Types of Forex Products

ByRichard Broomstick

Expert Author Richard Broomstick

A great path for any new investor is to trade on a demo account and test possible strategies that could be employed on real Forex trading environment, before considering investing any real money. Another great advantage of demo accounts is that it assists investors in adjusting to the platform and learning the different options that are available to them. Regardless of technical or fundamental, any type of analysis can be easily achieved by selecting a broker that offers a well structured and optimized platform that you can test through a demo account. In addition make sure to research the different privacy options offered by brokers to ensure that your personal information and trading activity stays safe. In this article we are going to present the variety of different products types offered by brokers and discuss the way they are traded today.

A common misconception about Forex trading is that the industry is evolved around the trading of only a limited amount of currency pairs. The reality is that the number of instruments offered by brokers is extremely large with some firms having more than 200 different currency pairs, spot metals, futures and shares. Similar to other investment sectors each tradable instrument has it owns value and the factors affecting its direction are linked not only to the market as whole but also by instrument specific criteria. This basically means that different factors affect the price of silver for example than the EUR/USD currency pair. Keep in mind that brokers usually charge different commission fees in the form of spreads for each tradable Forex instrument.

The main types of tradable products in the Forex market today are:

1) Currency pairs: The most popular Forex product on the market today, currency pairs are traded by investors worldwide with the most popular being the majors such as EUR/USD, GBP/US and USD/JPY.

2) Spot metals: This type of Forex products is mainly focused around the trading of spot silver and spot gold. Their popularity has been increasing amongst traders over the last few years.

3) Futures: Retail investors can also trade a variety of commodities and indices such as wheat, DAX, NYSE and oil.

4) Stock: CFDs on stocks such as Amazon, Tesco, Wal-Mart and Google are also available.

It is essential for every trade to analyse each instrument individually and see the different factors that affect its price and the trading fees charged by brokers.

Richard BroomStick is a financial writer. Check out his Pepperstone review and eToro expert review.