Are you new to trading and investing? If so, you’ve probably curious about what types of things you can trade. Besides standard forex currency pairs, there are actually plenty of interesting choices for new and established trading enthusiasts.
This is true whether you are primarily aiming to invest and grow a long-term portfolio or make a profit on short-term activities like swing or day trading. Regardless of your personal preferences, budget, location, or experience level, the world of investing is diverse, interesting, and wide open.
Many forex enthusiasts who have been buying and selling currency pairs for years discover that they want a change of pace.
When that feeling arises, they search for other instruments, like traditional corporate stock, private or government bonds, market index funds, cryptocurrency, futures, ETFs, options, and more.
Here’s a brief overview of the main choices available to anyone willing to buy and sell in the open market.
The most active part of the investing universe is the stock market, in which you can buy or sell individual shares of thousands of different companies.
In addition to the major corporations on the big exchanges, it’s also possible to purchase shares of companies that are not listed on the global exchanges.
Bonds are issued by governments, corporations, cities, states, and other entities, like universities. Most come with a $1,000 face value and pay annual interest.
If long-term profit is your goal, investigate the bond market.
If you prefer not to deal with individual companies’ shares, options, or other instruments, then the world of indices can be the ideal way to go.
When you buy or sell a share of an entire index, you’re actually buying a piece of all the companies listed in the index.
For example, when you engage in stock market index trading, you can acquire a share that represents hundreds of companies’ stocks.
Many new traders are attracted to the Dow Index funds or S&P indices.
When the overall value of the index rises, you earn a profit.tra
One of the newest ways to earn a profit by speculating on the price of financial instruments is in the world of cryptocurrency.
These cyber forms of money, like Bitcoin and Ethereum, for example, are a simple way to take part in the financial markets.
You can simply purchase as much or as little of any cryptocurrency that you prefer. When it goes up in value, you stand to earn a profit.
Most cryptos have gone through extremely volatile periods of price fluctuation, so be ready for a wild ride if you choose this category.
ETFs have been around for more than 20 years now, and are a relatively safe way for people to get involved with buying and selling of groups of stocks, commodities, or bonds.
These exchange-traded funds represent, or track, the value of a group of instruments.
For example, if you are interested in following the action of gold, you could purchase one of the many gold-based ETFs.
Some only hold bullion, while others hold shares in mining and refining companies as well.
There are ETFs for virtually every sector of the economy, so check out this way of investing if you enjoy following entire segments of the market.
If you wish to purchase a commodity futures contract, you are buying the right to acquire a certain amount of a given commodity, like wheat, gold, or oil, at a designated price on a specific future date.
Unlike options, you’re actually contracting to buy the underlying good, not just the right to buy the good.
If you believe you can predict general value trends in asset classes like corn, soybeans, copper, gold, natural gas, crude oil, or something else, then you might want to explore commodity futures.
Note that losses and gains can be extreme in the commodities sector.
The options marketplace is a fast-moving, exciting place for anyone who has at least a few months of experience under their belts.
What is an option, and how is it different from a simple share of stock?
When you purchase an option, you are actually buying not a share but the right to buy or sell a share of a specific company’s stock at some fixed future date for a fixed cost.
For example, you might do some research on XYZ Corporation and believe that their share value is going to rise in the next couple of weeks.
If that’s the case, you could purchase an option to buy one share of XYZ at a specified price two weeks from today.
If the current price is $5 and the price of the option is also $5, you stand to gain if the price rises above that mark.
The unique aspect of options is that they expire on a particular date in the future, so if you don’t exercise your right to purchase the underlying stock, you’re left with nothing.