What’s the best thing to trade for beginners?

If you are new to trading, you will need to consider which markets might be better for you, especially if you are lacking extensive experience and knowledge.  To be able to do well and avoid risking all your funds, you should start small and pick markets and trading strategies that suit your level of expertise.

One important thing to keep in mind is that no trader becomes instantly profitable. Trading requires learning, practice, and a long-term commitment to be successful. Diligence, focus, objectivity and emotional control are also some valuable traits that characterise traders who do well in the long term.

Trading instruments and markets suitable for beginners

Major currency pairs

These pairs are generally regarded as the best choice for beginners.

Major currency pairs are made up of currencies from the world’s biggest economies. Major currency pairs have been the below:

EUR/USD

GBP/USD

AUD/USD

USD/JPY

USD/CHF

NZD/USD

USD/CAD

But the list has expanded to include also:

EUR/GBP

EUR/CHF

GBP/JPY

One of the key aspects from the lists of major currency pairs is that the US dollar is always on the one side of the pair. These currencies are also responsible for the big volume of the foreign exchange market which is estimated at $7 trillion a day.

If you check out these currencies on your broker’s platform, you will see that they tend to have the lowest spreads and are the most stable.

Because they are so widely traded, they are also very liquid and can easily be exchanged. Most beginner traders, but also advanced ones, tend to trade these major currency pairs but as always, it is best not to put all your eggs in one basket, and instead diversify by spreading risk across other classes and instruments. 

Why trade the major pairs?

The major currency pairs dominate the 外汇市场 and steal the spotlight, and there is a reason for that.

Low costs

Low costs in trading are important, so you can maximise your potential for earning more. These forex pairs are great for this as they come with low costs. While there are differences among different brokers in terms of fees and costs, majors have the lowest spreads across most online CFDs brokers.

You can easily speculate on their direction

Whatever assets you pick, you need to be able to easily speculate whether they will go up or down. If they are stable and predictable then you will be able to make more effective trading decisions. Minor forex pairs tend to be highly volatile compared to major currency pairs and are also less stable which can wipe out your account if the market moves against you.

Low-risk, high-reward

The stability of major pairs is what makes them so attractive for traders who want to invest their money in low-risk forex pairs.  Major currency pairs are backed by strong economies and because they are liquid, they are less susceptible to manipulation by external factors. They are more influenced by supply and demand dynamics and by trading them, you will enjoy less re-quotes and slippage.

For these reasons, major currency pairs have low volatility, clear fundamentals and clear trend structure, which makes them ideal for beginners. Being more stable, more predictable and less susceptible to volatility, major currency pairs are one of the key trading assets on many traders’ portfolio.

Commodities: gold and oil

Gold and oil are the most common traded commodities. They have very tight spreads which makes them suitable for both swing trading or day trading.

Commodity futures are also very popular among traders. Futures can give you the closest exposure to the commodity itself when compared to other tradable products. Gold futures 和 crude oil futures can be great tools for both hedging risk and speculating on the future direction of their prices.

If you are a trader looking to explore this market by speculating on which direction commodity prices could go in the future, you can buy or sell futures contracts based on a bullish or bearish bias.

Types of commodity markets

You can trade assets like silver and soybeans to less liquid commodities like livestock and timber. If you are new to commodity trading, you might want to trade silver or soybeans as they are less risky than illiquid markets.  

Energy, metal, and agriculture commodities are quite popular and liquid, suitable for every trader. Energy commodities like crude oil and natural gas are also very popular but their prices fluctuate on a daily basis. Higher crude oil prices may result in higher prices for byproducts like gasoline, and cold winters can boost demand for natural gas which will help increase natural gas prices.

S&P 500 stock index

The S&P 500 is a popular choice for both beginners and experienced traders due to its historical stability and diversification.

The S&P 500 is a stock index made up of 500 of the largest companies traded on the New York Stock Exchange (NYSE), Nasdaq, or Chicago Board Options Exchange (CBOE).

S&P stands for Standard and Poor’s. Henry Poor was a financial analyst who in the 19th-century created a text with publicly held railroad companies. In 1941, his findings merged with those of the Standard Statistics Company. 500 is the number of stocks that make up the index.

The S&P 500 is estimated by adding each company’s float-adjusted market capitalisation. The companies of the S&P 500 are selected by a committee, and they have to meet certain criteria.

They all have to have a specific market cap (at least $14.5 billion), the public needs to hold the majority of each company’s shares, and the company needs to be public for at least a year.

For a company to be eligible to be included in the S&P 500 index, it needs to be from the U.S, have a market capitalisation of at least $14.5 billion, be highly liquid, and have a public float of at least 10% of its shares outstanding. The company’s most recent quarter earnings should show clearly that it is growing and is profitable and the total of its trailing four consecutive quarters’ earnings must be positive.

10 top stocks in the S&P 500

The 10 biggest S&P 500 stocks are the following:

Apple (AAPL)

Microsoft (MSFT)

Amazon (AMZN)

Nvidia (NVDA)

Alphabet Class A (GOOGL)

Alphabet Class C (GOOG)

Tesla (TSLA)

Meta Class A (META)

Berkshire Hathaway Class B (BRK.B)

Exxon Mobil (XOM)

If you’re just getting started with trading and are looking for something that’s safe and reliable, you can’t go wrong with the S&P 500 itself. With the benchmark index containing stocks from 500 of the largest companies in the US, such as Apple, Amazon, and Nvidia, you can definitely do no wrong.

Investing in the S&P 500 can be a great way to diversify your portfolio with minimal effort. And because these companies are some of the strongest in the world, there’s a much better chance for this type of investment to recover from market downturns.

If you have the right strategy, any time is good to trade in this index. It’s always impossible to predict how the market will perform in the short term, so trying to time the market and buy at the right moment can cost you money. Stock prices could always go higher, and you could miss out on valuable opportunities. Whether markets will go down or up, is part of the market cycle, and as they say, bear markets are shorter than bull markets.

If you are a beginner, sign up with a leading broker such as IronFX and explore all their tools and services, so you can discover opportunities with confidence.

Disclaimer: This information is not considered investment advice or an investment recommendation, but instead a marketing communication. IronFX is not responsible for any data or information provided by third parties referenced, or hyperlinked, in this communication.