Currencies, indices, raw materials - where to start?

People who make their first steps on transactional broker platforms have access from one place, one transaction platform, to hundreds or even thousands of financial instruments. Mostly they will CFD exchange rate differences based on quotations of currencies from the interbank currency market, contracts on stock indices or raw materials.

In the maze of so many available markets, it can be difficult to start with, and each of them has different characteristics that govern them. Hence, in this text I will try to briefly characterize the available markets, so that it may be easier to choose those that you want to be interested in at a later stage.

At the beginning, you should also add that offers from brokers are becoming more and more complex, which on the one hand gives access to a multitude of different markets, and on the other hand, it makes the choice even more complicated for people who do not know what they want yet.

Currencies

Mostly, forex is the most leveraged market when it comes to CFDs and current regulations in Europe, where the lever can reach the 30 level: 1. Of course, I always emphasize that the lever is a tool that you can use but you do not need to. Nevertheless, it should be emphasized that the currency market is susceptible to all factors, i.e. macroeconomic data, market rumors, central bank policy, cash flow, the situation on commodities or stock markets, and policy. Hence, it is the most unpredictable and in the short term often quite strongly "chaotic", where traders check information services every now and then, if there was a price-raising information.

The currency market often gathers day-traders, where short-term transactions are quite common thanks to high leverage. In other words, when someone has a lot of time, access to news and discipline and nerves of steel, then currency market maybe for him.

Indices

We are talking about the most popular stock indices such as the American indices or the German, Japanese, French or British indexes. In fact, CFDs on stock indices with low leverage can be a cheap alternative to other forms of investing in the stock market, such as ETFs or equity funds with an index benchmark. Often, brokers also offer CFDs on indices without the so-called swap points, i.e. the cost of holding a position for the next day. What's more, CFDs on indices give the opportunity to trade also when their value drops.

CHECK OUT: Trading on the DAX 30 index. Always up-to-date statement

With low leverage and low costs, the investment horizon can be extended to the medium-term, where the market situation does not need to be checked daily.

Raw Materials

The most popular CFDs for trading on commodities are clothing i gold. However, speculators have access to a wide range of markets, including cereal market. Here, the classic approach to macroeconomics, i.e. demand and supply, often has the greatest influence on the price. Increased expected supply of raw material puts downward pressure on prices, and increased demand exerts growth. If you are up to date with commodity reports and demand / supply estimates and don't want price to be influenced by very different variables, commodities seem to be the right choice.

It should be noted that all commodities on stock exchanges are settled in US dollars, so this is one more important factor. The weaker the dollar, the more it can help in rising prices, and the stronger it can help in falling.