The Stock Market. Once a company reaches a certain size it can offer shared ownership to private investors in the form of ‘Shares’. These are bought and sold in the Stock Market, through a small number of established Stock Exchanges, where each company is given a symbol (or ‘stock ticker’), such as GOOG (for Google) or AAPL (for Apple Computers). Some of the major stock exchanges include the New York Stock Exchange (NYSE), the American Stock Exchange (AMEX) the London Stock Exchange (LSE) and the Tokyo Stock Exchange (TSE).
If you have confidence in the value of a company increasing over to time, you may want to buy some shares in that company. Likewise if you think the value will decrease you may wish to sell shares.
The Commodities Market. Commodities are generally raw physical products such as grains, metals or oil, which can be bought and sold in standardized ‘lots’, depending on a person’s outlook on the value of that commodity. They are traded through a commodities exchange such as the Chicago Board of Trade (CBOT) or the London Metal Exchange (LME).
The Futures Market. Trading Futures is a way of securing an asset at today’s prices, but not actually taking ownership of it until a future date. Transactions are conducted by way of contracts, traded on a Futures Exchange, such as the NYSE Euronext exchange or the InterContinental Exchange (ICE Futures Europe).
There are several other types of financial markets including the Money Markets (for short term borrowing and lending), Insurance markets (for protecting against risks), Bond Markets (which provide financing through bonds), Derivatives Markets (for Futures Contracts and Options), and so on, but many of these markets can be too complicated for beginner traders to need to worry about. We would suggest that the four main types outlined in this section above will provide more than enough scope to build your experience.
They are also listed in order of our view of their relative complexity, so we would suggest Foreign exchange as the easiest place to start, followed by Stocks, then Commodities, and then Futures as you become more advanced and confident in your trading.
