In a broad sense, a financial market refers to a market whereby parties, no matter from the demand-side or supply-side, distribute capital resources through various financial tools. As a crucial stabilizing element in a capitalist economy, the financial market includes stock markets, bond markets, foreign exchange markets, commodity markets, and all derivatives markets.
Commodities are tangible assets, including agricultural products, raw materials, energy, and metals, which are often used in daily life as the basis for the production of goods and services. Commodities are normally described by “Bulk”, which generally refers to the asset class that is large in number or volume and involves considerable storage space.
Spot trading refers to transactions that take place on the spot markets, where buyers and sellers need to deliver goods immediately or within a few days after closing the deal.
Over-the-counter trading (OTC for short), also known as off-exchange trading, generally refers to trading activities not conducted on the central exchange, but through the “dealer network”
CFD, or Contract for Difference, is a relatively new type of derivative in the financial markets, where investors can start trading after paying a small amount of margin to banks or brokers according to the agreement. Most CFD transactions cover a variety of financial assets and commodities, including forex, precious metals, energy, stocks, indexes and crypto currencies. In theory, investors can trade all “underlying assets” through the concept of CFD.
Retail foreign exchange trading has become popular since 2000. Comprising numerous forex brokers across the world, the ecosystem of this industry runs different types of trading models. These types of trading models have their unique names—DD, NDD, MM, STP, and ECN are among those commonly seen.
Information that appears in the financial markets every day could possibly affect investors’ sentiments and market trend. Such information comes from different countries and large corporations, which is either compiled and disclosed by different institutes or to be released by some governments and central banks in some countries.
With the economic globalization, the interaction of economic activities among countries, including trade, tourism, consumption, and investment in various assets, becomes more and more frequent. In the process, currency transactions naturally occur. Forex / FX is the financial market which deals with currency transactions all over the world in a decentralized form.
Liquidity can be said to be the measure of the ability of an asset to convert into cash. The higher the liquidity of the asset is, the easier it is to be converted into cash, and it does not need to suffer too many unnecessary price losses due to supply and demand problems in a specific period of time.
Thanks to the advancement of information technology and the ubiquitous use of computers, trading foreign currencies (Foreign exchange, Forex) has become one of the main trades in the market. Forex trading’s popularity can be attributed to its own multiple advantages which attracted a great number of brokers who have been in the business for many years. Investors from all around the world can easily access to the information and news of the forex market.
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