Why is it important (don’t skip this)
As a trader, your job is choose the right types of trading, because there are many types of trading fields. First, we have to decide what kind of trading we should do and within which market it should be done, whether it’s the stock market, forex, cryptocurrency, bonds, metals, or futures and options, etc
Now you have to decide which trader you want to become. For example, if you have to make a long-term investment, then you will have to become a stock investor.
If you want to make money every day, you will have to become a day trader. And you will be making this decision now, after reading this article. So let’s start!
What are the different types of trading markets?
There are two types of trading in our entire world: “one offline” and “one online”. Offline trading is done like this. For example, if you have purchased gold from a gold shop and then sold it in the market at a slightly higher price, this is known as offline trading. And to trade online, you will need to create an account on a National or International exchange. You can operate it from your phone or your laptop, and after that, your buying and selling will start. This is called Online trading. A wide range of financial markets is available for online trading.
Types of trading and the financial market
- Stock Market
- Forex Market
- Cryptocurrency Market
- Bond Market
- Commodities Market
- Indexes/Indices Market
- ETFs (Exchange-Trade Funds)
- Derivative Market
What is the Stock Market
Stock markets, share market, or equity market, these three have the same meaning, friends. This is the market where you can buy or sell shares of a company. Buying shares means that you are purchasing some percentage of ownership in a company; that is, you are becoming the owner of that company, and, if this company makes a profit, you will also get some percentage of that profit. If this company makes a loss, you will also have to bear some percentage of that loss. Let me give you an example on the smallest scale. Friends, imagine that you want to open a new startup.
You have 10,000 rupess, but that is not enough. So you go to your friend and say that you also invest 10,000 rupees and will do a 50:50 partnership. You will get ‘50%’ of the profit in your company in the future, and your friend will get ‘50%’. In this case, you have given ‘50%’ of the shares to your friend. In this company, the same thing happens on a large scale in the stock market. The only difference is that there you go to your friends, you go to the whole world, and say, “Buy shares in my company.”
What is the Forex Market
What does Forex mean? “Foreign Exchange Market” The foreign exchange market, or currency market, is an over-the-counter (or decentralized) financial market where the world’s different currencies are traded. In the form of foreign exchange market participants, you can find retail traders, commercial banks, financial institutions, hedge funds, and even the central banks of countries. The Forex Exchange Market is the largest and most liquid market in the world. Where traders profit from the fluctuations of two currency pairs like “EURUSD and GBPUSD”. The Forex market is open 24 hours a day, with only one hour of break during the day, and is open from Monday through Friday, with Saturday and Sunday being its holidays. But remember that the forex market is a high-risk asset market. Here, you also get more leverage from your broker account. Because of this leverage, you can also lose more where you have more profit.
What is the Cryptocurrency Market
Cryptocurrency is actually a decentralized finance. Where to buy and sell trader Bitcon, Etherem, Rumple Doge, and various other altcoins. Cryptocurrency depends on blockchain technology. And it’s an interesting future choice for those interested in digital finance and blockchain technology. The cryptocurrency market is highly volatile, which presents high risk but also offers high rewards. And if you are choosing this market to trade. Try to take it as long-term investing. Not a short-term investment. And before buying in this market, try to carefully examine the fundamental and technical analysis of whatever asset you are buying or whatever coin you want to purchase, and then hold it so that it can give you good profits in the future.
Remember that when making a purchase, you should choose a well-established exchange such as Binance, OKX, or Bitget. You are selecting a decentralized wallet that is reliable in the market. And choose a hardware wallet for holdings.
What is the Commodities Market
Do you know what commodity funds are? Commodities can actually be anything: steel, aluminum, gold, or silver. Other things besides chemicals, cement, and fertilizers can also be commodities. Now, you can directly purchase commodity stocks, but valuing them is often quite difficult. Because commodities follow a business cycle, their prices keep going up and down. That’s why it’s considered better to invest in commodity stocks through mutual funds, because mutual funds have a fund manager who studies the stocks of all types of companies. He sees how the demand and supply of different commodities are going. And tracks them to make decisions.
Apart from this, there are other benefits, such as diversification into more commodities at lower prices. Hedge against inflation: You can invest in both futures and options, but they are very risky. Overall, just like you invest money in other stocks, you can also invest money in commodities. Like other stocks, it can also create wealth in the long term.
What is the Indices/Indexes Market
There are two types of words, but the working is the same in the financial market, Indices and Indexes. What is an index? An index is a collection of different companies. For example, the top 100 companies in your country are listed on the stock exchange. Now, counting the performance of each stock to understand where the stock market is going is quite difficult, and it’s also quite difficult to understand something from so much data. Therefore, instead of counting the performance of stocks, market indices are created by forming groups of similar stocksin the market. Now its grouping can be done on several bases, such as market capitalization, market sector, and stock price. For example, “S&P 500,” “NASDAQ,” and “Russell 2000.”
