Trading covers a multitude of sins, or else at least multitude of the markets. Mention, “trading” to the non-trader and they will most likely, think of the stock & shares however but there are many other markets that you can trade. All these include futures, commodities, CFDs, indices, and options. They have their pros & cons and a few need an specialized knowledge.

Most famous markets that are used by the traders are commodities, stocks, indices, futures, and forex. Few traders switch between the markets, and others stick to only one. Let us highlight a few of similarities as well as differences between all of them.

In USA there are more than 40,000 shares hence you have lots of markets to select from. You cannot deal in them so you have to home on those, which offer you and good trading odds by using whatever trading techniques you choose to use.

While buying the shares you generally need to put up all your money at a time of sale. It might appear clear but it is not like that with all the markets. Few brokers will offer a 50% of margin with the shares that means you may trade to value of two times the amount that is in your account. It seems like a good deal however if the shares begin to go down then you will get the “margin call” and can either need to put little more money in the account or else sell all the shares at loss.

The shares are generally traded in 100 and if you would like to trade the expensive share – and a few shares are extremely expensive, mainly in an US markets – you require a considerable sum of money in the account.

It is not very easy to sell the shares short and selling short is the strange concept to lots of people who think of purchasing the shares at low price as well as selling then at the higher price. However it is often simpler to predict that share may fall instead rise so what you would like to do is selling it at the high price and after that buy that back later at low price. Net result is also same whatever order of deals – that buy low, or sell high.

But, you cannot sell something that you do not own so to sell the shares short you should “borrow” all of them from the broker. This is not as straightforward as purchasing and not all the shares are accessible for selling it short.

Lastly, the share dealing happens during the market hours so in case you do not live in a country where they are traded you should adjust all your trading in hours to suit.

Futures, commodities & indices

Commodities are products like copper, corn, orange juice, oats, crude oil, gold & wheat.

Technically, the futures contract is agreement to make and accept the delivery of commodity on some day at certain price. In a practice, this hardly ever happens until you are manufacturer who in fact wants these goods. Vast majority of the futures traders are just speculating on whether price may go up or else down and don’t take delivery of the item.

The futures contacts comprise of commodities and as well stock market indices like an S&P 500, Dow Jones & Russell. Indices are just a composite of safeties that give an overall reading of market or else a few sections of that.

S&P 500 (Standard and Poor’s 500) tracks 500 of biggest companies in an US market. Dow Jones Industrial tracks just 30 of a largest as well as longest established companies whereas Russell 2000 is the index of all smaller stocks.

Basically, commodities & indices are futures & traded in a same way though the traders might make use of terms interchangeably. Not like shares, the futures are sold very short just as simply as they are bought. Every futures contract has its personal fluctuating price and many traders deal in only one contracts. Brokers generally charge the flat fee commission for every contract; often expressed as the “round turn” that is one purchase & one sell transaction. This might be some dollars, often below the value of point or else two on a contract. In case you are trading for a long-time frame then the commission is also negligible however if you are day trading & scalping for some points here & there then it becomes considerable part of a cost.

The futures brokers generally give a margin of about 20% of and value of underlying instrument so that you may control around $10,000’s worth of the contract for perhaps $2,000. However, same rules may apply – in case you over leverage your account you will get the margin call or else your positions are closed at the loss.