A financial market is a market where individuals and companies can trade financial securities, commodities and other assets at prices that are determined solely on supply and demand principles. Markets operate by placing the two counterparts, buyers and sellers, at one location so they can find each other easily, thus facilitating the deal between them.
Financial markets are channels which facilitates the flow of funds from a supplier who has excess assets toward a purchaser who has a deficit of funds.
There are different types of financial markets and their characterization depends on the properties of the financial claims being traded and the needs of the different market participants.
Foreign exchange market
The foreign exchange market enables currency exchange trading. This is the largest, most liquid market in the world with an average traded value of more than $5 trillion per day. It includes all of the currencies in the world and any individual, company or country can participate in online trading.
Derivatives market
This market facilitates the trading in financial instruments such as futures contracts and options used to help control financial risk. The instruments derive their worth mostly from the value of an underlying asset that can come in many forms – stocks, bonds, commodities, or currencies. The derivatives market is separated into two parts which are of completely different legal nature and means to be traded.
Binary Options are a fairly new type of online trading investment. These are a risky choice, but options do offer higher returns than a traditional stock investment. The process of trading stock options is very simple and it involves a short term contract with a broker. With binary options, traders predict whether the value of an asset will rise or fall. If investors can predict the rise and fall of asset values well, they can earn high returns.
The major advantage of trading options is the simplicity of the process. You are placing a short term bet on the price movement of an instrument like a stock over a short amount of time. Since there are only two possible outcomes – a bet that either produces a fixed profit at expiration or nothing at all. When a binary option is purchased, the buyer owns a contract that gives them the right to buy an asset at a fixed price within a fixed amount of time. The buyer has to hold the contract to expiration, which is very different from a traditional option.
Are Binary Options Worth a try?
The benefits of trading binary options are:
- Greater risk/reward ratio and return on investment.
- The pay-out can be as high as 95% on each trade.
- Your losses can never be more than the investment.
- Only a small capital is needed, Open an account with as little as $100.
- Transparent investment , the profit potential and risk involved are made clear prior to making a trade.
- There is no leverage, margin, commission or spread.
The forex market is the world’s most traded market, with an average turnover of more than US$5.3 trillion per day. Forex trading is essentially buying one currency while selling another. Currency values rise and fall against each other due to important factors such as economic stability and geopolitics. The goal of forex traders is to profit from these changes in the value of one currency against another by actively speculating on which way forex prices are likely to turn in the future.
The currency exchange rate is the rate at which one currency can be exchanged for another. It is always quoted in pairs like the EUR/USD (the Euro and the US Dollar). Exchange rates fluctuate based on economic factors like inflation, industrial production and geopolitical events. These factors will influence whether you buy or sell a currency pair.
Your primary task as a trader is to speculate the trend of the rate and buy an appreciating currency or sell a depreciating one, and then take your profits through execution of a reverse transaction.