What is the Bond Market
So many times, you must have heard the word in the market, which we call a Bond. What does bond mean? Look, and business needs money to run, and money comes from its own or someone else’s. That is, the business owner either invests cash from his own pocket in his business, which is called equity, or borrows from others, which is called debt.
Now, the government also needs money to run the country. If you give a loan against this loan, will you get a receipt for it or not? If you put the money in the bank. You get a receipt for it, which you call an FD. In the same way, when we give it to the government, we call it a bond that the government gives you, and you get interest on it. A bond is a type of loan that we give to the government, and we can also give to companies.
What is the ETFs (Exchange-Trade Funds) Market
ETFs are also commonly referred to as investment funds that trade on a stock exchange. ETFs typically track an index sector, commodities, stocks, and other assets. Because there is not much difference between ETFs and mutual funds, you actually have to go to the exchange to buy and sell Mutual funds, and the fund company charges three to four percent per year of the fund’s assets. The annual fee of an ETF is significantly lower than that of a mutual fund.
For example, if you buy an S&P 500 ETF, you are not investing in just one company, but rather you are investing in the top 500 companies in the US together. So the risk is automatically reduced. ETF is simple; it follows the market, so its costs are quite low. And you can buy and sell it at any time.
What is the Derivatives Market
It is a contract in which two parties deal on a futures price without buying a present asset. The main purpose of a derivative is to speculate, that is, to guess on the future price or hedge and manage your risk. The four types of derivatives are:
- Future Contract: In futures contracts, you commit to buy or sell an asset in the future at a fixed price. You have to decide both the date and the price.
- Options Contract: In an option contract, you get the right to buy the asset, but not the obligation. This means that if the price is not good, you don’t buy.
- Forward Contract: These contracts are also like futures, but they are customized. And are dealt in the over-the-counter market. And there are no deals on the stock exchange.
- Swaps: Swaps, in which two parties exchange cash flows with each other, such as interest rate swaps or commodity swaps.
Different types of trading
If you have learned that our Global market/Financial market is like, and you have decided which market you want to choose, now it’s your turn to know how many types of traders there are in the market.
There are types of traders and types of trading.
There are many types of traders throughout our market, but we will be talking about only ten traders. Who are quite famous in the market.
Day/Intraday trader in types of trading
Day trading involves buying and selling assets within a single trading day. This means that if the market opens at 9 AM and closes at 5 PM, you will have to make your trade decision on the same day, and to be successful in day trading, you need to stay connected to the fundamentals and technical Analysis of the market and be able to make decisions quickly.
Swing trader, how does it work
In reality, there is not much difference between swing trading and day trading. A day trader actually makes his decisions within a day, and a swing trader holds his stocks for several weeks or several days. And then he does his technical and fundamental analysis, and based on that, decides whether he should hold his trade or sell it.
Position trader
Position trading is actually called long-term investment. And it could span years, weeks, and months. And in it, traders identify major market moves and try to take advantage of market trends. For this reason, these traders are less concerned with market specifics and focus more on the overall direction of stocks and the market. And this is why this type of trader’s market is considered a long-term market. But for this, it is very important to understand the market well.
Scalper trader
Scalping is actually short-term investing, where you make hundreds of trades in a single day, and the goal is to make a small profit. Such traders open their positions for a few minutes or seconds. Remember, as a trader, scalping trading is very risky. If you are a beginner, then stay away from it. You will need a lot of experience for this job.
Momentum trader
There is no significant difference between momentum trading and scalping trading. You can also buy up stocks and currencies in this. And in this, they wait for a certain momentum to start within the market, and when it starts, they buy it and sell it before it ends. And their goal is to make a profit from this work.
Social/Copy trader
Social trading and copy trading both work in the same way, which is a type of modern trading. In this strategy, investors copy the investments and strategies of other investors by observing them, as it helps new investors investing in the share market to learn from older and more experienced investors.
News/Event trader
A news trader actually tries to trade by knowing the strategy of the news. And it becomes risky. If you are not an expert trader. To become such a trader, you must consider the conditions of each country and its news, especially the news of the United States, and try to trade based on this.
Technical trader
Technical trading is a type of strategy that relies on chart patterns and price action to plan trading. And these traders make decisions regardless of the fundamentals of any company or the news of any country. They follow the technical strategy they have created and try to make a profit from it.
Fundamental trader
Fundamental trading is actually done by looking at the financial condition of any company, its health, and its prospects. How will this company perform in the future? Which is widely used in financial markets such as forex, stocks, and commodities to determine the intrinsic value of any asset and predict its future performance. And mostly this field is for long-term investors. The value of a company’s assets is determined based on its fundamental analysis. And traders hold their trading positions accordingly.
Strategic trader
Strategic traders are traders who create a strategy based on fundamental and technical analysis. And they then wait for their pattern to form on the charts, plan their entry on that basis, and try to get a good reward from it.
Conclusion
In this article, I have covered how many types of financial markets and types of trading exist in the global market, but your learning process doesn’t end here. If there is still any field of marketing that I have not covered in this article or that I have not explained, you can leave me a comment. “Thanks for read article.”