Funding Suggestions: Select the Proper Marketplace for Your Cash
The trading world is huge, cross-border and has a capitalization of trillions. Let’s say you are a beginner and you step into a world full of terminology you don’t understand, risk factors you need to understand, time zones, currencies and myriad variables that affect different markets. It can be overwhelming, intimidating, and most importantly, confusing.
Before you begin, there are several decisions you need to make, including defining your goals, specifying your capital, risk appetite, the platform you want to trade on, and your timeframe. As you may find out, trading isn’t easy or easy, but rather a game of chess – it takes strategy, patience, and focus to be effective. Perhaps one of the most attractive things about trading, at least externally, is the universality in which you can invest.
The diversity of your portfolio can be derived from a myriad of different sources. However, the market itself is another consideration. The markets you enter each have their own characteristics and idiosyncrasies that can massively affect your experience trading them. Here we want to break down the most popular and well-known markets that CFDs (Contracts for Difference) are traded in, effectively the individual stocks, commodities or stocks that make up all of the different assets we can invest in.
Forex markets are some of the largest and fastest moving markets in the world. They are typically volatile and you usually rely on real-time reports and minute-to-minute shifts, often changes of just pennies or so. A recent Trade360 review detailed that using a platform that gives you free trades is a good strategy as the frequency of trades in something like Forex is usually higher than, say, commodities. You don’t want to incur these additional costs unnecessarily.
Also, be very careful about your risk appetite if you are interested in Forex so that your daily trades are carefully controlled and limited to what you want to risk. It’s also a market where leverage is significant so that you can increase your profits, but this is also reflected in potential losses. The point is, the time between trades is shorter so you need the short term focus rather than the patience common in other markets, as we’ll see.
In relation to goods
If you are a tactile learner, commodities are great for getting started in trading. Everything you buy and sell has physical mass and exists beyond the numbers on your screen. The raw material trade can also be translated very well for newbies thanks to the consistent standardization of the units of measurement. So you can put the conversion calculator down.
Unlike forex, which doesn’t have many time constraints (when one forex market is closed, another is always open), you are simply constrained by the location of a particular commodity market. If the Tokyo commodity market is closed, there is not much you can do about it until the next day. For the part-time trader, however, this shouldn’t be a major obstacle.
Exchange traded funds are very similar to the stocks you would normally trade in. However, they are a combination of different assets that are bundled and offered as a tradable financial instrument. Unlike mutual funds, which only trade once a day, the price of ETFs can fluctuate several times over a day. Typically they track indices or sectors, but can contain an eclectic mix of stocks, commodities, bonds, and derivatives. If you do your homework, you are well advised, as ETFs are best tracked by their assets at their core, so to speak, rather than many separate ones, so speculating on moves is a bit easier in theory.
If this is your first time trading, there is no need to discount entry into any particular market. Because of this, it is ideal to find a platform that not only covers trading in numerous markets, but also provides educational resources for all markets. The goal is to be able to make your decisions from a personal point of view rather than relying on outside tips or advice. Extensive educational platforms covering all of these markets will help you decide which assets, markets or strategies are right for you, your goals and your life.
Disclaimer: Investing money involves risks. Do this at your own risk. We recommend that people never invest more money than they can afford to lose and seek professional advice beforehand.