Asset Types in Forex Trading
The scope of tradeable assets extends far beyond currencies. Learn about the seven common asset types available through CFD trading.
What Can You Trade?
In online forex markets, assets are traded as Contracts for Differences (CFDs). CFDs let you speculate on price movements without owning the underlying asset.
Currency Pairs
Trade one currency against another. The foundation of forex trading.
Examples: EUR/USD, GBP/USD, USD/JPY
Commodities
Natural resources including precious metals, energy, and agriculture.
Examples: Gold, Silver, Crude Oil, Coffee
Stocks
Shares of publicly traded companies from global stock exchanges.
Examples: Apple, Amazon, BMW, Sony
Indices
Baskets measuring the performance of specific markets or sectors.
Examples: Dow Jones 30, S&P 500, DAX 30
Cryptocurrencies
Digital currencies using blockchain technology for decentralised finance.
Examples: Bitcoin, Ethereum, Litecoin
ETFs
Exchange-traded funds tracking specific industries or asset baskets.
Examples: SPY, GLD, EEM
Bonds
Government and corporate debt securities with interest payments.
Examples: U.S. Treasury Notes, Euro-Bund
Currency Pairs
A currency is a standardised measurement of a country's economic value. Currency pairs are formed between national currencies of two different countries.
The 8 Major Currencies
These are the most traded and most liquid currencies in financial markets.
Major Currency Pairs
Formed between USD and other major currencies. Represent 85% of total forex trading volume.
| Pair | Name | Nickname |
|---|---|---|
| EUR/USD | Euro vs. U.S. Dollar | Fiber |
| GBP/USD | British Pound vs. U.S. Dollar | Cable |
| AUD/USD | Australian Dollar vs. U.S. Dollar | Aussie |
| NZD/USD | New Zealand Dollar vs. U.S. Dollar | Kiwi |
| USD/JPY | U.S. Dollar vs. Japanese Yen | Gopher |
| USD/CHF | U.S. Dollar vs. Swiss Franc | Swissy |
| USD/CAD | U.S. Dollar vs. Canadian Dollar | Loonie |
Minor Currency Pairs
Formed between major currencies, except USD. Second most traded group.
Exotic Currency Pairs
One major currency paired with an emerging market currency. Higher volatility and wider spreads.
Commodities
Natural resources used as raw materials. Three main categories: precious metals, energy, and agriculture.
"Commodities such as gold and silver have a world market that transcends national borders, politics, religions, and race. A person may not like someone else's religion, but he'll accept his gold."
— Robert Kiyosaki
Precious Metals
Gold
The most traded precious metal. A symbol of wealth since ancient times. Considered the #1 safe haven during market uncertainty.
Silver
Shares similar features to gold with strong price correlation. Important raw material in electronics and healthcare industries.
Platinum & Palladium
Rare metals used in automotive, aviation, and space industries. High industrial demand drives prices.
Energy
Crude Oil
The #1 energy source and most popular energy commodity. Brent Oil (European benchmark) and WTI (American benchmark) offer excellent volatility for traders.
Natural Gas
The rising star of energy. More cost-effective and environmentally friendly than crude oil. Easier to extract, store, and transport.
Agriculture
Agricultural commodities include crops and livestock. Common examples: Corn, Soybean, Coffee, Wheat, Cocoa, Sugar, Cotton. Uses range from food and nutrients to fuel and industrial raw materials.
Stocks
Financial contracts representing ownership in a business. When companies go public via IPO, their stocks become available for trading.
"In investing, what is comfortable is rarely profitable."
— Robert Arnott
U.S. Stocks
The largest economy with the world's most valuable companies. NYSE and NASDAQ dominate global trading volume.
Popular: Apple, Amazon, Google, Facebook, Microsoft
Exchanges: NYSE ($22.9T), NASDAQ ($10.9T)
European Stocks
Royal economies united through the EU. Home to major conglomerates across finance, energy, and automotive sectors.
Popular: Royal Dutch Shell, BP, Volkswagen, BNP Paribas
Exchanges: LSE, FWB (Frankfurt), Euronext
Asian Stocks
China and Japan are the 2nd and 3rd largest economies. Fertile lands and large populations fuel growth.
