# Different Markets & Assets

Traders can trade a variety of different assets which can be broken down into categories called asset classes. You can trade assets from different classes to gain exposure for the same market, but generally traders operate within a single asset class, at least in the beginning.

# Stocks

Stocks, sometimes referred to as equities, are the shares of individual publicly traded companies. The value of a stock is a direct reflection of the implied value of the business. Trading stocks allows you to expose your portfolio not only to specific companies that you believe will appreciate in value, but also entire industries by buying shares of multiple companies operating within the same sector. U.S. stocks trade when the stock market is open, 9:30 to 16:00 EST, but can also be traded outside of regular market hours in the pre-market and after-hours sessions, and do not trade on weekends. Stock market trading is one of the most debated topics in financial markets. Some traders swear by their use of charts and technical indicators, while others subscribe to fundamental investing theories. Diversity, both in opinion and exposure, is what makes the stock market such an interesting investment vehicle, and such a challenge to consistently trade well.

# Cryptocurrencies

The cryptocurrency markets are ripe with endless opportunity and volatility. Cryptocurrency trades in the same way as foreign exchange markets do, in pairs based on purchase power parity. However, the key difference is that cryptocurrency never stops trading. The foreign exchange market closes on weekends because the banks are closed. Decentralization and independence from banks allow cryptocurrency to trade 24/7. Many traders find the volatility of cryptocurrency especially attractive. Every week new projects announce the listing of their own cryptocurrency, fueling market speculation. Another thing that made cryptocurrency so attractive to traders was its fractionality; the ability to trade just a piece of a coin rather than a whole unit. You didn’t need to own an entire Bitcoin to reap the rewards of Bitcoin’s price increasing 1300% in 2017. Now you can enjoy the same kind of fractionality for all assets on Morpher. Recently, traders have found that cryptocurrency can play a role in portfolio risk management, when they found that Bitcoin’s price does not correlate strongly with traditional assets, adding an extra level of diversity to any portfolio. In contrast to the stock market, cryptocurrencies are mostly traded by retail investors, not institutions. This means that price-action will normally reflect the real sentiment of an end-user and investor, which is important for traders relying on technical analysis, and any other strategy that is driven by behavior. We previously discussed that it doesn’t matter if you’re wrong or right as long as the market also follows your train of thought. That becomes a lot easier when you have a good understanding of who your counterparties are.

# Indices

Traditionally, indices are not tradable financial products, but rather statistical representations of a basket of other assets. Thankfully, you can trade indices directly on Morpher. The most well-known indices are the Dow Jones Industrial Average (DJIA) and the Standard & Poor 500 Index (SPX). The Dow Jones is regarded as a standard for measuring the performance of the U.S. industrial sector, consistent of the 30 largest industrial companies, and the S&P 500 tracks the 500 best publicly listed companies, serving as the benchmark for the U.S. stock market performance. Indices are great for traders that want to gain broad exposure to a market without having to trade all of their individual constituents. Indices also trade well in conjunction with other macro-exposed instruments such as commodities, and FX pairs. For example, a macro strategy swing trader may trade the Dow Jones 30 Index at the same time as monitoring the price of Crude Oil, knowing well that DJIA constituent companies are heavily exposed to the energy sector. The same reasons might bring a foreign exchange day trader to use the S&P500 to gauge whether EURUSD’s price-action is attributable to pressure from the Euro or the opposite. Finally, many traders simply go Long on the S&P500 when they’re taking a break from day trading to get passive exposure to the U.S. stock market.

# Foreign Exchange

The Foreign Exchange market, frequently referred to as Forex or FX, is the most traded market in the world. The FX market consists of currency, something everyone uses in their daily lives. In this money market you would find yourself trading the value of one currency over that of another in pairs. An FX pair consists of two currencies, like the Euro and the U.S. Dollar, to form an expression of value: EURUSD. The first currency in the pair is called the base currency, and the second currency is called the quote currency. This exchange rate expresses how much of the quote currency is needed to buy one unit of the base currency. The EURUSD trades at 1.13, that means that one Euro can be purchased for 1.13 U.S. Dollars. A lot of factors contribute to the value of a currency, but ultimately it is a representation of the general perception of the economic strength of a nation or region. Investors and traders look to the global economic and political landscapes in assessing the economic sustainability of a region or nation, and trade accordingly. Currency trading is somewhat different to that of stocks and commodities. The markets trade non-stop from Monday to Friday (24/5). As night falls on the U.S. Markets, the Asian session brings more price-action – someone is always trading FX. Currencies also are less volatile than stocks and commodities, forcing many traders to use leverage in order to generate returns of the same scale as in the stock market. Lastly, foreign exchange pairs reflect value relative to one another, which makes it difficult to attribute what causes certain price-action. You will find that pairs that trade against the U.S. Dollar will move more because of circumstances surrounding the Dollar because of its stronger underlying economy and use as the world settlement currency.

# Commodities

Commodities are usually traded via futures, but alternative methods of trading them exists where they behave similarly to indices – which is what you will find on Morpher. Commodities start trading at different times, depending on where the asset is listed. For instance, commodities trading on the Chicago Mercantile Exchange start trading at 18:00 (ET) on Sunday, while Brent Oil Future on the Intercontinental Exchange start trading Sunday at 23:00. Trading commodities grants you exposure the products that fuel world economies, and greatly influence the way the rest of the markets behave. Commodity prices are so important that it often becomes a topic of discussion for world leaders, many of which brokering trade deals to support their domestic commodity producers. Commodity price-action is also not solely attributed to investor trading volume. In fact most commodity traders aren’t trading for profit. Commodities are traded as a means of risk management for investors, corporations, producers, and governments. For example, an airline company will trade oil in order to hedge the potential risks of rising fuel prices, governments buy gold to prevent inflation, and producers use commodity futures to protect themselves against adverse price movements affecting their supply chain.