What is trading?
Markets 101: forex, indices, commodities, metals and crypto
Learning objectives
By the end of this lesson, you'll be able to:
Describe the main asset classes available as CFDs and what drives each one
Explain the three tiers of currency pair and why majors behave differently from exotics
Explain how trading an index differs from trading a single stock
Match instrument characteristics (volatility, trading hours, costs) to your own experience level
The instrument map
A trading account looks like a single product. It behaves more like a departure board. Forex, stocks, indices, commodities, metals and crypto are all reachable from the same platform, and they behave nothing like each other. This lesson is your map - what each instrument is, what moves it, and which ones deserve a beginner's attention (spoiler: fewer than you'd think).
One thing before we start.
Everything here is traded as a CFD - a contract that tracks the price without you owning the underlying asset. Lesson 5 covers exactly how CFDs work; today we're touring what they can track.
Forex: the market everything else is priced against
A forex trade is always two decisions in one. You buy one currency and sell another simultaneously which is why prices are quoted in pairs. EUR/USD tells you how many US dollars one euro costs. Buy EUR/USD and you're long the euro, short the dollar. There is no way to be long a currency in isolation; currencies only have a price relative to each other.
That relativity is the mental shift. You're never asking "is the euro any good?" You're asking "is the euro stronger than the dollar right now?" A currency can be having a terrible year and still rise against one that's having a worse one.
Pairs come in three tiers:
- Majors: the seven or so pairs that include the US dollar on one side: EUR/USD, GBP/USD, USD/JPY, USD/CHF, AUD/USD, USD/CAD. Deepest liquidity in the world, tightest spreads, most orderly behaviour.
- Minors (or crosses): pairs without the dollar: EUR/GBP, EUR/JPY, GBP/JPY. Still liquid, but spreads are wider and moves can be less orderly.
- Exotics: a major currency against a smaller or emerging-market one: USD/TRY, USD/ZAR, USD/MXN. Spreads can be many times a major's. Moves can be sudden, driven by central bank intervention, capital controls or political events, and liquidity can vanish exactly when you need it.
What drives them: interest rate expectations above all. Currency strength largely tracks where the market thinks a central bank is heading, which is why inflation prints, employment data and central bank statements move forex hardest. Growth, trade balances and risk sentiment do the rest. These are the same macro forces you'll meet again in indices and gold, which is the point.
Hours: the forex market runs continuously from Sydney's open on Monday to New York's close on Friday. No exchange bell, no daily gap. You can react to news at 3am if you're awake for it. The weekend gap still exists as Sunday's opening price can differ from Friday's close, but within the week, price is continuous.
Costs: majors carry the tightest spreads available anywhere in a retail account. That matters more than beginners expect. As lesson D1.4 showed, spread is charged on every round trip, so the cheapest instrument to trade frequently is the one where the gap between buy and sell price is smallest.
Character: a major typically moves around half a percent in a day. That sounds unexciting, and it's precisely why it's the right place to learn. A sizing mistake on EUR/USD teaches you something. The same mistake on Bitcoin ends the lesson early.
The honest warning on exotics: the appeal is that they move more. So does the cost. A spread ten or twenty times wider than a major eats a large share of any gain, and the sharp moves that attract attention are the same moves that jump stops. Exotics are not a beginner instrument, however tempting the volatility looks.
Single stocks: one company, one story
A stock CFD tracks the shares of one company: Apple, Tesla, Barclays. Its price moves on that company's story: earnings reports, product launches, lawsuits, management drama, plus the mood of the broader market.
- What's attractive: stories are easy to follow; you probably already have opinions about companies you know.
- What's hard: single stocks can gap violently - a company reporting earnings after the market closes can open 8–15% away from yesterday's close, jumping straight over any stop-loss you placed. Stock CFDs also only trade during the underlying exchange's hours (e.g. 14:30–21:00 GMT for US stocks), so you can't react overnight.
- Example: a US tech stock trades at $180. Earnings disappoint after hours; it opens next day at $158, a 12% gap. A leveraged position had no chance to exit in between.
Note the contrast with forex. Continuous pricing means an idea can be exited as it goes wrong. Exchange-hours pricing means it sometimes can't.
Indices: trading the whole team
An index CFD tracks a basket of stocks: the S&P 500, the UK 100, Germany 40, NASDAQ 100. Instead of betting on one company, you're betting on the overall market's direction.
- Diversification is built in: one company's scandal barely dents a 500-stock index. Moves are smoother than single stocks.
