The Basics of Trading Instruments

Trading instruments used in trading can be categorized into a few different categories. The main groups of trading instruments are money market instruments, stock market instruments, bond market instruments, futures market instruments, commodities trading instruments, currency trading instruments, and stock exchange instruments. Each category has a different level of importance. The list is as follows:

There are various options available to traders for trading depending on their money management needs. For example, some traders use the money market instruments that are fixed or floating exchange rates. A fixed rate transaction means that the value of one unit of a certain instrument may not vary depending on the fluctuations in the value of the currency.


In contrast, the other types of market transactions may include open market purchases and sales of a commodity, or the bid/ask spreads of a particular stock exchange. This allows traders to hedge their positions in cases where they foresee a falling price. A floating exchange rate allows for the exchange rate to vary based on information concerning the fundamentals of the specific commodity concerned.


Trading in the stock market or the bond market involve the purchase or sale of stocks or bonds. This may be done using a contract for difference or a call option. Another option is to hold a position in the futures market and make purchases or sales using a futures contract.


Commodities trading involves the buying and selling of commodities using currency. Prices are quoted using the European scale. Futures trading includes short selling of futures contracts.


A foreign exchange or futures contract is generally transferred from one person to another at a specific price. This is known as foreign exchange or forex trading.


Stock trading can be done on the stock exchange, in the foreign exchange, or in futures markets. There are also futures contracts traded in the stock exchange. Foreign exchange trading involves trading using the currency of one country to buy or sell a product, or the currency of another country to buy or sell a product.


Futures on a currency index exchange may either be a forward contract or a call option. It is also possible to create an interest only contract with the option to sell the underlying contract at a specified price at any time. As in a futures contract, there are several options to purchase or sell a futures contract.


Exchange traded funds (ETFs) allow investors to purchase stocks, bonds, commodities, and even currencies in a simple, standardized manner. The advantage of ETFs is that they are more liquid than shares. Also, with the increase in the value of ETFs, it is possible to buy and sell smaller amounts of shares with fewer brokerage fees.


One of the main types of trading instruments is futures contracts. They can be bought and sold on the NASDAQ stock exchange or the Chicago Board of Trade (CBT).


The US stock market can be divided into various sectors. Futures can be bought and sold on the CBT. The investment of futures contracts includes these four basic trading instruments, but there are many more.