Trading 101: Popular Markets You Should Consider

Financial trading is no longer some obscure activity only a few people can understand. However, depending on the market, there can still be a fair amount to learn before you really get started. Different types of assets move in different ways, and traders need to approach them with detailed understanding and specific strategies if they’re to be successful.

Before you get into developing your strategies though, you need to spend a little bit of time comparing your options. To help you get started, we’re providing a brief overview of some of the most popular markets you might want to consider trading in.

Stocks

A single stock represents ownership of part of a company such that whoever owns the stock essentially has a right to a small portion of profits. Naturally, stocks for companies doing well rise in value, and those for companies doing poorly tend to drop. Anyone with a good understanding of the global economy and, in particular, how large companies are managed, has a chance to invest productively in stocks. However, it should be noted that, at best, investors should expect a return on investment of 10% annually. Anyone trying to pitch a method offering significantly higher returns is likely either misinformed or running a scam.

Commodities

Commodities are basic goods –– from grains, to oil, to gold and silver –– that the market has determined to be valuable for one reason or another. Thus, as the market’s perception of a given commodity shifts, so too does that resource’s price. Trading in this environment again requires a deep understanding of the involved markets, as well as a capacity to keep up with both financial and political news. It’s challenging, but also a trendy market, with The Wall Street Journal pointing out that the recent performance of some commodities has led a lot of people to show interest in investing. To do so, you simply need to find a commodities trading platform and begin buying and selling quantities of the assets in question much like you would a stock.

Forex

The foreign exchange, or “Forex” market refers to the trading environment wherein people can buy and sell international currencies in search of profits. These investments are traded in pairs, with the EUR/USD denoting how many dollars go into a euro, for example. Thus, you are always buying one currency specifically with another. This market is also a bit different than others in that movements are incremental and constant, with currencies constantly fluctuating by fractions of whole units in value. There are ways to get used to this somewhat frenetic pace however, with the trading demo accounts at FXCM and a few similar practice programs around the web representing good starting points. These systems will simulate forex trading conditions and give you the chance to get used to how currency pairs work, how rapidly trading occurs, and even how to trade with leverage –– a major part of this particular market.

Real Estate

There are multiple ways you can try to profit from real estate as an investor. First and foremost, you can buy property and look to maintain it and then sell it when the market conditions suggest you’ll be able to get more than you paid initially. Second, you can purchase property to rent out on a regular basis, such that you develop a regular stream of income (though bear in mind there will also be maintenance and upkeep costs). And finally, you can also look into what is known as a real estate investment trust, or REIT. The REIT explanation at Business Insider notes that these essentially give you the chance to own property without being a landlord. You basically buy into a fund financing properties that are professionally managed such that you and other investors share in the profits.

Crypto

Various blockchain investments are constantly making headlines these days, from decentralized autonomous organizations raising money for charities to celebrities endorsing NFTs. Cryptocurrencies are also constantly being bought and sold, with the most valuable (and most popularly traded) being Ethereum and Bitcoin. And while CNBC has reported on decreasing prices around the time of this writing, many still see cryptos as digital commodities with long-term potential. Should you wish to buy in, you have two main options. You can first buy cryptos to hold for the long term in the hopes of seeing significant gains –– something you may be best off doing with regard to emerging cryptos like Polygon or Cardano, rather than expensive, established options. Second, you can buy and sell a variety of assets to capitalize on more short-term swings, the way you might do with stocks.

The world of trading may seem a bit intimidating at first. There are a lot of different options, and unfortunately, no guarantees. When you consider the main markets though, you can begin to get a grasp for what suits you, and where you have the most potential to make the most of your trades.