FINANCIAL ASSETS: CURRENCIES AND DERIVATIVES.
Talking about financial assets and we are going to focus on currencies and derivatives are also two very common options when investing in this type of assets currencies are the means of payment of legal tender in different countries and markets International financial markets are the most traded as the US dollar is the euro and the Japanese yen and the pound sterling but well there are other currencies that are also traded there however noting that not all currencies are convertible not all are traded in The international markets originally the currencies were bought and sold to be able to acquire goods and services in foreign countries today the volume of trading in the foreign exchange market has nothing to do with transactions in the real economy but they are mainly due to The operations in the financial markets and also there is a very high percentage of speculation is important to emphasize that it is not an organized market this means that as well as if I want to compare shares of inditex or microsoft I go to the organized market and I can buy At a price at a specific price in the case of foreign exchange there is not a single market but there are many markets this is like when one is tourist in istanbul going for a walk around the city and that there are many currency exchange shops And that each one because there is a different exchange rate because this exactly the same is what happens globally in this type of market therefore it is important that when it comes to trading in currencies we take great care with which broker we are going to operate with What with which dealer to have an advantageous exchange rate that also look at the commissions and also have to look a lot at the credit risk is to say that it is necessary to take into consideration that the broker breaks then in this case no matter how well we have done ourselves Our strategy with great profitability we have removed if in the end the broker is not going to return the money because broken because we have failed in our strategy is to say that it is a very important factor that is not usually taken into account but every equis time happens some event that Makes that there are brokers that fail not in terms of currencies that variables are those that influence the exchange rate of ours to take into account evidently because in foreign exchange the strategy is to buy cheap and sell expensive good as always what affects the Price is mainly the supply and demand and that struggle between supply and demand as it depends on expectations these expectations as they depend on political and macroeconomic factors such as inflation can be evolution.
Of differential interest rates, the fiscal policy of the different countries, the evolution of the balance of payments, etc., aside from this analysis of the economic one, since we have the option of investing using strategies based on technical analysis, which also offer good results and on All are the strategies that must be followed if we want to invest in the short term we will finally comment very briefly some fundamental characteristics of derivatives financial financial derivatives there are many classes are in continuous evolution each has different characteristics as to the product itself to quantum How is it traded in what type of market and will begin to analyze them in detail is it is impossible in this introductory course however if it is important to have a basic global vision some of the best known financial derivatives are the futures options the warrants the swaps The fras.
Cfd etcetera it must be taken into account that when there is a derivative there is always an underlying asset ie the derivative is a synthetic product that is created based on an underlying asset a real asset that is also listed as shares can be the indices types of Interest raw materials energy prices and so on
Then the idea is that the derivative has a similar behavior in the price to the underlying asset the derivatives also has a number of features that are interesting to us when it comes to investing in the first place allow to make money in bullish or bearish markets this as Is good usually we think that first you buy an action for example and then it is sold and that you can not sell something that you have previously bought me well as this with the derivatives is not so to close the position I have to buy and sell or sell and Buy ie I can sell first and buy after then I close the position another advantage to the derivatives is that it is not necessary to acquire the underlying asset ie I can speculate with the price of oil but I do not need to buy a barrel of brent or a Texas barrel then is also an interesting factor that allows me to follow the evolution of an asset without acquiring that asset really must also take into account that in most of the derivatives in which we can.
Invest as private investors because the capital gains are settled daily what means good if I buy a share at twenty euros and then the price starts to fall nineteen eighteen I if I want I can keep the stock I say good because in ten years will have gone up I will sell it well and I do not have to disburse any money in this with the derivatives does not happen like that but every day I have to go paying if the eu the stocks low the derivative low I have to pay the potential losses I have to pay the handicaps and this is Something important because I can run out of money according to the action ie the derivative is going down in price also have to take into account that to be able to deal with derivatives because they usually require some guarantees that have to be deposited and when those guarantees are consumed Because I have lost all that money because my position is closed whenever it is possible to close it and there are times that I can lose more money than I have in guarantee with which it will be me and also contribute with additional money also have to be taken into account and Finally we are going to comment on the high degree of leverage that the derivatives have and that is why they are quite popular among certain type of investors to the high degree of leverage implies that with little money disbursing little money that is what the money of the guarantees
You can get a very high payout little payoff and in relation to what you disbursed I get a lot of money then a high profitability for that leverage but nevertheless you have to keep in mind that the profitability can be positive that it makes money or it can be negative then it is a factor To take into consideration good and up to here the explanation of what are the currencies and derivatives many thanks.