What are Trading Instruments – which are the most profitable?
Profitable trading instruments offers a wonderful opportunity to earn extra money and gain financial security.
- Many people hesitate to trade owing to their negative experiences.
- Many people have lost money by indulging in uninformed speculation, or by taking ill-informed decisions.
- Many others made wrong trades after getting overwhelmed and confused by the charts and other technical resources.
- New investors become unnerved by the market conditions. They do not take up huge positions owing to fear of commitments, and lack of social proof for their trades.
- Others are busy in their day-to-day life, and have no time to invest in stock-trading. If they devote time to make informed market-trading decisions, they end up with conflicting schedules with their primary job.
An informed approach to stock-trading sets right all these issues.
Sufficient knowledge makes it possible to place successful trades and earn daily returns. This holds true even when the trader has no disposable income to invest.
Most Trading Instruments in The World
There are near-infinite profitable trading instruments in the world.
Choosing the right financial instrument to trade is the basic strategy for a successful trade. Financial instruments offer either fixed or variable returns. Fixed return instruments, such as term deposits, offer a fixed rate of return upfront. The proceeds from variable return instruments depend on extraneous factors.
Key factors include the economic performance of the asset, interest rates, trends, and more.
Instruments that offer variable gains offer scope for better gains, but also carry higher risks. The most popular instruments include stocks, futures, forex, and gold.
All these financial instruments offer variable gains. In fact, any instrument that offers liquidity is popular with investors. Trader’s leverage the volatility of these instruments to buy at low and sell at a higher price.
Traders may indulge in spot market-trading, equity market-trading, or swing trades, depending on their trading strategy.
What are The Safest and Most Profitable Trading Instruments?
The safest and most profitable form of financial market trades is trading in companies stocks.
Making trades in stocks tho comes with fewer downsides.
Investors may handpick the best stocks in the world, from European markets, Australian markets, Hong Kong stock Exchange, FTSE 100, or anywhere else.
Futures and forex carry higher uncertainty and unpredictability.
– Stock prices move by the minute, influenced by several factors.
– Company earnings, changes in demand of the company’s products, new product releases, and more influence prices.
– Investors grasp such details through fundamental analysis and technical analysis of the stock.
– The share price also depends on the underlying trends of the broader stock market, and the levels of volatility.
– The sector indices give a good indication of the direction in which the price will likely move.
Most long-term investors prefer to invest in the biggest companies. Day traders track prices daily. They start and close the trade on the same day. The day trader has an array of day trading opportunities.
Day Trading Algorithmic Trading, and Automated Trading allow investors to place fast bets and earn substantial gains in a short while.
ETF or Exchange Traded Funds allows a trader to capture the movement of an index in one trade. ETFs track the price of an index or a basket of stocks.
But blue-chip stocks have high valuations and come with limited upside. A smart trader diversifies his portfolio and also invests in penny stocks. Penny stocks are more speculative, and because of their low base, have a greater chance to shoot up and deliver optimum returns.
How profitable is futures trading?
Today’s investors are spoiled for choice. They have an array of asset classes, of various asset types.
A futures contract offers the best way to trade with high leverage. Buying stock requires huge investments.
Leveraged CFD trades allow investors to make huge returns without substantial capital.
For instance, a single share of Amazon costs around $3500. A leveraged CFD trade of 1:500 allows a full contract of Amazon stock with a capital of just about $700.
Futures trades are possible for stocks, and also commodities such as gold, and also forex. Futures trades enable a 24-hour trading schedule.
Is gold trading highly profitable?
Making trades in liquid commodities is another popular financial instrument.
Among commodities, gold, silver, and crude oil rank as most popular.
Different types of commodities exist for trades. Meat commodities such as pork bellies are also popular.
Futures contracts underpin such asset derivatives. Gold-trading reflects the price of gold in the international bourses. The two most popular ways to trade in gold and precious metals are through Gold ETFs and gold futures contracts.
The price of gold is relatively stable and less volatile compared to other instruments. As such, trades in gold are less risky. But the trader has to commit to high volumes to make sizable gains.
Is forex trading profitable?
Trades in currencies, in the foreign exchange market, is the most popular choice for investors, after stocks and commodities.
Investors trade currency pairs. Forex trades take place in pairs, such as EUR/USD, EUR/GBP, GBP/USD.
Most investors use 1-2 assets when trading in forex instruments. Operating a larger number, such as 10-20 currency pairs, would need extra analytics and forecasting faculties.
The most popular forex pairs are GBP/USD (Pound Sterling-United States Dollar), EUR/GBP (Euros), USD/JPY (Japanese Yen), AUD/USD (Australian Dollar), USD/CAD (Canadian Dollar), EUR/CHF (Swiss Franc), and so on.
There is no apt currency pair though. Investors with an eye on details and keeping abreast with happenings in different parts of the world may trade in exotic currency pairs, such as EUR/TRY (Turkish Lira), GBP/ZAR (South African Rand), USD/THB (Thailand Baht), NOK/JPY (Norwegian Krone), and so on.
Many businesses and investors indulge in forex trades as part of their geo-political risk aversion moves.
Forex trades mitigate the risk of currency devaluation. Of late, there is a trend to trade in digital currencies, such as Bitcoin, and other cryptocurrencies. But cryptocurrency markets have high risk. These exchanges do not have a regulatory authority, and face high volatility.
Read Also: 7 Benefits of Forex Trading
How to Start Trading
Smart investors do their due diligence and learn the ropes first before entering the bourses.
They start with individual stocks, and upgrade to futures and options. The forex market place is different compared to equities. It offers a good diversification and hedge. But investment in currency pairs duplicates the effort needed for research.
Beginners tend to make basic mistakes. They do not understand risk-factors properly, and trade without risk management strategies.
A successful trader has an appetite for risk and understands the risk profile of his trade. Professionals who have a profitable investment career make a sound calculation of the risk. They make sure their gains include a risk premium. The key to success is getting consistent profits.
A trader should always remember unrealised profit is just a figure on the screen. Smart traders are not greedy. They book gains regularly. They also open an account with a reliable broker to trade in financial instruments.
The best brokers offer high leverage, and low transaction rates.
tixee offers investors a convenient platform, to trade through desktop browsers and mobile apps. Investors also get the choice between a fully loaded platform or a simple platform. The platform suits everyone, from professional traders to novices, from passive investors to part-timers, and everyone else.
Register a trading account now on tixee, and start successful trades.