Popular: Toyota, Sony, Samsung, BHP, Sinopec
Exchanges: Tokyo, Shanghai, Hong Kong
Trading tip: Stock trading is especially active during quarterly earnings seasons and economic crises. Asian stocks generally follow U.S. trends due to strong trading partnerships.
Indices
Financial baskets measuring the performance of specific assets in a market or industry. Serve as benchmarks to monitor market valuations over time.
Dow Jones 30
USA30 largest U.S. blue-chip companies
S&P 500
USA500 largest U.S. publicly traded companies
NASDAQ 100
USA100 largest non-financial NASDAQ companies
DAX 30
Germany30 largest German companies on Frankfurt Exchange
FTSE 100
UK100 largest companies on London Stock Exchange
Nikkei 225
Japan225 top-rated companies on Tokyo Stock Exchange
How Components Are Chosen
Management boards decide methodology. Components are usually the highest-valued assets in their markets. Companies must meet reporting and performance criteria to remain listed.
What Affects Index Prices
All factors affecting stock prices also affect indices. Earnings seasons, tax changes, new technologies, and economic events all impact. High-weight components have larger influence.
Cryptocurrencies
Digital finance products using blockchain technology. Offer peer-to-peer transactions that are superfast, encrypted, anonymous, and low-cost.
Bitcoin (BTC)
The original cryptocurrency, published in 2008 by Satoshi Nakamoto. The benchmark for all digital currencies.
Ethereum (ETH)
Second-largest crypto with smart contract functionality. Powers decentralized applications and DeFi.
Other Altcoins
Alternative coins including Litecoin, Ripple (XRP), and Bitcoin Cash. Most are forks of Bitcoin or built on its technology.
High Risk Warning: Cryptocurrencies have large-scale price fluctuations due to low liquidity compared to traditional markets. They are high-risk / high-return assets. Bitcoin reached $19,000 in December 2017 before significant corrections.
ETFs & Bonds
Investment funds and debt securities offering different risk/return profiles for portfolio diversification.
Exchange-Traded Funds (ETFs)
Investment funds traded on stock exchanges. Each ETF owns a portfolio of assets focused on a specific industry or market. Trading ETFs avoids high-risk exposure to buying each asset individually.
Treasury Bonds
Debt securities issued by governments or corporations. Purchasing a bond means giving a loan in exchange for interest payments. Often regarded as the safest investment option.
Backed by U.S. government. Maturities from 2-10 years.
German government bonds. Benchmark for European fixed income.
British government bonds with high liquidity.
Issued by Japan with various maturities.
Multi-Asset Brokers
Trade all these asset types from a single account with these regulated brokers.
AvaTrade
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Pepperstone
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Frequently Asked Questions
Common questions about trading different asset types.
What is CFD trading?
CFD (Contract for Difference) trading lets you speculate on price movements without owning the underlying asset. You profit from the difference between opening and closing prices. CFDs offer leverage, allowing you to control larger positions with less capital, but this also increases risk.
Which asset type is best for beginners?
Major currency pairs like EUR/USD are often recommended for beginners due to their high liquidity, tight spreads, and predictable behavior. Avoid exotic pairs and highly volatile assets like cryptocurrencies until you gain experience.
Can I trade all these assets with one broker?
Many modern forex brokers offer multi-asset trading including currencies, commodities, stocks, indices, and cryptocurrencies. AvaTrade, eToro, and similar brokers provide access to thousands of instruments from a single account.
What's the difference between trading forex and stocks?
Forex markets are open 24/5 with higher leverage and no central exchange. Stock trading happens during exchange hours with lower leverage but potential dividend income. Forex has higher liquidity and lower transaction costs.
Are commodities like gold good for hedging?
Yes, gold is considered the premier safe-haven asset. During market uncertainty, investors often move money into gold, driving prices up. Silver and other precious metals also serve as hedges against inflation and currency devaluation.
How do indices work as trading instruments?
When you trade an index, you're speculating on the collective performance of its component stocks. Index movements reflect market sentiment for that region or sector. Higher-weighted components have more influence on the index price.
Ready to Start Trading?
Open a demo account to practice trading different asset types risk-free. When confident, start live trading with a regulated broker.
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