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Most Traded Instruments
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Most Traded Instruments In The Financial Markets

Wed Dec 30 2020 05:53
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Choosing a financial instrument in the right way is crucial for your profitability. Some expert traders recommend the most traded instruments. While others may recommend the most active financial instruments. 

All these recommendations make new traders confused. Without any confusion over trading recommendations.  

You must figure out what are the most traded instruments in any financial market. If we start counting all the investment instruments, the list will be never-ending. But it is easy to classify all the trading instruments according to their trade volume. 

That is why a broker and a platform provider classify all the instruments as per the volume of trade. So let's find out which is the most common financial instrument that every trader trades.  

Classification of Most Traded Instruments 

Various methods of trading are there. From futures trading to futures and options products, traders have a lot of options. But the fundamentals of all these instruments are different. 

A future contract operates in a different way in the future market as compared to hedge fund trading. In the same way, forex and stocks are among the most traded instruments. But these derivative products are classified into various categories as below.  

#1. Currencies 

As you know that this list is sorted according to the trade volume. Then the asset which comes at the first position in most traded instruments is a currency. But this market asset is having the highest liquidity. 

Any kind of price action takes place in this market. Whether you want to buy or sell, there is always a demand for both of these market actions.  

Transactions in this market take place in a quick manner. The trading commission of this market is different from others. It depends upon spreads between pips rather than the fixed percentage of fees. 

If we divide fx-trading to classify the major currency pairs, then we get two categories.  

Major currency pairs: 

Almost six pairs lie in this category of currency pairs. These are the major currencies whose pairs have the USD (United States Dollar), GBP  or EUR (Euros), JPY (Japanese Yen), AUD (Australian Dollar), CAD (Canadian Dollar), and CHF (Swiss Franc). 

These pairs are the most traded instruments in the currency market.  

Minor currency pairs: 

The minor currency pairs are also vital and they are the most traded instruments in forex trading. The difference is that the major currency pairs always have US-dollar in them. But minor currency pairs never have the American dollar in them. 

#2. Stocks 

Stock exchange markets are the second most liquid market after forex markets. Stocks are important for traders who want to get stable investment options for them. When we compare risk among various markets.  

Then the stock exchange always has fewer risks as compared to foreign exchange and more. But, stocks are always considered as the most traded instruments. 

A trader needs less technical analysis, fundamental analysis. And also needs less charting in stocks as compared to foreign exchange.  

Common stocks: 

Common stocks or shares are the most traded instruments in stock-exchanges. In such stocks, a shareholder never gets a guaranteed dividend. But, the shareholder will have the right to vote in the company’s decisions.  

Preferred stocks: 

Preferred stocks are the exact opposite of common stocks. These stocks are not common and given to the shareholders only after agreements. The best thing about these stocks is they give regular dividends to holders.  

Cryptocurrencies 

The cryptocurrency market has changed the online trading sector. Many forex traders have turned towards this anonymous market. But, still, many traders are struggling to learn how to trade.  

Various reasons are behind the success of cryptocurrencies such as Bitcoin and Litecoin. These currencies are also responsible for some Ponzi scheme scams. 

But still, these currencies are growing with good speed. That is why this category of trading is in this list of the most traded instruments in the markets.  

#4. Commodities 

If you think that the above-mentioned instruments are the most traded, then you are wrong. What about trading gold, silver, crude oil, more? Yes, these commodities are also traded in high volume in the commodity market. You can trade these commodities on margin or with any approach you like.  

Hard commodities: 

The first type of commodities is hard commodities. A hard commodity is what we get from a natural source. Natural resources like gas, oil, expensive metals, etc. are known as hard commodities. Gold futures or oil futures are the most reliable commodities in the global market.  

Agricultural products: 

Agricultural products are sometimes referred to as soft commodities or livestock. Some popular commodities in agricultural products are wheat, soybean, corn, coffee, cocoa, more. 

These products have a high influence on expert rules, taxes, natural calamities, etc.  

#5. Futures 

A Futures contract is the best way to trade any most traded instruments of any financial market. You can get benefits with high leverage with these. The futures market has many options to trade. 

You can trade futures on currencies, index futures, commodity futures. Also on interest rate futures, commodity futures, stock futures, futures options, more.  

#6. Bonds 

Bonds are traded in the bond market. But, it is at the last position in the list of most traded instruments. But still, this type of trading can provide huge benefits to the trader. 

The Bond market is also known as the loan market and it lies under the money trading market group. Bonds on government loans, business loans, debt securities, etc are part of this market. 

People trade many bonds in this market like government bonds, market bonds, and more 

Things To Consider While Choosing Most Trading Instruments 

There are a few things traders need to know while investing in the most traded instruments. These things are mentioned in this section about the most traded financial instruments. These are fundamental things to consider, we are not listing the things more in-depth. 

In-depth things cover market sentiments (bearish or bullish), technical indicators. And, speculative analysis, support, and resistance also play a pivotal role.  

Liquidity 

Always have a look at the liquidity of the financial market in which you are going to put your money. We all know that high liquidity means ease of trade and easy placement of orders. 

Because many buyers and sellers are active in a liquid market. But along with it, there is a huge chance to lose money.  

Volatility 

Volatility is also the best thing when you are choosing the best instrument to invest in. High volatility will generate more profits in the market due to the rise in decline.  

Leverage 

With leverage, a trader can get higher returns and profits with a little investment. So always try to find the instruments with the most leverage.  

Transaction Costs 

Low transaction cost is the key feature that most of the traders look into any investment market. So always use some calculators to calculate the cost of trading. 

Conclusion - Most traded instruments 

There are some most traded instruments in the global financial markets. So you have to keep an eye on all these categories. The active instruments category changes with time. 

The list of active trading instruments is changed and shuffled. But, most traded instruments remain almost the same in a long term perspective. 
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