Education
If you want to be a trader but don't yet know what, how, or where to trade — this is the place to start. By the end of our academy you'll be informed, enlightened and empowered to start trading for real.
So, you want to be a trader, but you don't know what to trade, how to trade, or where to trade? This is the place to start.
By the end of our trading academy you'll be informed, enlightened and empowered to start trading for real. Let's get down to business: if you want to trade the financial markets, you need to understand what the financial markets are.
Don't worry if you're unsure — you may know more than you think. The financial markets go by many names: the stock market, the capital markets, or simply the markets. Put simply, the financial markets are where buyers and sellers come together to trade assets.
There are different types of markets, different participants, different products and different kinds of investor. To understand the markets fully, it helps to understand the players involved.
An international flow of money chasing money.
There are three main global financial centres — Tokyo, London and New York — and several distinct types of market: foreign exchange and money markets, equities, commodities, fixed income and ETFs, and emerging markets. These products are traded on what are known as exchanges; one of the best known is the NYSE (New York Stock Exchange).
The institutions that make the markets move.
Now that you have a basic understanding of what the financial markets are, take a look at the institutions that make them. The main participants are commercial banks (retail and investment), brokers (electronic and voice), institutional investors such as pension funds and hedge funds, and central banks such as the Bank of England.
Exchange-based versus over-the-counter.
There are essentially two methods of trading. Exchange-based trading is conducted on a centralised, highly regulated exchange — examples include NYSE, NYMEX–COMEX, CME, CBOT, LSE, LME and IPE. Over-the-counter (OTC) trading is conducted off-exchange, usually directly between banks through a dealer network — examples include the inter-bank currency market and the derivatives and bond markets.
Hedgers and speculators.
What kind of trader are you? Most traders fall into one of two camps. A hedger is motivated not by profit but by reducing the risk of adverse price movements in a security. A speculator seeks large profits in return for large risks by trying to anticipate price movements in the hope of quick, sizeable gains.
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