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Financial Instruments

Stock Market: – It refers to collection of markets and exchanges, where the issuing and trading equities, bonds and other sorts of securities takes place.

In general term, it is an area (called as Exchanges), where all the companies listed or registered there names.And people are trading to these companies through brokers or sub-brokers.

Types of Markets: – We have different types of markets given below.

  • Equity
  • Debt
  • Derivatives
  • Commodities
  • FOREX

(Equity) The value of an asset less the value of all liabilities on that assets.

In simple term, it is an amount after deduction of your liability from your assets.

[Assets:  Anything gives money to your pockets in a continuous basis. Liability: Anything takes money from your pockets in a continuous basis]

Equity = Assets – Liabilities.

(Debt) It refers to something (like amount of money) owed by one party, the borrower to a second party.

The most common form of debt are loans, including mortgages, auto loans and credit card debts.

In corporate terms, bonds and commercial papers are common types of debt.Bonds are type of dent instruments, that allows a company to generate funds by selling the promise of repayment to investors. Commercial paper is a short term debt with a maturity of 270 days or less.

(Derivative) Derivative is a contract that derives its value from the performance of an underlying entity.

It is a contract between two or more parties based upon the assets or assets. It’s value fluctuating based on underlying assets. The most common underlying assets are stocks, bonds, commodities, interest rates and market indexes.

It is up Four types: Forward, Futures, Option and Swap. Generally we are using two types in our trading Futures and Option.

Futures contracts are one most common types of derivatives. Future contact is a legal agreement to buy or sell a particular financial instruments at a predetermined price at a specific time in the future.

Option is a product, generally used for hedging or creating strategy.

(Commodity) Commodity means the basic raw material, which is using to make different products. Example: – Gold, Silver, Copper, Natural Gas, etc.

And Commodity market means, where we are trading primary economic sectors rather than manufactured products.

(FOREX) Forex exchange market is a globally decentralized market for the trading of currencies.The FOREX market is made of up banks, commercial companies, central banks, investment management firms, hedge funds, retail FOREX brokers and investors.

(Image Courtesy : pixabay.com/en/money-computer-desk-finance-931423/)

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