Know about the various trading instruments for an informed investment

by andrew n. Manager

Investment can be tricky. While it does earn money the way one is going to invest money would be carefully looked into. There are various forms of investing. Some choose the normal investments made through the banks. Others go with the real estate investment. There are many other people who look for investments through the method of mutual funds and stock markets. This seems to be a good yielding investment which is done legally. There are various branches in the share market investment also. Based on one’s predictions, likings and investment strategies they can choose the trade instrument which they feel comfortable to use.

In order to investment in the right way and to make a well informed good investment decision the investor would be aware of the trading instruments in place. This will help the investor in making the right choice while choosing the particular trade instrument and in choosing the particular bond. In order to help the investor with the choosing of the trading instrument, first let’s get to know the various trading instruments which are commonly sought after.

Short Selling

This has been the quote for many people who are involved in the stock markets. They always say buy low and then when you are selling, sell it high. If you are confused as to how this works, then read further. It is the method of taking a bearish or any kind of negative trade on an asset. Now, instead of buying it low and then selling it high, the investor would actually sell it high and then buy it low. This will make the profit change on a great scale in terms of the asset price. The trader here will actually think that the market might go down. So they will want to take the profit from the move by starting with a short position. This is otherwise termed as a sell trade instead of the commonly known buy trade.

Knowing how a short sell works is important to work on this strategy. This will help in increasing the profits and to make a good investment in the future. The market should be studied careful before going in for this move.  Knowledge on how short selling works is vital to make the move and to earn proper and safe profits from it.

The commodities

Before going into the topic of how to invest with commodities, let’s look into the basics of commodity in order to thoroughly understand the concept. In usual terms, a commodity is just a basic good or even a raw material which is used in the purpose of commerce. These commodities which can be in bulk or it can stand-alone are the building blocks for the other major goods and services. Taking one example here, for the creation of tea, the raw materials such as sugar and tea powder is essential.

In the case of commodities, they are little different when compared with the other goods. This is because they are both standardized as well as interchangeable. In this case, when the theory applies, the manufacture or the maker of the commodity does not matter as the same commodities will always bring the same product in an approximately same quality and price range. This statement holds true when the equivalent commodities are used.

There are various types of commodities used in commerce. The investor can choose the type of commodity which they are familiar with or can go with the most sought after one. The entire decision lies with them. The commodities can be chosen among the types of either produced or grown. Right from the breakfast of the day there are lot of commodities which are involved in the food even. The commodities market will give a brief idea of what are the commonly sought after commodities. This will help the investor in knowing the commodities which are usually in demand. 

Under the commodities market there are four types which is an individual commodity market on its own. All these are tradable ones. One is the agricultural commodity. This includes the basic food products such as tea, sugar, beans etc. The next is the energy commodity. Under this the petro products such as oil, gas, petrol, diesel etc will be seen. Further we have the metal commodities. In this brand of commodities thee is the precious metals like the gold, platinum, silver, copper etc. There is another form of commodities market which includes the livestock commodities. This branches out into cattle, meat products, general livestock etc.

The Gold

Among all the precious metals under the metal commodities the most popular one chosen for investment is gold. There are various things to be considered when going after the investment for gold. There is the method of risk diversification which has to be used in all case of investments in gold. Like any other market for investment the gold also has its own profits and losses. This market is also subject to some changes and volatility. The gold price will usually be decided based on the supply as well as demand for the material.

But in the case of gold unlike the other materials the disposal as well as saving will also impact as opposed to the actual consumption of the material. The investment in gold depends on various factors. Since there is a lot of gold invested for the purpose of safety the whole demand and supply cycle has changed when it comes to gold as a commodity.

The Government Bonds

The Government is by no doubt the largest issuer of debt. In case an investor is buying the government bonds, then it means that they are giving money to the government to keep for a certain number of years. For this the government will pay certain amount of interest which will happen regularly and in regular intervals.  This will be based on the loan amount. The face value of the bond will remain the same. The maturity period will differ and any one can invest here. 

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Created on Dec 3rd 2018 08:29. Viewed 270 times.

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