Are you a new or up-and-coming trader wondering what the best market is for beginners? If so, you’ve come to the right place! Here we’re taking a look at whether beginners prefer to trade forex or commodities.
Many traders are struggling with what exactly is the best place to start. It’s actually one of the most common challenges that new traders are facing. You hear so much about things like the dollar remaining strong, while others claim that the biggest opportunity right now exists in commodities like gold, silver and even oil. Figuring out what to make of all this is no easy task!
To clear up all of this confusion, we asked two financial markets experts what they believe is the best market for a new trader to start trading in and where conditions are most suitable for beginners in today’s market.
Trade forex for high volume and liquidity
The foreign exchange market is where the majority of traders buy and sell every single day. And there’s a good reason for this! The most popular pairs in the forex market are available to traders with incredibly tight spreads, meaning the difference between the buy and the sell price of the currency is small. When spreads are tight, it’s easier to profit!
As a new trader, you’re probably going to be making some mistakes and some bad trades every now and then. That means a lot of buying and selling of instruments that you won’t necessarily make significant profits from.
You, therefore, need to keep the difference between the buy and sell price of these instruments as small as possible. If you can do that, your trading strategy will take play its part, which is to give you the edge you need to profit from the market.
In the forex market, the tightest spreads are usually found on the most popular pairs. By far the most popular one is EURUSD. This pair is one of the easiest trading instruments to understand in all of the financial markets.
Commodities are for ‘fundamentalists’
As opposed to the incredibly liquid and popular forex market, commodity markets trade in a different way. Originally, this market was set up for commodity producers like farmers and miners. They’d protect themselves against price fluctuations by ‘locking in’ prices for the commodities they were planning to sell in the future. Today this is still the case.
However, an army of speculators has appeared between the buyers and the sellers of the physical commodities. These speculators try to profit from even the tiniest price changes. An important role is still played by these so-called ‘non-financial players’.After all, producers are still buyers of commodities. This means that commodities still tend to be more driven primarily by fundamentals. An example of this would be things like the weather impacting the price of coffee or soybeans. Political or economic uncertainty also tends to drive up the price of gold.
To compete with the big boys in the commodity market, you should, therefore, have a deep understanding of these fundamental drivers. Also, remember that spreads are wider here since there are fewer independent traders like yourself active in this market. However, for those who can figure out the secrets behind what’s influencing commodity prices, the rewards can be great. Riding the stable and long-lasting trends higher in one of the big commodities is an experience every trader is sure to remember!
As usual, our experts do not exactly agree on what the best market for a new trader is. However, we should point out that our forex market expert makes a valid point. It’s demonstrably true that looking for instruments with tighter spreads will mean that your costs to trade are lower. If you’ve come across a trading strategy you want to test out – such as this trend trading strategy – EURUSD may well be your best bet! If you're think more of a long-term investment, perhaps gold and other metals might be a more attractive option.
Interested to get access to the global forex markets through Exness?
Your 4-step guide to opening a trading account
Step 1: Getting registered
It's very easy to open an account with Exness. Click here to open the sign-up page in a new tab. If you want to get everything done in the next 10 minutes, be sure to have a credit card, ID, and, proof of address by your side. You can choose to open a demo account without these things. Either way, everything you need to know is here in this two-minute video. Pause the movie as you go through the first three steps.
Tip: Account type depends on the amount you wish to deposit. Leverage is effectively an interest-free loan that the broker offers. It allows you to make a large investment from a small deposit. If you are looking for high profit with high risk, a higher leverage might be right for you. If you prefer slow-burning safety with lower results, then keep your leverage low. You can never lose more than you have, but higher leverage means faster results... both good and bad.
Step 2: Prove who you are
Exness takes security very seriously, and they check every client signing up. Just like opening a bank account, you'll need to prove who you are before getting access to the global markets. Watch this one-minute video to see how.
Tip: While you're waiting for your real account to be approved, open up a demo account and start getting to know the trading platform.
Step 3: how to get access to the market
Trades are made using the award-winning MT4 trading platform. Inside the box of the demo or real account you'll see a gear cog. Click the gear cog to make a deposit. Use the passwords provided in the email. Click the gear cog again and select SIGN IN TO MT4 WEBTERMINAL then follow this one-minute video. You're about to make your first virtual trade on the real markets.
Step 4: making a trade
As a default, the top currency pair on the list will have an open chart. Right click on the chart and select the “close” option.
As a professional trader, selecting the right pair requires some research. For a first-time test, any pair will be sufficient. Drag a pair from the list of currencies on the left side of the trading terminal. The old saying goes, “what goes up, must come down.” Obviously, this principle goes the other way too. Your mission is to find a moment when the price direction is going to swing or reverse. If you feel the price is about to go up (bullish), then BUY, if it looks like it’s been trading high and the price has started a downward (bearish) trend, then SELL.
Open a trade
There are many ways to open your trade. You can select from the buy and sell options on the top left of the chart. Preferably, double-click the currency pair on the list. Right click on the chart when you’re ready to make your first trade. Time to set the volume depending on how confident you are in the direction you are forecasting. This is the perfect time to set your stop loss and take profit. Click the arrow to the right of the stop loss and take profit prices.
Note how the blue and dark red lines in the popup graph sit above and below the buy(ask) and sell(bid) price. In the example, we traded long (buy) and got a message confirming the order was successful. If you get an error, your volume was too high for your balance, or your stop loss/take profit was too close to the spread. Remember, every order starts as a negative because of the spread. Be patient. Your take profit will activate when the time is right, and your stop loss is protecting you. To close an order, you have three options. Click the X on the right or right-click the order. If you double click the order, you can close or modify the order.
You now know how to make a trade. Forex trading can be an exciting way to spend your free time, and you'll actually learn some real-world skills that will serve you well throughout your lifetime. Be patient, learn, and who knows, you might one day be one of the lucky few full-time traders. How will you spend your day?
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This article is a marketing communication and does not constitute investment advice or research. Its content represents the general views of our experts and does not consider individual readers’ personal circumstances, investment experience, or current financial situation.
This article is not prepared in accordance with legal requirements promoting independent investment research, and Exness is not subject to any prohibition on dealing before the release of the article. Readers should consider the possibility that they may incur losses. Therefore, Exness is not liable for any losses incurred due to the use of its articles. Please note that past performance of an asset is not a reliable indicator of future results.