A name does not describe the whole product
A stock represents an ownership interest in a company. An index is a measure calculated from a group of components; observing its value does not mean owning them. A currency is quoted against another currency. A future is a contract with specifications, expiry and settlement rules.
Different products can track the same market while having different sizes, costs and risks. Before practising, identify the exact product and the source of its specifications. Similar labels on two platforms do not guarantee equivalent instruments.
Prepare an instrument sheet
Your sheet should explain what is traded, where, in which currency, the price unit and how a price move translates into a financial result. Add expiry where applicable, trading hours and data limitations. Leave unknown information incomplete and find an official source; do not infer it from a chart.
Synthetic example: products X and Y both display 100 points. X is worth 2 currency units per point per contract; Y is worth 20. With one contract, a three-point move has ten times the impact in Y. The number displayed on screen does not reveal that difference on its own.
Identification exercise
Compare a stock, an index and a future. Describe what each represents without deciding whether to trade it. Understanding leveraged futures is not a requirement for starting to learn the foundations.
- Record the full name, symbol, source and unit for each example.
- Separate verified details from unanswered questions.
- Move on when you can explain the specific instrument used in your practice.
Check your understanding
ACTIVITY · AT YOUR OWN PACE
Apply the idea before continuing
Write your answer before opening the reasoning. All prices, quantities and outcomes in this activity are hypothetical. Keep your explanation in your own notebook; it is not sent to the server.
The case
X and Y both quote at 100 points. One X contract is worth 2 units per point; one Y contract is worth 20. Assume a 3-point move.
Your task
Calculate the value change for one contract of each product. List the information needed to describe them fully.
Compare my answer with the reasoning
The changes are 6 units for X and 60 for Y, before costs. Missing details include the exact product, currency, venue, tick, hours and expiry where applicable. An identical displayed price does not imply identical exposure.
Evidence you should be able to explain
An instrument sheet stating units and missing details without guessing.
If you cannot justify it, revisit the example and state what is missing. A memorised answer or simulated profit does not replace this explanation.
Explore instrument sheets →Sources and references
- CME Group · Introduction to futures
- SEC Investor.gov · Stocks
- CNMV · Productos complejos y no complejos
Chezur examples and explanations are educational. Consult the original source to verify conditions, data and updates.
Context and review of this explanation
What information identifies an instrument before I practise?
- Topics
- Instruments · Foundations and simulation
- Level
- Beginner
- Skills
- Identify an instrument
- Examples
- Hypothetical situations illustrating the concept.
- Specialist review
- Not documented for this edition. Automated structure and internal-link checks do not establish specialist review.