The Foreign Exchange market, often referred to as the Forex or FX market, is considered to be the largest and most liquid market in the world. With an average daily trading volume of approximately $5 trillion, the currency market dwarves other, more traditional means of investment such as the stock market. The Forex market is decentralised, meaning there is no central location where trades are conducted, rather, Forex trading is conducted over the counter (OTC).
Traditionally, Forex investing was reserved for major financial institutions and high net worth individuals. However, advances in technology have enabled anyone to invest in the currency market online and over 30% of daily FX trading is now conducted by retail traders. The exponential growth in the number of retail investors conducting Forex trading has been facilitated by the introduction of derivatives including Contracts for Difference (CFDs). By investing in these derivatives, retail traders can speculate on whether the value of currencies will rise or fall, without taking ownership of the underlying asset.
Gold is more accessible to the average person because an investor can easily purchase gold bullion (gold in its physical form), from a dealer or, in some cases, from a bank. However, with the advent of more advanced financial instruments gold, along with other commodities, has become much easier to invest in without having to buy the physical metal. There are now exchange traded funds(ETF) that replicate the movements of the underlying commodity, giving investors direct exposure. While not every commodity has an ETF, both gold and oil have ETFs. For example, the SPDR Gold Shares (ticker symbol GLD) trades on the New York Stock Exchange and can be traded at any time throughout the trading day. Each share of the ETF represents one-tenth of an ounce of gold, so if gold is currently $1,300 an ounce, the gold ETF will trade at $130 per share. This investment product is one of the easiest and least expensive ways to access the gold market.
One method of owning oil is through the purchase of commodity-based oil exchange traded funds(ETFs). ETFs trade on a stock exchange and can be purchased and sold in a manner similar to stocks. For example, buying one share of the U.S. Oil Fund (USO) would give you exposure to roughly one barrel of oil.
In addition, investors can gain indirect exposure to oil through the purchase of energy-sector ETFs, like the iShares Global Energy Sector Index Fund (IXC), and to energy-sector mutual funds, like the the T. Rowe Price New Era Fund (PRNEX). These energy-specific ETFs and mutual funds invest solely in the stocks of oil and oil services companies and come with lower risk. Investors have many options for getting involved with oil. These methods come with varying degrees of risk and range from direct investment in oil as a commodity, to indirect exposure in oil through the ownership of energy-related equities. Each of these investment types can be acquired through an online brokerage account.
Bitcoin and other cryptocurrencies operate on a technology called “blockchain.” You may have heard of blockchain referred to as a “distributed, decentralized, public ledger,” but the technology is actually easier to understand than that definition sounds. At its most basic level, blockchain is literally a chain of blocks—only not in the traditional sense of those words. When we say the words “block” and “chain” in this context, we are actually talking about digital information (the “block”) stored in an online database (the “chain”). Here’s how it works.
When consumers make purchases using the U.S. dollar, banks and credit card companies verify the accuracy of those transactions. Bitcoin performs this same function without these institutions using a system called “hashing.” When one person pays another for goods using bitcoin, computers on the bitcoin blockchain rush to check that your transaction is accurate. In order to add new transactions to the blockchain, a computer must solve a complex mathematical problem, called a “hash.”
Rice received a lot of attention in 2009 when Wall-Mart began limiting the amount of rice that a shopper could purchase. This action was in response to worldwide shortages that came about due to high fuel prices and adverse weather conditions. This shortage caused prices to spike, earning some knowledgeable investors a lot of money. We diversify our stock portfolio by investing in rice, there are several ways to do it.
FUTURES AND OPTION CONTRACTS
We have a brokerage account that allows us to trade futures, options and stocks
We buy an options or futures contract on rice. The ticker symbol for rice is ZR.
We enter the ticker symbol into the brokerage software and click on "Search." This will bring up a list of rice-related products and their contract dates.
We select the month of the contract that we wish to purchase and the price that we wish, to buy it at under the "Limit" price. We click on "Buy" or "Submit Order." When the price of the contract is reached, the software will automatically purchase the contract.
STOCKS AND ETFs
We buy a stock or exchange traded fund (ETF). Since rice producers are not publicly traded companies we cannot purchase their stock directly. We can, however, buy the stock of companies related to the production of rice.
We buy stock from companies that make pesticides and seed-related products related to rice.
We buy an exchange traded fund (ETF). These are funds that invest in several different, but related companies for diversification. There are several agricultural ETFs that you can consider. These include the ELEMENTS Rogers International Commodity fund (NYSE: RJA), the iPath DJ AIG Agriculture Fund (NYSE: JJA) and the PowerShares DB Agriculture ETF (NYSE: DBA).
One of the best aspects of investing your own money is the freedom you have to adopt any sort of investment philosophy that works for you. Everyone wants to make money on their investments, but beyond that premise is a wide open field. The reasons why you might choose to invest in a company reflect your personal goals and objectives and can range from a decision based on a minute analysis of a company's valuation to simply liking how a company does business.