Overview of the Markets
Understanding the different market types can be a difficult or confusing when starting out. Our mission is to empower you with clear, concise and actionable analysis, so you can make informed decisions in response to market trends and economic shifts.
Whether you are an experienced trader or just beginning your journey, we are here to equip you with the knowledge to stay ahead in the financial markets.
Different Market Types
Examples
NASDAQ 100
S&P 500
FTSE 100
Dow Jones
DAX 40
Indices represent a basket of the top companies in a country or sector. Instead of trading stock, you trade the overall performance of many.
Indices work by measuring the combined price movements of the products inside them. When large companies rise, so does the index.
They're moved by economic news (inflation, unemployment, GDP), interest rate changes, earnings reports, and global market sentiment.
Indices are popular with day traders since they provide cleaner price action compared to other markets, whilst also having high volume.
If you trade using technical analysis, indices provide a much less volatile experience.
Commodities are natural resources or raw materials that are traded globally.
Prices heavily depend on supply and demand and global geopolitics.
Wars, storms and legislation changes (OPEC decisions) are massive affecters of commodity prices, generally pushing prices up, whereas recession and oversupply can cause falling prices.
Scalpers like commodities due to high volatility and strong trends, tending to have clear reactions to news and macro events.
Examples
Gold
Silver
Crude Oil
Platinum
Natural Gas
Wheat
Examples
GBP/USD
EUR/USD
GBP/JPY
AUD/JPY
The foreign exchange market, also know as 'forex' or 'FX', is where global currencies are traded against each other. Essentially trading one country's economy versus another.
Currencies mostly move based on interest rates and economic strength. If a country aggressively increases interest rates, it can cause slower economic growth due to a newly increased cost of borrowing.
Please be mindful that this could also attract more foreign investment and saving, increasing demand for the local currency causing it to strengthen.
Forex is attractive to traders due to its massive liquidity (nearly $10 trillion daily), tight spreads and clear trading sessions.
Forex has a poor reputation due to the amount of scammers in it, even though it is a legitimate market.
Cryptocurrency is a very new type of market, with Bitcoin being created in 2009. The premise is that it is a fully decentralised digital currency market - no government owns it and it runs 24/7
Crypto prices are mostly driven by market sentiment and adoption. Traditional economic data can be less effective when applied to crypto markets.
This causes extreme volatility in some cases, paired with the fact it is very sensitive to social media hype and regulation news.
Traders who are able to take advantage of extreme volatility like crypto, although it is widely considered a very high risk investment and not recommended for beginners.
Examples
Bitcoin (BTC)
Ethereum (ETH)
Solana (SOL)
Dogecoin (DOGE)
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