CFDs on Stocks represent fractional ownership of companies that are publicly traded. Stock markets are simply the venues that facilitate the trading of these companies’ shares between individuals and institutions. Stocks are normally categorized by the country where a company is based. So, for example, Apple is considered a US stock and Adidas is considered a German stock.
The market cap of all the world’s stock markets combined is over $80 trillion. This is a staggering amount, especially considering that the entire world’s GDP (gross domestic product) in 2017 was around $80 trillion. The largest stock market in the world by far belongs to the United States, which accounts for over 30% of the global market cap on its own.
Foreign exchange is a global decentralized market where currencies are traded around the clock, 5 days a week. FX is by far the largest and most liquid market in the world. It’s the lifeblood of the global economy, helping resources flow across borders and allowing for highly complex manufacturing processes such as the one that led to the device you’re viewing this on.
Without the foreign exchange market, the modern world would hardly be possible. It’s the mother of all markets, making all other types of trading possible. Every three years the Bank of International Settlements (the central bank of central banks) releases its survey of foreign exchange and OTC derivatives markets. According to the last report, the dollar amount traded every single day on the global FX market is over $5 trillion, effectively dwarfing every other market in existence.
If forex is the lubricant that keeps the cogs of global industry running smoothly, commodities like crude oil are the fuel that powers it. Similar to other commodities, oil and gas are so vital to the functioning of the global economy that their price movements are largely driven by supply and demand rather than just pure speculation.
Think about any country, any industry, any kind of economic activity; without the fuel that keeps everything moving modern civilization would be unthinkable. And that’s not to forget the many industrial uses for petroleum products that don’t involve fuel.
Fundamental traders require a lot of preliminary education before trading energy, from macroeconomic factors and geopolitical tensions to stockpiles and production rates.
The baby of all asset classes, Bitcoin burst onto the scene in 2009 when an anonymous cryptographer (Satoshi Nakamoto) provided a very elegant solution to several problems that had been stumping computer science for decades. Satoshi solved the problem of digital scarcity and trustless consensus. Bitcoin is the first application of this new technology. It’s the world’s first cryptocurrency and it is revolutionizing finance on its storied journey to acceptance.
Today Bitcoin is just one of a massive market of crypto projects, all attempting to use decentralized ledger technology (DLT) to disrupt every conceivable industry in the same way that Bitcoin managed to disrupt finance, banking and wealth management.
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An index fund is an instrument that gives investors access to a basket of underlying assets. So, instead of buying or selling one specific stock, you can invest in an index that is itself riding an entire stock market or a basket of currencies. The best known indices track the value of certain global stock markets. The S&P 500 for instance, is an index that tracks the value of the largest 500 publicly traded companies in the United States.
When compared to individual stocks, investing in an index spreads your risk across all the assets that compose that index. For example, if you invest in one high profile company such as Apple or Facebook, the performance of your investment will be determined by how well or poorly that individual company performs. With an index, you are investing in the market as a whole, so your potential upside may be limited when compared to the individual performers in the index. However, the potential downside is also drastically reduced and for this reason, indices are considered less risky investments and are a staple of many portfolios.
Although all markets are by their nature speculative, the metals market is necessarily rooted in supply and demand as the extraction and refinement of metals requires large scale operations and huge investments of capital. Due to their use in industry, there are certain unavoidable supply and demand dynamics responsible for shifting the price of metals. This is great for traders as this asset lends itself particularly well to both fundamental and technical analysis.
Aside from their industrial applications, precious metals like gold and silver are important to traders as they’re considered safe-haven assets. Investors turn to gold and silver in times of economic uncertainty as they provide a hedge against currency risk and are a sound addition to any investment portfolio. This is because they’re either uncorrelated or negatively correlated to conventional assets like stocks or the US dollar.