The true size of financial markets as a whole are likely beyond comprehension. From investment banks to hedge funds. Venture capitalists to private equity. Insurance brokers to mortgage lenders, the overall ecosystem is one many cannot grasp.
Each of these sectors are open to speculation due to the uncertainty which often surrounds them, as a result this creates room for them to be traded on the markets. So imagine the various forms of trading there would need to be in order to facilitate these trades.
Within trading there are a variety of ways in which one can get involved in speculating price movements. These types of trading will be market dependent some more specific for shares, others focused on derivatives etc.
Below we explore the other types of trading to consider for those wanting to make an income from the markets.
CFD trading is one of the most popular, especially amongst new traders. CFDs act as a contract for difference allowing holders to be able to speculate on the price moment of various markets without having to have any ownership of the underlying asset.
As a result this is attractive to participants who do not want to invest huge amounts upfront. Leverage is a big part of CFD trading and with this, allows traders access to markets which would otherwise be outside of their reach.
If CFDs are attractive to the new breed, lower starting capital investor, then stocks appeal more to the old school participant. Stock trading is for higher net-worth, longer-term participants.
Stock trading will usually offer lower leverage than CFDs and thus requires a larger amount of capital to be involved in these. Participants in stock trading are more investors than traders as the are looking at own the physical stocks they transact.
Bitcoin trading is the newest phenomenon, with the rise of cryptocurrency, we have seen more and more people wanting to speculate on the perceived value of these markets.
Bitcoin trading comes in numerous forms, from miners of the coins themselves, to those using this as an alternative currency to the FIAT system, to those who simply want to trade these as CFDs.
Options trading simply sees the holder have the options to enter a buy /sell at an already pre-agreed price. These options come in the form of calls and puts. A call gives the holder the option to buy, whereas a put gives the option to sell.
In some senses similar to options, futures trading sees a futures contract held between the buyer and the seller to complete the transaction at a set time/date in the future. These contracts are usually popular in commodities trading.