Shares
Indices
Commodities
Treasuries
ETFs
Currencies
Currency derivatives are used for currency arbitrage or to hedge against foreign exchange risks. Importers and exporters use them to protect against domestic currency fluctuations. Currency derivatives can be traded in currency pairs, such as USD/INR and EUR/INR, or cross-currency pairs, such as EURUSD and GBPUSD.
Currency derivatives are traded on stock exchanges or over-the-counter (OTC). The foreign exchange options market is the largest and most liquid options market.
Foreign exchange derivatives can improve economic efficiency by providing businesses with tools to reduce financial risk and founding costs.
When you buy a share, you are buying a small part – or ‘unit of ownership’ – in a company. The benefit of trading shares is receiving dividends which are usually paid out by the company twice a year.
Commodities can be an important way to diversify a portfolio beyond traditional securities – either for the long term or as a place to park cash during unusually volatile or bearish stock markets.
Today, tradeable commodities fall into four categories – Metals, Energy, Livestock & Meat, and Agricultural; and are mostly traded in two forms – cash and forward – with the settlement (or delivery) dates being the main difference between the two.
Indices provide the best way to gauge the performance of an industry, sector, or an entire countrys stock market. If, on average, the share prices of the companies making up the index go up, the index will rise with them. And if they fall, it will drop.