Financial Market Instruments
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INSTRUMENTS TO TRADE IN FINANCIAL MARKETS

There are several distinct groups of instruments to trade in financial markets. The prices of these financial instruments depend on many factors. In order to be able to trade profitably on them, it is important to understand how these factors affect the instruments’ prices and be able to make predictions based on their analysis.

Fundamental factors affecting the prices of financial instruments:

• Financial factors

• Political factors (impact of news)

• Environmental factors

• General economic factors

CURRENCY

Currency - is the most volatile financial instrument. Its variability constitutes its main quality, as it provides the opportunity to make high profit in a short period of time. Currency market is the largest market in the world and has the highest liquidity. Foreign exchange market - as it is often called - cannot collapse, as the fall of a currency results in the rise of another. Traders can earn money in all market circumstances, even in times of crisis, as any change in currency can be used to make profit; a falling currency is as profitable as a rising one.

GOLD

Gold - is considered as a “protection instrument”, which is traded more often by conservative people. Gold trading has gained a reputation for being more stable as a form of investment and is regarded as a safeguard for traders against political, social and economic instability in contrast to other forms of trading. In periods of uncertainty in markets, investors increase dramatically the demand for this instrument, which makes gold prices fluctuate. In such a situation, trading gold through CFD provides the opportunity to profit both by the increase and decrease in the asset’s price.

STOCK INDICES

A stock index is a method of measuring the value of a portfolio of shares. Stock indices reflect the changing trends in the market. Depending on the indicators you select, stock indices provide an overview of changes in specific sectors of the market (for example, if you take into account only shares of the commodity sector for the calculation of the index) or the whole market in general. As trading individual shares might be a complicated task, it is much more convenient to track the indices that reflect the general trend in the market and trade on their differences. Predicting the change in an index is much easier than predicting the course of any other financial instrument. This makes stock indices a very popular trading instrument.

STOCKS

Stocks - are a classic instrument for investment, which has traditionally been very popular among investors wishing to make money and increase their company’s capital. Stock markets around the world hold a huge number of shares of various companies to trade. To make profit on them, you need to constantly be aware of macroeconomic events, keep an eye on corporate news and be able to understand the financial statements of these companies. One of the biggest limitations of stock trading is the high amount required to enter the stock market (about $25,000). Trading of shares through CFD, though, provides the ability to trade stocks with a smaller amount of money and profit both by the rise and fall in their prices

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