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At first glance, trading is an incomprehensible and complex field, but it can become quite affordable for you, and most importantly, bring the desired profit without difficulty. You only need to make a little effort to study the necessary information. Your main task is to master the four basic terms that will provide you with confidence in your decisions and actions, after which you are guaranteed a positive result.
A currency pair is the main trading tool in the Forex market, which is the ratio of two national currencies. Any currency pair consists of the base currency in the first place and the quote currency, or quoted. The base currency is the currency that is being sold or bought, and the quoted currency is the one for which the base currency is bought or sold.
Today, there are a large number of different currency pairs that are used by traders in trade, for example: Euro / Dollar (EUR / USD), Dollar / Swiss franc (USD / CFH), Dollar / Yen (USD / JPY).
A swap is used when entering into transactions for the purchase / sale of financial assets, when any transaction is accompanied by a reverse sale / purchase. The simplest example of a swap is a temporary currency exchange. At the time of the transaction, the parties sell their currencies to each other and agree to make a reverse exchange after some time. If at the time of closing the transaction the rate has changed, then one of the parties will benefit, the other will be at a loss. Three main swaps are distinguished in exchange trading: short swaps, short one-day swaps and forward ones.
Leverage is the borrowing of capital in order to increase investment income. Using leverage allows a trader to make transactions worth much higher than his own capital in the account. However, this also means that the trader will incur losses in the same proportion, as if his capital is much larger
Margin is closely related to leverage. It is a guarantee that is blocked in the account of the trader when he opens a deal. The greater the leverage, the less will be the collateral that will freeze the broker in the account of the trader. Accordingly, with a greater leverage, the trader will be able to open more transactions, get more profit or loss.
The foreign exchange market is a market in which transactions for the sale and purchase of currencies are made in order to profit by changing their exchange rate. Forex is the largest financial market in the world, its turnover significantly exceeds the turnover of the stock and other markets. In this regard, Forex has high liquidity, and this market attracts many traders, both beginners and professionals.
It is the market where are represented almost all the iconic currencies of the planet. Here, traders get at their disposal an impressive set of various tools that increase the likelihood of profitable contracts. This financial market is convenient enough for stable earnings; traders use it daily..
The stock market is a segment of global capitalization that allows you to trade shares in the stock and over-the-counter format. The stock market affects the development of commercial projects, works to raise funds from investors. You can make a profit by buying and selling securities in the process of changing quotes.
One of the important factors of the stock market is the price. Prices on the stock market are set in accordance with the yield of securities, the direction of news, and a decrease or increase in company income. Such principles are implemented through stock market pricing strategies, for example, setting the initial high or low price, making profit from sales, entering the market and mastering part of it.
CFD / Indices / Raw
CFD is an agreement on the exchange of differences in the value of a particular asset from the moment of opening the contract to its closing.
Commodity markets are markets in which they trade in goods, raw materials or property rights to them. Working with commodity markets has its pros and cons. The main plus is protection against inflation, and the main minus is that there is no interest income and there is credit risk.
There are stock indices and stock exchanges, they are an indicator of changes in the price of the sample of shares, which represents the entire stock market.
When choosing a market, it is worth considering such factors:
Number of available tools
Trading account size
Personal trading experience
Set investment goals
Strategy and term of trading
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Features of the markets for novice traders:
Many traders are attracted by the low starting capital threshold and the availability of a demo version. For beginners, this is a huge plus, since you can practice without the risk of losing personal funds. Leverage should also be considered. A large leverage significantly increases the size of potential profits and helps inexperienced traders quickly part with their own deposit. A significant role in choosing a market is played by the number of instruments: currency pairs, commodities, precious metals, indices, CFDs on stocks.
Stocks and corporate securities are a simple and justifiable tool for making money, which can be used by both an experienced trader and a novice. Trading stocks has significant advantages – it is cost and convenience. An additional difference in trading is binding to exchange sessions where stocks periodically change their owners, and as a result, quotes.
To successfully trade CFDs on commodity futures, you need to carefully study the trends of the relevant market. This will facilitate understanding of the reasons that lead to an increase or fall in prices for certain goods. When trading contracts for commodity futures, you can use both universal methods that work equally effectively in all markets, as well as specific methods based on the study of economic laws that affect pricing. The most popular and liquid of commodity futures is oil. A product with constant demand plays an important role in the economy of any country.
Index CFDs offer great market entry opportunities and work more flexibly than other instruments. Also, the pluses of CFDs on indices include the possibility of opening fractional lots, which allow you to start working with little capital.
Precious metals CFDs are a very popular form of trading. Many traders focus on gold, as it is one of the most liquid assets. Gold is considered the safest asset. This is especially true during periods of increased volatility and market instability. Other valuable metals, such as silver and industrial metals, are traded less often, but trading skills with this group of assets can bring high returns.