Trade markets

What is a financial instrument? It is a marketable asset of any kind, more specifically, it is an asset that we can buy or sell at a defined value in a financial market.

Within the financial instruments we will find currency pairs (or the foreign exchange market), commodities, stock indexes and shares of companies (or individual stocks). When a trader issues a purchase order, he is actually only speculating on the futures exchange rate for the foreign exchange instruments and the Contracts for Difference (CFD) for the shares, the commodities and stock indexes. As a result, a change in the price of the physical asset will be accompanied by a similar fluctuation in the price of the contract.
If the trader favors the trading of futures and CFDs, it is because they are easier to trade and more profitable. To illustrate this case; if a trader physically owns a share of a company, there may be additional costs in some countries. None of these costs exist with futures and CFDs. CFDs can also be sold short. This is not the case for the other instruments.

A CFD stands for difference contract in French. In the financial markets, it is a contract between a client and his broker where one of the parties is a “buyer” and the other a “seller”, stipulating that the buyer will cash or disburse the difference between the price of the asset at the time of sale and its price at the time of the performance of the contract. If the difference is negative, then the seller will cash this difference.
CFDs are unregulated derivative financial instruments that earn profits based on the upward (as well as downward) change in the price of the underlying. The underlying can be an action, an index, a commodity or a currency. For example, when the underlying is a stock, such a contract is an equity derivative that allows investors to speculate on stock price movements without the need to own the stock. The attraction in this product lies mainly in the fact that it is associated with an important leverage effect that does not exist with conventional equities; however, speculation is considered negative both as a personal behavior and because it can cause significant damage to the real economy.
A raw material is a raw material (material extracted from nature: notion of natural resource), or, after collection, having undergone a first transformation on the place of exploitation to make it suitable for international exchange, used in the transformation of finished materials or as a source of energy. In the case of food-stuffs, it is rather a food-crop product and a product of hunting and fishing.
A share is a title deed issued by a corporation (for example a public limited company or a limited partnership). It gives the holder the ownership of a part of the capital, with the rights associated with it: to intervene in the management of the enterprise and to obtain an income called a dividend.
The shareholder is qualified as a shareholder and all the shareholders constitute the shareholders.
Stock indexes are based on the choice of a sum of stock values according to their influence.
The stock indexes indicate a general tendency of the fluctuation of the stock market and thus makes it possible to compare the various stock exchanges.
– DAX 30
– DOW JONES
– FTSE 100
– NIKKEI 225

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