3. The menu

Translation under review. The illustrations are still in Portuguese.

"If the market is a big supermarket, these are the shelves. Each one sells a different product, with a different shelf life and a different risk."

Sam
Eight supermarket shelves, each with one type of asset and its nickname: stocks (the micro-partner), fixed income (the loan), indexes (the thermometer), ETFs (the grocery basket), futures (the time machine), mini index and mini dollar (the playground), options (the insurance), commodities and metals.

A comparison. Think of the market as a supermarket. Each shelf sells a different kind of thing. The nicknames in the table are comparisons too, just to help you remember.

Shelf The nickname In one sentence
Stocks the micro-partner Tiny pieces of a real company (the little bricks from chapter 2). If the company grows, the piece tends to be worth more.
Fixed income the loan You lend money to the government, a bank or a company, and you get the interest you agreed on.
Indexes the thermometer It's not a company, it's an average. The Brazilian stock exchange index and the index of the biggest American companies show whether the overall mood is good or bad.
ETFs the basic grocery basket The ready-made package: one , and inside it comes a little bit of dozens of companies.
Futures contracts the time machine You agree today on the price of something that will be delivered in the future.
Mini index and mini dollar futures the Brazilian playground Small slices of the giant futures. The most famous ones, and the most dangerous for anyone .
Options the insurance You pay a little for the right to buy or sell something at an agreed price, up to a certain date.
Commodities and metals the real economy and the bunker Oil, soybeans, corn, cattle, coffee. And gold and silver, where money runs when panic hits.

Fixed income, in two lines. With stocks you become a partner and share the risk. With fixed income you become a : you lend, and the deal is to get it back with interest. The risk is that the borrower doesn't pay.

Why know this before looking at a chart. Each asset has a personality. A company moves for different reasons than corn or the mini index. You don't treat the bakery the way you treat the gas station.

Some are slow and calm. Others are wild and can wipe out your account in minutes. Knowing which shelf you're on keeps you from using the right tool in the wrong place.

Nobody needs to trade everything. The menu is there so you know the shelves. A lot of people end up sticking with one or two that fit their routine, the size of their wallet and how strong their stomach is.

Words in this chapter

Unit
A slice of a fund. Whoever holds a unit owns a little piece of everything inside it.
Day trading
Buying and selling the same asset on the same day.
Lender
The one who lends. With fixed income you become a lender: you lend, and the deal is to get it back with interest.
See the full glossary

End of chapter 3

Level 1, The market.

Up next · ch. 4 How a price is born "The price blinking on the screen is just the last handshake between someone who was dying to sell and someone who was dying to buy." Module A: 1 chapter left to "I know where the price comes from." Continue · 2 min

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