Which trading instruments to choose when entering financial markets?
Entering the financial markets can be difficult because no matter which trading instrument you decide to use, you will be able to access 1,000 different instruments. The most popular securities can be a good entry point into the market, as they have some of the best protections. However, this does not mean that they are risk-free.
So what could a potential portfolio look like consisting of some of the most popular instruments?
FTSE 100: To speculate on the movements of the FTSE 100, spread bettors and CFD traders buy and sell the UK 100 instrument, one of the most popular markets in the world. Launched in 1984, before the resurrection of London City, the FTSE 100 has been tracking the UK and global economy ever since. The index is particularly exposed to commodity price fluctuations due to the number of large mining and oil companies listed on the London Stock Exchange.
Apple: The electronics giant is loved as much by traders (especially those who owned Apple stock in the 1990s) as by consumers. After a slump in the 1990s, the corporation rose to global dominance after launching the hugely popular iPod and iPhone. The trading of this capital is particularly influenced by the launch of new products and the number of errors they can contain.
Gold: The precious metal is one of the longest-selling commodities in the world and is seen as a safe haven for investors in times of market turmoil. In recent years, the price of gold has been further boosted by Indian and Chinese demand (which accounted for a staggering 54% of global demand in 2013).
Oil: As one of the basic components of modern society, crude oil is one of the most important instruments in the world. Oil price fluctuations have contributed to the overthrow of governments, and the price of this instrument is significantly influenced by political events. The recent sharp drop in oil prices has triggered major (and divergent) changes in economies around the world, the long-term consequences of which are yet to be seen.
GBP/USD: Known by traders as „Cable”, the exchange between the British Pound and the US Dollar is one of the oldest in the world. The forex pair is also among the most traded, with both New York and London being important financial centers. The GBP/USD pair is known for its volatility, and new traders are generally warned against trading this pair until they are more experienced, and only then is FinmaxFX safe for them to use.
EUR/USD: the Euro/Dollar currency pair has the highest trading volume of any market in the world. This means that it offers high liquidity and one of the tightest spreads. As with most currency pairs, the Euro/Dollar is particularly affected by public policy announcements and economic data. Trends are usually better defined and last longer than other trading instruments, which usually makes the pair a good choice for novice traders. However, this does not mean that risk management strategies should be ignored.