Most Common Asset Traded

The forex market is one of the most revenue-generating markets in the World. Daily, it produces about 5-6 trillion Dollars. But do you know why it is so productive?. The answer is the versatility of the market. The forex market covers thousands of products. There are also misconceptions about the instruments of the forex market. Although the forex includes only currency pairs, you can utilize many products. This article is about the most common assets traded in the forex market, asset types, and many facts regarding them.

What is an Asset?

First of all, we want to clear your concept about an asset. According to the academic definition,

Any resource owned by a person, business, or an economic entity that could generate a profitable economic result. An asset can also be saving like property, jewelry, insurance, or even prize bonds. However, in the forex market, the assets are referred to as the following.

Most Common Assets Traded in FX

In forex trading, products you can trade products as CFDs. Here we will mention the most common assets traded in the forex market one by one.

They are arranged ascendingly as per their demand and use.

  1. Currency pairs
  2. Commodities
  3. Stocks
  4. Indices
  5. Crypto-currency
  6. ETFs
  7. Treasury Bonds

Now we will discuss them comprehensively.

1. Currency pairs

Currency refers to the standard measurement unit of a country which denotes the economic position of the country. Every currency is abbreviated by three letters. For instance, GBP shows the Great Brittan Pound as the currency of England is Pound Sterling. There are eight most frequently traded currencies in the World.

  • United States Dollar, USD
  • The Great Brittan Pound Sterling, GBP
  • Japanese Yen, JPY
  • Eurozone Euro, EUR
  • Australian Dollar, AUD
  • Canadian Dollar, CAD
  • Swiss Franc, CHF
  • New Zealand Dollar, NZD

In the forex market, currencies are traded in pairs. Forex pairs have a diverse classification.

Most Common Asset Traded

Major Currency Pairs

In this currency pairing, each main currency has a pairing with the USD. Euro and Dollar (EUR/USD) is the most traded pair. Almost 80-85 percent of the trading volume is the result of trading by these pairs.

These pairs are AUD/USD, GBP/USD, USD/JPY, USD/CHF, NZD/USD, and EUR/USD.

Minor Currency Pairs

The pairing of two major currencies except the United States Dollar makes a Minor currency pair. It has three classes

  1. Euro Crosses– When a European currency has a combination with a Major Currency like EUR/JPY.
  2. Pound Crosses- When the Pound has paired with other major currencies, EUR/NZD.
  3. Yen Crosses- When the Japanese Yen pairs up with other major currencies like JPY/CAD.

The Exotics

The pairing of frequently traded with a less traded or developed economy currency makes an exotic pair.

For example, the pairing of USD with Thailand Bhat makes Dollar Bhat.

Other Currencies

  • The Scandies ( currencies of Scandinavian countries)
  • G10 Currencies ( most traded and liquid currencies)
  •  CEE Currencies ( currencies of Central and Eastern Europe)
  •  The BRICS ( most emerging countries)

You will learn more about the currency pairs in our next articles. However, move on to the next most common asset traded in the forex market.

2. Commodities

Commodities are interchangeable consumer goods that are often used as raw material and also for trading purposes. This group is also one of the most common assets traded in the Forex market.

Commodities are divided into three classes.

  • Energies
  • Metals
  • Agriculture

Metals

The precious metals are the most common asset traded as a commodity in the forex market.

Precious metals include Gold, Silver, Platinum, Palladium, and Copper. Gold and Platinum have a distinctive position due to their ornamental use. Similarly, these metals are the most traded instruments after currency pairs. Gold is considered as the safest instrument to trade. Among all the classes of commodities, most of the financial brokers and traders prefer Gold.

Energies

This type of commodity includes all-natural energy sources like Oil or Gas products along with their derivatives. These energies have high usage in every type of industrial and domestic purposes. 

  • Crude Oil is the most commonly traded energy asset. WTI Crude Oil is the first choice of all brokers due to its high return and liquidity.
  • Natural Gas and Brent Oil are also popular trading products among the traders.

Agricultural Commodities

They are not traded heavily. However, we cannot neglect their value and economic benefits. These are Cotton, Soya beans, wheat, and Sugar, etc.

3. Stocks

Stocks are financial contracts highlighting the ownership of a company by buying shares of that particular company. Shares of Netflix, Apple, Disney, and Facebook are examples of Stocks.

When a company lists on the Stock Exchange by an Initial Public Offering an IPO, that company can sell his shares. Similarly, whenever someone buys shares of that company he the company gets investment from the buyer. In this way, the company receives money through the business market. The investor obtains the share according to his investment, which may be a profit or loss. The company issues a financial report quarterly to all of its shareholders to acknowledge them with all circumstances.

 There are three types of Stocks.

US Stocks

As it is clear by its name, the stocks of the American companies are the U.S Stocks.

American Stocks include the most expensive stocks such as Apple, Microsoft, Amazon, and Google.

The United States has the title of the World’s biggest economy. NYSE and NASDAQ are the world’s largest stock exchanges.

Asian Stocks

Asian stocks are the shares of the Asian Countries.  Toyota, Samsung, Shanghai, and Sony are profitable stocks in Asia.

After the U.S, Asian economies like China and Japan are the 2nd and 3rd biggest ones.

European Stocks

The European Stocks include stocks from all European countries. Volkswagen is a European stock which is famous and well-known.

 London Stock Exchange is also one of the biggest stock exchanges in the World. The biggest stock exchange in Europe is Euronext.

Most Common Asset Traded

4. Indices

A group of Index is known as Indices that show the progress of the market, by which we can monitor the increase and decrease in market capitalization.

Dow Jones and S&P 50 are two separate indexes in the New York stock exchange, but when we see the total worth of market capitalization, we add both of them that create indices. Indices have different types.

  • Stock Indices, FTSE 100
  • Commodity Indices, Bloomberg commodity index
  • Currency Indices, USD Index

5. Crypto Currency

Cryptocurrencies are digital financial assets that you can use for trading. They have no existence in reality. You can refer to them as virtual or abstract currency. Cryptocurrency is not the most common asset traded in the forex market. Although, trading in cryptos has been in trend since 2017.

Bitcoin is a world-famous trading asset that was introduced to the market in 2008. After that Altcoins came into the market. But still the most popular is Ethereum and Ripple.

Most Common Asset Traded