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.
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.
The shareholder is qualified as a shareholder and all the shareholders constitute the shareholders.
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.
– DOW JONES
– FTSE 100
– NIKKEI 225
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