Remember the time when people only used to trade in the shares and too were highly limited as people used to think that this is a mode of secondary income. However time changed and now the amount of people considering all the varied range of investment and trading options has increased with a great pace. You have options like share trading, commodity trading and forex trading these days. This article draws a basic comparison between all of these three types of trading options to help you understand what is more suitable for you as an investor.
- Understanding the basics
Equity is a term used to talk about the shares. So when you invest in the shares belonging to any company that is listed on the NSE or BSE, it is called equity trading.
Commodity is a term that is used for the metals, agricultural products, precious metals, natural gas, crude oil, etc. Lately commodity trading is becoming very popular amongst the traders.
Also known as currency trading, is where you trade and place orders on exchanging currencies. This is an option for you if you are looking for some great trading to make money from the money market.
- Understanding the differences
As the above mentioned basic definitions state, there are a lot of differences amongst all of these three options. Take a look at some of the key factors on the basis of which differences can be drawn.
In stock trading, you have the options of spot market along with the derivative market. In contrast to this there is only the derivative market for the commodity market and online forex market.
When you plan to invest in forex market the amount of risk that you would b exposed too would be the highest. Second option on the grounds of risk is the commodity market while the share trading or equity trading is believed to be the least risky kind of trading.
One needs to do some good amount of research in very kind of investment as even if you invest in the stocks thinking the risk is minimum, there are chances where the company’s business drops or it ends up being bankrupt. Due to this, it becomes essential to make correct investments.
- Trading methodology
Just as there are different options to invest in all the three categories being talked about here, same is the case with the trading methodologies. Although with the options of online trading, not a lot of hassle is involved, what needs to be understood here is that you would always need a firm in between which is known as stock broking company or stock brokers. With various options like options, future, intraday, delivery, etc. one has to select the trading methodology depending upon their goals.
Depending upon the type of trading plan you choose you would be charged different brokerages in stock, commodity and currency trading respectively.