CADET · Module F01: Your First Steps · About 20 minutes
Today's rule: We are learning what markets are, not deciding which one to trade. Examples are simplified and are not recommendations.
Your mission today
Learn what a market is, recognise five common markets, and understand the difference between owning something and trading a contract based on its price.
1. First, what is a market?
Think of a fruit stall. A seller offers mangoes, buyers decide what they are willing to pay, and purchases happen when they agree. A market is any place or system that brings buyers and sellers together.
A financial market works in a similar way. Instead of mangoes, people may buy company shares, exchange currencies or trade contracts. Prices move as buyers and sellers respond to new information and to one another.
A symbol is the short label a platform uses for something you can trade. For example, EUR/USD is a label for the euro compared with the US dollar. It does not tell you everything about the legal product, so we still need to check the details later.
2. Five common types of market
Shares (stocks): A share can represent a small piece of ownership in a company. If you own an ordinary share, you have an ownership interest, although you do not get to run the business. Share prices can rise or fall.
Foreign exchange (forex): This means swapping one currency for another. If you see EUR/USD, you are looking at the value of one euro expressed in US dollars. It is a comparison between two currencies, not a company share.
Gold: People buy physical gold, but trading platforms may also offer products that follow the price of gold. Seeing “Gold” on an app does not automatically mean you own gold bars.
Stock indices: An index, such as the S&P 500, measures the prices of a selected group of shares. An index is a measurement. To trade its price, people use a separate product such as a fund, future or contract.
Cryptocurrencies: These are digital assets recorded on computer networks. Some can be owned directly; others are traded through derivatives. Prices can move sharply, and custody and fraud risks matter.
3. An important distinction: owning versus tracking
Suppose you buy one ordinary share of a company through a share broker. You normally own a share. Now suppose you trade a CFD, which stands for contract for difference. A CFD is a contract whose value changes with a market price. You typically do not own the underlying share or bar of gold.
Why does this matter? Different products can charge different fees, use borrowed exposure, trade at different times, and follow different rules. Two apps may display the same gold price but give you very different products.
Beginner translation: The picture on the screen tells you what price you're looking at. The contract details tell you what you're actually buying or selling.
4. Which market should a beginner start with?
For learning, start with one imaginary example and get comfortable reading its price. You do not have to choose the “fastest” market. Fast-moving prices are not automatically better. They can make mistakes more expensive.
Choose a familiar-looking chart in demo mode and focus on understanding its label, whether it is a share or a contract, and whether the market has opening hours. That is enough for Cadet.
5. Plain-English glossary
- Share: A small ownership stake in a company.
- Currency pair: The price of one currency compared with another.
- Index: A number that tracks a group of prices.
- Crypto asset: A digital asset that may be held directly or through a trading product.
- CFD: A contract linked to price movement, usually without owning the underlying asset.
Practice mission: Match the description
Write down the market that best fits each sentence:
- “I own a tiny part of a listed company.” → Share.
- “I am comparing the euro with the US dollar.” → Currency pair.
- “I am watching a number representing many big US companies.” → Stock index.
- “My broker lets me trade gold's price without taking delivery of metal.” → Possibly a CFD or another derivative; read the product details.
Before your next lesson
Explain the five market types using one sentence each. Most importantly, explain why seeing the word GOLD does not prove you own physical gold.
Coming next: Why prices change, and why buying and selling prices can be different.
