You have heard and read a lot about trading and the financial market. So, what are the financial instruments available for you to trade? The financial market is the largest in the world and attracts millions of traders from all over the world.
There is an array of securities and instruments that you can trade. A trading platform is a perfect place to trade your preferred financial instruments. It allows you to exploit price movements to make profits. Also, check out the forex course.
There are five categories of financial instruments. These are:
- Equities
- Commodities
- Indices
- Forex
- Bonds
Before you choose your instrument of choice, there are a few factors you should take into consideration. Once you have decided the best one for you, select metatrader4 download and get started.
What You Need to Know Before Selecting Your Instrument
Before we look at the instruments available for trade, here are some factors you should consider before you choose one:
1. Low Transactions Costs
In business, low transaction costs are preferred because you make more profits while spending very little money. You may have to compare brokerage fees as different brokers come with different charges.
2. Liquidity
How easy is it to buy and sell a specific instrument? Opt for those with high levels of liquidity as they are easy to trade. You can enter and exit a position smoothly.
3. Flow of Information
The availability of information is crucial if you are to make money off your chosen security. Prices are constantly affected by happenings around the world. Hence, you should only choose an asset that has a free flow of information.
4. Volatility
A financial instrument that can rise and fall sharply is a great choice. Volatility is two-faced as it can be a pro and also a con. High volatility allows experienced traders to make profits many times. However, a small error can turn out to be very expensive.
Why Forex is Popular Trading Instrument
Being the largest market in the world, the foreign exchange market has some of the best financial instruments. Forex is responsible for over $4 trillion in daily trades. The Forex market or FX involves trading currency by making the most of the changes in currency pair prices.
Many of the securities traded include some of the strongest currency pairs on the globe. These include the following:
- EUR/USD
- USD/JPY
- GBD/USD
- USD/CHF
These and many others are the banes of foreign exchange trading. They are comparably stable and are available 24/7. Trading platforms ensure that their clients access some leverage. This makes it easy for them to place trades they normally would not afford to.
Also, forex trading is the best for short-term day trading. They are high on liquidity as well as volatility.
Online Trading
Online trading allows traders to trade at their convenience. Since trading on company time would not be allowed. They can trade after hours or on their breaks. Other benefits of online trading include the following:
Convenience
You do not have to call a broker to organize your trades. You can conduct all your trading on a trading platform online and watch your positions online in real-time.
1. Economical
The commissions are very low especially due to increasing competition. Therefore, traders can make more money.
2. Control
Trading is open all day, all night. Investors choose when to trade. Also, they can trade from anywhere as all that is needed is a laptop or mobile device.
3. Real-Time Trading
Traders can access real-time updates and track their positions effectively. Trading platforms also provide market signals for their clients so they can make prompt trading decisions.
4. Speed
As soon as you open a trading account and deposit the required capital, you can begin trading immediately.
Conclusion
Online trading is a modern way of trading. Trading forex online is arguably the most popular with many investors. It has a wide range of instruments to trade and is the largest market in the world. Also, it comes with high levels of volatility and liquidity.
