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Vahrokh Vain > Economy and finance > Securities > Trading > Markets

Markets

24 February 2013 By vahrokh

 

 

Markets: introduction

Market introMarkets are a fascinating, fundamental yet so unknown feature of ancient and modern life alike.

The first part of this chapter shows a brief general introduction to the markets, the second goes deep into the more theoretical elements that are at the foundation of the markets.

This trading course will focus a lot on currency pairs trading, also known as Forex. The reason for this is because Forex is the lowest entry barrier, cheapest financial market a perspective trader may start training with. Whereas other markets could require expensive software, market data feed fees and a minimum of several thousands dollars account, Forex may be approached with as low as .

Markets: the basics

Markets are not something complicate or abstract, they are something we live every day. Every time someone buys or even barter something, a trade happens. The place where this activity happens is called a market. The most basic market features a buyer and a seller, this scales up to thousands of buyers / sellers, to exchanges and brokerages but in the end the concept is still the same: counterparts taking one of two positions: buying (also known as “going long”) or selling (also known as “going short”).

TComplex trading platformhis course is aimed at trading a specific kind of assets, called “financial products“, also known as securities. It also covers the markets where these securities are exchanged. Securities have often used to be contracts written on paper. They are a legally binding contract between two or more parties often precisely specifying all sorts of fine details. Here is an example of a very common future contract, called e-mini S&P 500.

These days most contracts are electronically traded through high speed dedicated communication lines and Internet.

The markets may be operated with this method. Each market may be tradeded by using specific software called “trading platforms”. Those range from free solutions with basic charting capabilities and market orders entry to very expensive and complicate platforms that include very advanced orders structures.

Brief list of common markets

Follows a list of the most common markets and some of their characteristics.

  • Forex or currency pairs: the easiest to get into, the lowest entry barrier of all. Trading platforms often come free (expecially one called Metatrader), brokers accepts small accounts, some times as low as . Despite this, Forex markets are not the simplest to tackle of all due to an amount of “background trading noise” that may somewhat affect price.

  • Futures, featuring currencies, indexes, metals and many other commodities: they have higher requirements than Forex. The higher fees and the exchanges opening hours sometimes limited to the U.S.A. time zones work hours, make trading futures somewhat of a more difficult choice. Often times the brokers require a recurring payment to use their platform, they also often require to pay for the market price data feed. Sometimes they even ask a fee to give access to historic data. Often times, brokers demand several thousands of dollars to open an account. These amounts are required because of a feature called margin usually used in conjunction with another feature called “leverage“. Leverage lets traders earn more profits (or take bigger losses) by effectively multiplying their money at market. Futures come with medium and high leverage and this requires a larger buffer in their margin account.

  • Shares, stocks: these are the most classic markets. They come with very low leverage and easily require accounts outside of the grasp of a new trader. Furthermore they have commissions not seen in Forex and managing open positions in them is harder. In fact they often show a low liquidity (this means, not many traders in those markets and not much money) and thus high volatility that may kick traders out of their trade.

  • ETF, funds etcetera: those are more advanced and sometimes illiquid and deceiving markets (expecially the inverse ETFs). It’s suggested not to trade them until a good experience has been gained.

  • Options and other markets: those are advanced markets best left to those with great experience, that is not this course’s audience.

 

Further markets basics study

Before proceeding with the rest of the course, the Reader should visit the following Baby Pips web sites and complete their beginner tutorial, called “school”, all down to “graduation”. This tutorial provides a very newcomer friendly introduction to Forex, this course’s choice as marketplace due to it being fast, easy and cheap to get started into.

English The English version of the course is available at this location.

Italian The Italian version of the course is available at this location.

~1~
  • Price Action Trading Course
  • Market, price and trading basics
  • Credits
  • Course components
  • Useful books and references

Related posts:

  1. Price Action Trading Course
  2. Course components
  3. Market, price and trading basics
  4. Key to the course abbreviations and acronyms
  5. Credits
  6. Useful books and references
  7. An eye opening wake up call about this course and the hard work ahead of you
Pages: 1 2 3 4 5 6

Filed Under: Trading Tagged With: course, EvE Online, free, market, PASR, price action, trading, tutorial, Vaerah Vahrokha, Vahrokh, video

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Comments

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  2. wykrywacze metalu says

    29 March 2013 at 22:59

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Definitioner

1 (OHLC)
Open, High, Low, Close (and sometimes Volume) data, is a finance industry standards format used to represent price evolution during a certain period of time (daily, weekly, hourly...). OHLC data are consumed by financial analysis applications and by charting software to represent price action.
1 (audit)
The general definition of an audit is an evaluation of a person, organization, system, process, enterprise, project or product.
1 (Meta game)
Meta gaming is a broad term usually used to define any strategy, action or method used in a game which transcends a prescribed ruleset, uses external factors to affect the game, or goes beyond the supposed limits or environment set by the game. Another definition refers to the game universe outside of the game itself.
1 (emergent)
Emergent gameplay refers to complex situations in video games, board games, or table top role-playing games that emerge from the interaction of relatively simple game mechanics.
1 (sandbox)
A sandbox game is a type of video game design where a player can roam freely through a virtual world and is given considerable freedom in choosing how or when to approach objectives. Sandbox emphasises a paradigm where, as in a physical sandbox, the user is entertained by his ability to do as they wish creatively and with there being "no right way" of playing the game
1 (discretionary)
A discretionary method is a trading method where little or no mechanical tools and procedures are used to decide the trades. A discretionary trader applies a solid ruleset basing on a flexible interpretation of the market
1 (PLEX)
A Pilot License Extension (PLEX) is an item that adds 30 days of game time to an EvE Online account. It is freely traded like any other in game item. CCP accepts to convert in game PLEXES to real money in case disasters and emergencies happen.
1 (NEISIN)
A New Eden Interstellar Securities Identification Number (NEISIN) uniquely identifies a security. While its structure is identical and strictly compliant with "real life" ISINs, NEISINs are tailored to New Eden investments and contracts.