Many of us consider careers in trading. After all, this is an extremely lucrative area that provides brilliant opportunities to make significant sums of money. However, when we start our journey towards a career in trading, we tend to focus on who we want to trade for. We look at the roles that different hedge funds, asset management companies, and banks can provide us with. But it’s also important that you consider the different markets where you can trade.
The majority of traders favor or stick to one market in particular and make it their area of specialism. This can help you to land particular jobs for particular clients and establish yourself as a big name in your given trading market. So, to help you to make this major decision, here’s a run through of some of the trading markets that you can use!
The Stock Market
The stock market is perhaps the best known market out there. Why? Well, it tends to be the go to market for the media when directors or producers want to create programs or films based around the concept of trading markets or with traders as main characters. Consequently, it’s what springs to the average person’s mind when they consider trading alongside thoughts of business people in suits shouting numbers and figures frantically down the phone. But what actually goes on in the stock market? Well, the stock market simply involves buying and selling shares of companies.
While the stock market tends to be the best known market, it surprisingly isn’t the biggest. The largest market out there isforex trading. Forex is short for foreign exchange and is a market that facilitates the exchange of currencies around the globe.
The options market does not rely on ownership of an asset. You are not necessarily exchanging assets that belong to you (though you should bear in mind that rights and obligations to whatever asset you’re focusing on do exist), but it is instead an undertaking of positions in the derivative of an asset. You need to be particularly on the ball with this market, as the money you will get from an option fluctuates alongside the value that the asset being dealt with provides.
CFD stands for contract for difference and is a market that combines the previously mentioned stock exchange, foreign exchange and options markets. You could say that it is a kind of hybrid market. This market, however, doesn’t tend to be the best option for beginners, as you have to place a larger bid or ask spread than they would on any of the other individual markets.
These are the main markets that you can find yourself dealing on as a trader. You don’t necessarily have to stick to one or the other, but it is generally a good idea to familiarize yourself with one at a time in order to become competent in how each works, rather than throwing yourself in the deep end and trying to operate within them all at once.