Beginner to Independent Trading Course
About Lesson

There’s one core principle that underpins financial trading: predicting whether something will go up in price, or down. Get it right and there’s opportunity for great rewards. But get it wrong and you could lose a lot of money.

That’s where TeamFX come in. The purpose of our education is to take you through financial trading by sharing our experiences and speeding up your learning process. The more information you have, the less likely you are to make costly mistakes. And our goal is to provide you with all the knowledge you need to start making informed trading decisions.

We’re going to be looking at what, where and how you can trade. We’ll teach you how to look out for trading opportunities, we’ll investigate how to manage your risk, and we’ll look at what techniques we use to become consistently profitable traders – and much, much more.

But before we do all that, let’s address the fundamental question about financial trading. What exactly is it?

What is financial trading?

Very simply, financial trading is the buying and selling of financial instruments. These instruments can take many forms, but some of the main categories are:

Forex – global currencies, including the pound, dollar, euro.

Indices – the value of a group of companies, represented as a single number, eg the FTSE 100, S&P 500, Nikkei 225

Shares – small units of ownership in a company, such as Apple, Netflix, Barclays

Commodities – physical assets, raw materials and agricultural products, for example gold, oil, wheat.

People and companies often trade financial instruments because they need the assets for themselves or their business. For example, you may be travelling from Europe to the USA and want to convert euros to dollars. To do this you would participate in the forex market.

Or, a laptop manufacturer might need a large shipment of aluminium to build components for its computers. When buying the metal, the firm would be participating in the commodity market. However, most of the time financial traders don’t need the assets at all. They are simply looking to make a profit from movements in the price, for example by buying low, then selling high.

Financial markets enable traders to exchange assets quickly and easily, because all buyers and sellers are in the same place – sometimes literally, sometimes electronically, sometimes both.

They also tend to have very strict rules and regulations, which helps to reduce fraud and illegal activity. For example, if you wanted to purchase some cotton on a regulated commodity exchange, you could buy it without needing to inspect it, safe in the knowledge it had been through a number of quality checks beforehand.

Traders are able to access a wide range of financial markets but what are the main markets available and how do they work?

Indices

Made up of a basket of shares, a stock market index can be traded like an individual share. By buying and selling indices, traders can speculate on the changes in price of the biggest companies in a single market. For example, the US 500 is one of the most widely traded indices globally – it is a measurement of some of the largest and most actively traded companies listed on the New York Stock Exchange or NASDAQ.

Currencies

Also known as Forex or FX, the currency markets represent the constant exchange of currencies between banks and other market participants. Currencies are quoted as a currency ‘pair’ – for example GBP/USD is the value of US dollar to the pound. All currencies have a three letter code. The currency markets, unlike many other markets, are open 24 hrs.

Equities

Also known as share markets, these represent the prices of shares in companies that are listed (quoted) on major stock exchanges. Famous examples include Apple, BP or Microsoft.

Commodities

Many commodities are resources that are eventually consumed, for example oil or wheat. Most commodity markets fall in energy – like natural gas or crude oil, softs – like soybeans or wheat, and metals, like gold, silver or platinum. Each commodity market will have its own particular cycles, determined by specific factors like harvests or energy demands.

Bonds

Bonds are debt instruments issued by government which pay interest to investors, and  which can also be traded.  Popular bond markets include the UK and US government 10 year bonds. 

Interest rates

Interest rates are set by central banks and represent the cost of borrowing for currencies controlled by those banks. The interest rates of the UK, US and Eurozone rates are frequently traded.

Start trading today in 3 simple steps

1

Register

Choose your account type and create your account

2

Fund

Fund your account with your chosen funding method

3

Trade

Access over 250+ trading instruments on MT5

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