Selecting a market

In our first lesson, we looked at how to fund your account. In this lesson, we’re looking at some of the major markets, how to select a market to trade, and how to find market information to inform your trade strategy.

If you haven’t yet, you can set up a free demo account to practise placing your first trade without putting any real capital at risk. With an IG demo account, you’ll get immediate access to a version of our online platform, along with a pre-set balance of $20,000 in virtual funds to practise with.

Which markets can I trade?

IG offers thousands of markets you can trade. These include share trading, which works by giving you direct exposure to a company’s performance, as well as more than 18,000 contracts for difference (CFD) markets for you to speculate on, including shares, forex, commodities, indices, bonds, cryptocurrencies and more.

IG offers various types of trading accounts, depending on the markets you are interested in trading.

What is share trading?

When you buy shares directly, you own part of the company or ETF, making it a popular choice for long-term investors with a positive outlook. You may also receive dividends and gain voting rights.

Direct investing requires the full amount upfront, with no leverage (which also means your maximum loss is limited to what you invested. For example, if you invest $1,000, the most you can lose is $1,000).

With share trading, you can only profit if the share or ETF price rises above your entry price, unlike CFD trading, which offers opportunities to profit from both rising and falling markets.

What are CFD markets?

CFD markets refer to markets where traders buy and sell CFDs – financial derivatives that allow them to speculate on the price movements of various assets without owning the underlying asset.

A CFD is essentially an agreement between a trader and a broker to exchange the difference in price of an asset from when the contract is opened to when it is closed. For example, if you buy the market at 100 and it moves to 105, then you would profit 5 units; if you buy the market at 100 and it moves to 95, then you would lose 5 units.

Read more about the difference between share trading and CFD trading here.

When trading derivatives you can go long or short. This means there is potential to make a profit if that market’s price rises or falls – if you predict it correctly. At the same time, if the price moves against you, you will incur a loss. If you owned the asset outright – if, say, you had a bar of gold in a safe in your home, as opposed to trading gold as a commodity – you would only make a profit if the price climbed.

Derivatives also allow you to trade with leverage. This means that, instead of paying the total value of your trade upfront, you’ll put down a fraction of its value as a deposit, which is called ‘margin’. This means leverage can stretch your capital much further as you can open large positions for a smaller initial amount. Although you only pay a fraction of your trade’s total value upfront, you’ll be exposed to the market based on the size of the full position, which means that leverage can increase your potential profit, but it can also amplify your losses.

Major markets

Let’s look at some of the major markets you can trade with an IG CFD trading account. For more detail on each, check out our Introducing the financial markets course.

Shares

Share trading is speculating on whether the share price of a public company will rise or fall. It’s one of the most popular ways to trade the financial markets, especially among retail traders.

A share is a unit of ownership in a company. If, for example, a particular company is worth $100,000 and has issued 2,000 shares, each share would be worth $50 (100,000 ÷ 2000).

As the share price rises or falls, it reflects changes in the company’s market value. Traders buy shares with the hope that the company will grow, allowing them to sell their shares later at a higher price.

Forex

Forex (short for foreign exchange and also known as FX) is how individuals and businesses convert one currency to another and is the largest financial market in the world. It’s also important for financial institutions, central banks, and governments because it facilitates international trade and investment by allowing companies that earn money in one currency to pay for goods and services in another.

Forex is an over-the-counter (OTC) market, which means currencies are exchanged directly between two parties rather than through an exchange (unlike shares).

Forex prices are always quoted in pairs, such as AUD/EUR, which stands for the Australian dollar versus the euro. This is because if you want to purchase Australian dollars you need to buy them with another currency, like euros.

Commodities

Commodities are physical assets. Unlike shares, indices or currencies they are raw materials mined, farmed or extracted from the earth, such as gold, oil or corn.

There are ‘hard’ and ‘soft’ commodities. Hard commodities are mined substances like precious metals, diamonds, oils, etc. Soft commodities are plant and animal resources like grains, sugar cane, coffee beans and cattle and other livestock.

Commodities can be traded in two main ways: through spot markets and derivatives markets. In spot trading, you buy or sell the actual commodity (like gold, oil, or wheat) for immediate delivery and payment. In derivatives trading, you don’t own the physical commodity. Instead, you trade contracts that derive their value from the commodity’s price, such as futures, options, or CFDs.

