Stocks, Bonds, Commodities, Forex, and Crypto

The Major Asset Classes

When people say "trading," they could mean many different things. The financial world is divided into several asset classes — categories of instruments that share similar characteristics. Understanding each one will help you decide where to focus your energy.

Stocks (Equities)

A stock represents a tiny piece of ownership in a company. When you buy one share of Apple, you literally own a fraction of that corporation. Stock prices rise when the company does well (or when people expect it to do well) and fall when prospects look bleak.

Key characteristics:

• Trading hours are typically 9:30 AM – 4:00 PM ET (US markets)
• Thousands of individual stocks to choose from
• Heavily influenced by earnings reports, company news, and economic data
• Many prop firms focus on futures rather than individual stocks

Bonds (Fixed Income)

A bond is essentially a loan. When you buy a government bond, you're lending money to the government in exchange for regular interest payments and the return of your principal at maturity. Corporate bonds work the same way but with companies.

Key characteristics:

• Generally lower risk and lower return than stocks
• Prices move inversely to interest rates — when rates rise, bond prices fall
• Most retail traders don't trade bonds directly but may trade bond futures (like ZB or ZN)

Commodities

Commodities are raw materials: gold, oil, natural gas, wheat, coffee, and more. Commodity trading has existed for centuries — it's how farmers and merchants managed price risk long before electronic trading existed.

Key characteristics:

• Prices are driven by supply/demand, weather, geopolitics, and seasonal patterns
• Traded primarily through futures contracts (covered in our Futures 101 course)
• Popular instruments: Crude Oil (CL), Gold (GC), Natural Gas (NG)

Forex (Foreign Exchange)

The forex market is where currencies are traded. It's the largest financial market in the world, with over $7 trillion traded daily. When you exchange dollars for euros at the airport, you're participating in forex (at terrible rates).

Key characteristics:

• Open 24 hours a day, 5 days a week
• Traded in pairs (EUR/USD, GBP/JPY, etc.)
• High liquidity means tight spreads and easy order execution
• Popular among prop firm traders due to flexibility and leverage

Cryptocurrency

Crypto markets trade digital assets like Bitcoin and Ethereum. Unlike traditional markets, crypto trades 24/7/365 with no closing bell.

Key characteristics:

• Extremely volatile — large gains and losses are common
• Unregulated or lightly regulated in most jurisdictions
• Newer and less established than traditional markets
• Not offered by most prop firms (some exceptions exist)

Which Should You Trade?

There's no single right answer. Consider:

• Your schedule: Forex and futures offer extended hours; stocks are limited to market hours
• Your capital: Forex micro lots and prop firm funded accounts reduce capital requirements
• Your personality: High volatility (crypto, oil) vs. steady trends (forex majors, indices)
• Prop firm availability: Most prop firms specialize in futures or forex

• Each asset class has different characteristics, risks, and trading hours
• Stocks represent ownership in companies; bonds are loans to governments or corporations
• Forex is the largest market by volume, trading currencies 24 hours on weekdays
• Choose your instrument based on your schedule, capital, and risk tolerance

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