Like I explained in Lesson 1, Forex is an online market where different instruments are traded. These instruments could be currencies, stocks, oil, commodities and index of stocks. In this Lesson, we are going to explain those instruments and how they are classified.
Forex, initially started with the exchange of currencies of different countries until it grew into a level where all other financial instruments are traded. These instruments are represented with their corresponding initial, which are always 3 letters. They are categorized as follows: (though dependent on the broker you are using):
- Currencies: This is the major instrument traded in foreign exchange market. They are divided into 2; major currencies and minor currencies
- Major: Australian Dollar (AUD), US Dollar (USD), Euro (EUR), Great Britain Pound (GBP), Swiss Franc (CHF), Japanese Yen (JPY) Canadian Dollar (CAD), New Zealand Dollar (NZD)
- Minors/Crosses: Singapore Dollar (SGD), Chinese Yuan (CNH), Turkish Lira (TRY), Brazil Real (BRL), Mexican Peso (MXN), Russian Ruble (RUB), South African Rand (ZAR)
These currencies are traded in pairs, because it involves an exchange of one currency with another currency. All currencies are represented by the symbols which are abbreviation of 3 letters of each currency.
- Equities/CFDs: These are companies’ shares/stocks from Major Stock Exchanges of the World. Basically, the shares traded are from the European Stock Exchange (mainly France and Germany), London Stock Exchange (Great Britain) and the New York Stock Exchange, (The US)
- Metals/Commodities: They are: Silver (XAG), Gold (XAU), Palladium (XPD), and Platinum (XPT). These commodities and traded against the US Dollar (USD) and Euro (EUR)
- Energies/Oil: They are: (US Oil (WTI), Brent (CL_Brent) & Natural Gas (NGAS).
- Cryptos (Bitcoin (BTC), Dashcoin (DSH), EOS, Etherum (ETH), Iota (IOT), LiteCoin (LTC), NEO, OmiseGO (OMG), SAN, Tron (TRX), Monero (XMR), Ripple (XRP), Zcash (ZEC). They are traded against three major currencies; US Dollar (USD), Euro (EUR) and the Great Britain Pound (GBP).
- Major Indices (Australia 200, Spain 35, Euro 50, France 40, UK 100, German 30, HongKong 50, Nasdaq 100, S&P 500, Dow Jones Industrial Average (DJI or US_30)
Different Brokers offer different instruments as much as they can.