What are the Investment Instruments in the Forex Market?

What are the Investment Instruments in the Forex Market?

The most traded investment instruments in the Forex market are contracts for difference (CFD), stock market indices, commodities, precious metals such as gold, silver, and copper. Through Forex trading, investors can have the ability to trade the world’s leading stock market indices such as Dow Jones, NASDAQ, S&P 500, DAX, and FTSE as underlying assets.

An ounce of gold is an asset that is widely perceived by investors as a safe haven. In an environment where the global risk appetite has decreased and there are uncertainties, gold prices are prone to an upward trend. The weakening in the dollar index, which measures the worldwide strength of the dollar, is also a factor that drives gold prices up.

One of the investment instruments traded in the forex market is oil. Oil prices are closely related to global oil supply and oil demand. There are some differences between the two types of oil due to the extraction and processing conditions. Brent oil price tends to hover slightly above the American type crude oil (WTI) price. While events and decisions that reduce oil production affect oil prices upwards, an increase in production will put pressure on prices.

Investors can also trade on products that take the NASDAQ, S&P 500, Dow Jones, DAX, FTSE world stock indexes as underlying assets if they wish. These indices are among the assets that attract attention when risk appetite increases in global markets.

Contract sizes corresponding to 1 lot of CFD products are as follows:

  • Ounce Gold (XAUUSD): 1 Lot 100 Ounces
  • Silver (XAGUSD): 1 Lot 5,000 ounces
  • Copper: 1 Lot 25,000 pounds
  • Platinum: 1 Lot 50 ounces
  • Natural Gas: 1 lot 10.000 mmBtu
  • Brent Petrol-WTI Oil: 1 Lot 1000 barrels
  • Mini NASDAQ-100: 1 Lot of 20 contracts
  • Mini S&P 500: 1 Lot of 50 contracts
  • Mini Dow Jones: 1 Lot 5 contracts
  • DAX: 1 Lot 25 contracts
  • FTSE 100: 1 Lot of 10 contracts

SEE ALSO: What Is Forex Portfolio Management?

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