Introduction to securities & trading
Learn to trade anything! Here is a guide to securities and how to make money on the different securities. The chapter discusses stocks, currency trading, options, warrants, futures, forwards, commodies and other securities.
Securities can be stocks, commodity contracts, derivatives, exchange-traded funds, foreign exchange, contracts for difference, warrants, options, bonds, just to name a few. Are you confused? Read this article and you'll get a complete overview of the most important securities are and how you can make money on these.
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An effective way to make money is to use the money you already have. This is called investment or trading, depending on the timing and strategy used.
The most common securities to invest in the stocks, currencies, options, and bonds, as well as various types of funds. Here you will learn more about trading in securities, and you get a short introduction to including stock trading, options trading and currency trading.
Below you will find definitions and explanations of these securities and trading instruments and strategies: stocks, options, bonds, currencies, shorting, leverage, CFD, ETF, warrants, futures and forwards.
Stocks and stock trading
A stock is a share of a limited company or a private limited company and public limited companies (public limited company). Foreign companies go under other corporate -type name. Shares in English called shares.
Social trading
Follow and copy other traders. Social investment networks is a brilliant way to invest your money. Try the social investment network mentioned here, and you will learn a lot about how social trading actually works.
Currency trading
Currency is quite simply money. As you know, there are many different types of currency, dollar, yen, euro, Swedish krona. A currency is a means of payment which can be used in one or more countries.
Currency The value fluctuates constantly. You can see this by watching the exchange. An exchange rate describes the value of the relationship between two currencies.
If you are interested in starting to trade foreign exchange you can read our article on currency trading.
Bonds
Bonds is what is called for interest-bearing promissory notes. Risk associated with bonds is that there is always a possibility that the issuer is unable to repay the amount owed. Then the proprietor lost their money.
Why are bonds? Because there are players who need money, and because on the other hand, there are players who are willing to lend their money in exchange for getting higher returns than what they get in the bank. Some are more risky to lend to, and therefore more likely that the borrower can not service the loan.
Think of the English word " Obligation " - a commitment, when you think about bonds. The issuer of the bond holder always owe money and is obligated to repay them. If the issuer goes bankrupt or economy of the issuer not make it possible to repay the money, it's a loss for the issuer. Some types of bonds, such as Treasury bonds, is often regarded as the safest bonds. The risk that a state / country / nation can go bankrupt is indeed always present, and when one has lost money.
Shorting
Shorting allows you to make money in falling markets. When stock prices plummet and everything goes to hell... then you can laugh all the way to the bank if you have shorts in a falling market. The financial crisis was in fact good times for quite a few traders, not all logged blood red numbers in these times - some were actually extremely rich.
Shorting (or short sales) is also known in some cases as "loan sales".
It's not easy to drive with shorting on the Oslo Stock Exchange. Many will say it is impossible. However, there may be other markets where it is still necessary to engage in short selling.
Short sales can be done in many ways, for example, can operate efficiently via short sale option trading (see above).
Leverage your investments
Shifting is an informal word for mortgage investment. The other way to explain it is that one trader on credit. So, you use borrowed money to shop for.
Leverage increases the risk significantly, but can also give you far more back in returns. The fastest way to get rich in the financial markets are shifting their investments, while being right in their assumptions.
Leverage works so that, for example, can use 1.000 million of your own money, and then you get 10,000 dollars to trade for. You then have a 1:10 gear ratios.
Warrants
This has nothing to do with Warren Buffet!
A warrant is a timed subscription right. Here you have the option to buy the underlying security (eg. A stock or a currency) at a specific price by the end of the warrant.
Warrants and options have very much in common. The main difference is that warrants are an issuance of new shares, which means that the original stock price will go down to adjust the new price. Another thing is that warrants tend to have longer expiration time than options.
A warrant will be listed on a stock exchange as a separate securities and settlement takes place by making a final settlement in cash on the expiration date. As with options, there are also purchase and salgswarranter. Kjøpswarranter gives the right to redeem the warrant at a predetermined rate, salgswarrantens is the opposite, and if the price is reached, a salgswarrant be worthless.
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