- Drivers: interest-rate expectations, economic growth, risk sentiment: the same macro forces that move currencies. If you've learned why a rate decision moves EUR/USD, you already understand most of why it moves the S&P 500.
- Long hours: index CFDs often trade nearly 24/5 (with thinner liquidity outside exchange hours), so overnight surprises are partly tradable rather than pure gaps.
- Indices are many traders' favourite "second instrument" after forex majors, for exactly these reasons.
Commodities: oil and friends
Commodity CFDs track raw materials, most prominently Brent and WTI crude oil, plus natural gas and agricultural goods.
- Drivers: supply and demand in the physical world: OPEC decisions, inventories data (the weekly US inventories report can move oil sharply), geopolitics, weather.
- Character: oil is fast and headline-driven. A pipeline outage or an OPEC surprise can move crude 4–5% in a session, against roughly 0.5% for a typical forex major. Same leverage, ten times the wiggle: size accordingly or stay away until Practitioner level.
Metals: gold, the crossover star
Gold (XAU/USD) is technically a commodity but trades like a currency. It's quoted against the dollar, follows macro forces (real interest rates, risk sentiment, central-bank buying), and is liquid nearly 24/5. Gold routinely moves tens of dollars an ounce in a day.
Silver (XAG/USD) is gold's more volatile sibling: similar drivers, bigger percentage swings, wider spreads.
- Gold deserves respect, and the reason is the contract size rather than the price. A 1-lot gold position is 100 ounces, so the position gains or loses $100 for every $1 the price moves. A $15 move, routine for gold, is $1,500 on one lot. Beginners who size gold like they size EUR/USD get an expensive surprise. Many brokers offer 0.01-lot gold precisely so you can learn at $1 per $1 move.
Crypto CFDs: the far end of the volatility spectrum
Bitcoin, Ethereum and other crypto CFDs let you trade crypto prices without wallets or exchanges. Trading is typically 24/7 (or near it) and volatility is extreme by any traditional standard: Bitcoin has repeatedly moved 5–10% in a day and 50%+ in a quarter, in both directions.
Three honest notes:
- Available leverage on crypto CFDs is usually lower than on forex majors, because the volatility is already doing the work leverage normally does. Some jurisdictions cap it as tightly as 1:2 to 1:5, others not at all, so check what your own account actually offers. And treat a higher limit on a more volatile instrument as a warning rather than a feature.
- Spreads and overnight financing costs are meaningfully higher than on majors.
- If you can't yet manage risk on EUR/USD, crypto will simply find your weaknesses faster.
Which market is right for you?
Here's the comparison that matters.
as you move down the table, the same position size carries more risk. The instrument doesn't make you money faster. It makes outcomes arrive faster, including the bad ones. A beginner's edge (if any) is discipline, and discipline is easiest to practise where moves are orderly and costs are low. That's forex majors and, soon after, a major index.
- You'll meet all of these instruments again with proper tooling (pip values, margin, position sizing) in the Foundations level. For now, you know the map.
| Instrument | Typical daily range | Hours | Beginner-friendly? |
|---|---|---|---|
Forex majors | ~0.4–0.7% | 24/5 | Yes |
Major indices | ~0.7-1.2% | 24/5 | Yes |
Gold | ~1-1.5% | 24/5 | Yes (In small sizes) |
Stocks | 1-3% | Depends on exchange | Intermediate |
Oil | 2-3% | 24/5 | Intermediate |
Forex exotics | 1-3% | 24/5 | Intermediate |
Crypto | 3-10% | 24/7 | Intermediate |
Market
Leverage Available*
Margin*
Margin*
Forex
1:3000
0.03%
0.03%
Metals
1:3000
0.03%
0.03%
Forex
1:3000
0.03%
0.03%
Metals
1:3000
0.03%
0.03%
Forex
1:3000
0.03%
0.03%
Metals
1:3000
0.03%
0.03%
Forex
1:3000
0.03%
0.03%
Key takeaways
Forex is quoted in pairs: every trade is long one currency and short another. Majors are the most liquid and cheapest to trade; exotics carry far wider spreads and sharper moves
Indices smooth out single-company risk and respond to the same macro forces as currencies, making them a natural second instrument after forex
Single stocks gap over earnings and trade only in exchange hours; oil is headline-driven; crypto is the most volatile of all
Gold trades like a currency but a 1-lot position is 100 ounces, so it moves $100 per $1, so size it deliberately