Indices

A stock index (stock indices is the plural, or indices for short) is a measurement of value of a certain section of the stock market. They are benchmarks that track the performance of a group of selected shares listed on a particular stock exchange or across a sector.

Indices are a collection of publicly traded stocks all grouped together into one entity that can be traded singularly, so that when you trade on the index, you’re trading on all its constituents at the same time.

The ASX 200, for example, tracks the performance of 200 of the largest companies in Australia. If the ASX 200 starts to rise, then on average these companies are performing well. A rising ASX 200 tells investors that, generally, the state of the Australian stock market is improving.

Most countries have one major index, but the US has three: the Dow Jones Industrial Average, S&P 500 and NASDAQ-100.

Indices can be thematic, too. For instance, smaller ‘alternative’ stocks not big enough to appear on the FTSE 100 or FTSE 250 will be listed on the FTSE AIM (Alternative Investment Market) index.

Traders don’t buy the actual index. They use financial instruments that track the index’s price movements, allowing them to speculate on whether it will go up or down. These include index CFDs, index futures, exchange traded funds (ETFs), and options on indices.

Here’s a summary of the markets we’ve covered:

How do I choose a market?

There’s no one-size-fits-all answer. It’s about finding a market that suits your interests, goals, lifestyle and risk comfort level.
Start by thinking about how much price movement — or volatility — you’re comfortable with. Some markets, like forex or commodities, can move quickly and dramatically, creating more opportunities to profit (but also more risk). Others, like government bonds or major stock indices, tend to move more steadily.

Next, consider when you actually have time to trade. Forex is open 24 hours a day during the working week, which is ideal if you need flexibility. On the other hand, markets like the ASX or NYSE operate within set hours, so they’re great if you prefer to trade within a daily routine and take breaks when the market’s closed.

It’s also worth thinking about what you already know or are interested in, starting with something where you have an existing level of understanding or an appetite to learn more.

Another thing to keep in mind is how easy it is to get in and out of trades, known as liquidity. Then there’s your trading style and timeframe. If you’re just looking to place a few trades a month and hold them for days or weeks, you’ll need a different type of market than someone who wants to make multiple trades a day, as well as a different trading strategy. Find out more about developing a trading plan and matching a trade strategy to trading styles here.

Finally, think about your risk tolerance. If you’re cautious, you might want to avoid highly leveraged or volatile markets to start with.

Remember, there’s no perfect market — just the one that’s right for you. The best way to figure that out is to learn a little about each option, try a demo account, and build your confidence one step at a time.

Finding market information

IG offers a range of tools to help you explore markets that interest you. Many of these can be found on your left navigation panel.

The News button takes you to a comprehensive selection of news, from top headlines to recommendations based on your trading history, IG market analysis, news videos, and a search function.

The Signals tab displays signals aggregated from different (third- party) signal providers that suggest when to buy or sell a financial asset. Their purpose is to help traders identify potential opportunities, manage risk, and optimise their trading strategies. They are based on technical analysis and often also incorporate broader economic context. Please note that they do not constitute investment advice. No warranty is given as to the accuracy or completeness of the information and any person acting on it does so entirely at their own risk.

The TipRanks tool displays information provided by TipRanks, a financial technology company that uses artificial intelligence to analyse financial big data to provide stock market research tools. TipRanks is a third-party data vendor. IG Group and its subsidiaries can’t be held responsible for the integrity of the data provided.

The Macroeconomic Calendar shows upcoming economic events, along with search functionality and various filters available.

Stock Screener, a TipRanks tool, allows you to research and filter shares based on key parameters and metrics, such as price, market cap, dividend yield and more.

Selecting a market to trade on IG

To place your trade, you’ll need to choose from the asset classes on the sidebar menu to the left of your platform. Decide which of these markets you want to trade.

For example, you might decide you want to trade forex. Click on FX, then select the currency pair of your choice. You can scroll to find your pair or use the search button at the top of the screen.

Click on your pair and a new pop-up will appear with the chart and tab for the deal ticket. You can either add this to your workspace, or populate the deal ticket directly from this screen.

In the next lesson, we’ll look at choosing a direction and using charts.

See how it works, by opening a free IG demo account.