $30,000.
An ETF refers to an exchange-traded fund and is an investment fund that is traded on stock exchanges in the same way that shares are. It will hold assets such as bonds, stocks, and commodities and operates with an arbitrage mechanism that means it trades close to its net asset value. ETFs have become a really popular market to be involved in and they are seen as attractive investments due to their low costs, stock like features and tax efficiency.
There are many different types of markets to trade on and so it is important to consider spread betting. This is a tax efficient way of betting on the price movement of many global financial instruments, shares and commodities etc. So, once you take the time to learn about spread betting at City Index, for example, it will become apparent that you don’t buy or sell the underlying asset and just place a bet on whether it will go up or down. This gives you the opportunity to dabble in many different markets without actually purchasing lots of different stocks and shares.
The Forex market is the largest in the world and facilitates the exchange of one currency for another. It is the most liquid market in the world. The situation is changing on a daily basis and retail clients can trade Forex online. The volatile nature of this market means that there are a lot of opportunities to acquire and get rid of assets, meaning there is a lot of potential for profit. It is more accessible than other markets too and trading within Forex can begin with as little as $100. It is also very safe to trade within as it is heavily monitored and regulated by several authorities.
The main day to day trading markets outside of Forex and stocks are the futures and options markets. The futures market contains agreements between buyers and sellers to buy or sell a certain amount of an asset at a future date. Money can be made by day traders within this market by price fluctuations between when they buy and sell and their close position. You could start trading futures with as little as $3500.
Options markets allow participants to undertake positions in the derivative of an asset. The option is not the ownership of the asset, but the option price which can fluctuate with the value that the asset is providing.