Trading instruments can be an attractive way to watch your money grow. But how do you tell which ones are the safest and the easiest to use for a newbie trader? If you’re a beginner, you want to take it slow. Focus on learning as much as you can and watch and read industry news and updates. There are a number of exciting trading instruments, all very different from one another. Let’s take a look at the top five trading instruments for the newbie trader.
Forex
The global forex trading SA sector is a thriving, bustling one, offering a number of instruments every day. Additionally, international currency exchange markets are live 24×7. Forex instruments are also perfect for short-term day trades because they involve low capital and low transactional costs, and large liquidity and high volatility. Choose the currency wisely as per the needs of day trading.
Stock Index
Stock indices show the performance of the larger stock market as well as a part of the market. These indices outline the stocks of firms in a given sector. The indices can also list stocks based on their market capitalisation. You can opt to speculate on price movements in various international stock indices such as S&P500, Germany 30, and Wilshire 5000.
Equities
Individual equities are an attractive financial instrument. In contrast to the broader exposure of indices, through equities, you can choose to trade individual stocks of businesses. This type of trading also offers you a chance to enjoy part ownership of a business, depending on the number of shares you manage to buy. Stocks and equities are also popular because they offer a very high level of liquidity. Trading volumes and volatility change on a day-to-day basis, which lets traders capitalise on the smallest price movements.
Commodities
Thriving commodities such as crude oil, gold and silver are another great way of trading to build your wealth. Commodities help you broaden your portfolio and move away from equities and indices. There are five main categories of commodities trading — agricultural, energy, precious metals, industrial metals, and livestock and meat commodities. Traders can buy or sell various commodities via futures contracts. Commodities offer a sound investment option during times of political instability and economic uncertainty.
Government Treasuries or Bonds
A bond is a debt instrument that works by letting traders loan money to institutions such as governments or companies. Traders earn via interest payments and may also be able to sell the bonds for better rates. Government treasuries, also known as government bonds, are some of the safest financial instruments because they come with a government-backed assurance of fulfilment. No other trading instrument comes with such a guarantee. Government bonds are therefore a popular trading instrument, especially for beginners. Alongside stocks and cash, government bonds are considered a key part of a balanced and diverse trading portfolio.
Trading instruments can be a great way to watch your wealth grow. Read up as much as you can and invest wisely in some of these best trading instruments for beginners.
