Which Markets Are Best for Beginner Traders?

As you make your first steps in the trading world, you may wonder which market is the best to start with. Should you start with forex, stocks, futures, CFDs, ETFs, or maybe cryptocurrencies? Is it better to choose liquid or not-so-liquid markets? Volatile or not? 

Logically, choosing a market to trade as a beginner can be a very important decision you must make. It can be a crucial step in building your confidence and help you get excited about trading. 

However, we must also say that there’s no ‘best market to trade’, as every market has some key advantages and disadvantages. Ultimately, choosing a market is a personal decision that largely depends on your trading style, goals, and preferences. The good thing is that we can help you get the basics of each market before you choose one.

So, on this page, we’ll explore some of the best markets for beginner traders, considering key factors such as volatility, liquidity, ease of understanding, and ease of analysis.

What is a Market in Trading?

As a beginner, you must first understand what we mean when referring to a ‘market.’

In trading, a market can be a specific instrument/asset or a broader definition of a market based on a category or asset class. For example, the EUR/USD can be defined as a market since there are buyers and sellers that can exchange one currency for another. A stock like Tesla, Apple, or MicroStrategy can also be considered as a market. At the same time, a market can also be defined as a group of financial instruments known as asset classes. This includes FX currency pairs, shares and equities, commodities, ETFs, fixed income, digital assets, indices, etc. 

A market in trading can also be classified based on the type of investment. For instance, the options market could be a market of its own. Other examples include the futures market, the CFD market, or the certificates market. 

What Markets Can You Trade?

As a trader, you can access a wide range of markets. It all depends on what market you want to focus on. 

However, the choice of what market you decide to trade depends on the platform you decide to trade on. For example, if you choose a stockbroker that connects you to one of the leading stock exchanges, you’ll be limited to trading stocks. Or, if you decide to open a futures trading account, then you can only trade futures contracts. 

For that reason, beginner traders often opt for a CFD trading account, which allows them to access various asset classes - all under one trading account. Here, on Switch Markets, we offer our traders over 2000 markets across different asset classes - forex, shares, indices, digital assets, commodities, and ETFs. 

Which Markets Are Best for Beginner Traders?

Generally speaking, beginner traders who start trading the financial market must select a market that is accessible, convenient, and has enough liquidity. As long as the chosen market provides these aspects, you can learn how to trade and develop an effective investment strategy quickly. 

From my knowledge, the best markets for beginner traders are as follows:

 Now, let’s briefly review each market and the reasons why it might be suitable for beginners. 

1. The Forex Market

Many consider the Forex market the best market for beginner traders due to its high liquidity, high leverage ratio provided by brokerage firms, and accessibility. Additionally, unlike other markets, the simplicity of Forex trading enables traders to quickly grasp how the Foreign Exchange market works and what influences FX currency pairs’ price movements. What's more, since the Forex market is the most popular market of all, it is easier for forex traders to find technical analysis on a particular asset, and identify clear market trends. 

Other reasons for beginner traders to choose Forex include the high leverage ratio, the trading hours, and the low spreads. For example, here, at Switch Markets, we offer a leverage ratio of up to 1:500 and spreads as low as 0.0. 

You should note, however, that if you decide to trade forex, it is recommended to choose one of the major FX pairs. These include EUR/USD, GBP/USD, USD/JPY, USD/CAD, NZD/USD, AUD/USD, and USD/CHF. The primary reasons for choosing these currencies are the high liquidity and volatility, the low spread, and their sensitivity to economic data, central bank announcements, and geopolitical developments.

For more information about forex trading and how to get started, visit our beginner's guide on how to start trading forex. 

2. The Stock Market

The stock market is also ideal for beginners, largely due to the huge variety of tradable shares. Unlike FX trading, trading stocks offers diverse opportunities. Traders can choose blue chip individual stocks like Apple, Tesla, and Facebook that provide them with enough liquidity and volatility as well as the ability to fundamentally analyze the stock price market movements. 

At the same time, traders can also focus on penny stocks or less established firms, although this is much riskier than blue chip stocks and often more suited for long-term investors. Additionally, some platforms like Switch Markets provide access to various stock exchanges, which helps traders find excellent stock trading opportunities. For example, Switch Markets offers traders the opportunity to trade European stocks from different exchanges across Europe. 

3. The Commodity Market

The commodity market is often considered an excellent market, especially for short-term trading. This can be attributed to its high volatility, which is often not found in other markets. It’s not unusual to see large price swings in commodity prices, a factor that is particularly important for successful trading. 

Some of the most popular commodity CFDs include Gold, Crude Oil, Silver, Natural Gas, Corn, Wheat, Soybeans, Coffee, and Sugar. In addition, you can also get access to some of the most exotic commodities in the markets via ETFs, like Uranium trading. 

4. Global Indices Market

Global stock indices are essentially a basket of stocks that represent a certain region. For instance, the NASDAQ 100 is a market index of the 100 largest technology firms listed in the United States. The DAX 40 is an index of the 40 largest companies listed on the German stock exchange.  

For beginner traders, indices are a great option to start with since these are fairly simple to analyze and trade. Like FX currency pairs, indices are heavily affected by macroeconomic data and geopolitical news, making them an asset class with a short learning curve. 

Moreover, the costs of trading CFD indices are quite low, providing a convenient way for short-term trading strategies. 

Therefore, many beginners often focus on one popular index such as US100, SP500, DAX 40, or US Dollar Index (DXY).  

5. ETFs (Exchange Traded Funds)

ETFs are a broad category of financial instruments. Technically, Exchange Traded Funds (ETFs) are anything that can track an index, a sector, a certain commodity, or any other financial asset. For example, you can find ETFs that cover the price performance of the Dow Jones 30, the technology sector, energy prices, or an ETF that tracks Bitcoin’s price movement. 

All in all, ETFs are an exciting market. However, it is highly recommended that you learn more about a certain ETF before you decide to focus on this asset. Since financial companies issue ETFs, you must be aware of different conditions and the ETF specifications before trading them. 

6. The Cryptocurrency Market

Lastly, cryptocurrencies. Perhaps the most exciting market of all, but also the riskier. Cryptocurrencies offer huge earning potential; however, they are highly unpredictable and volatile. For that reason, digital assets are less favored by beginner traders who normally seek basic information to analyze instruments’ price movements. Unlike currency pairs, commodities, indices, and ETFs, it is quite a challenge to analyze digital assets. 

Still, trading cryptocurrencies could be an ideal market for those with enough knowledge and understanding of the crypto market. 

Final Word

To sum up, there are no hard rules about which market is best for beginners. It all depends on your trading preferences and style. If you are a trader searching for rapid price movements, commodities and cryptocurrencies could be the ideal markets for you. Otherwise, if you are looking for a market that can be effectively analyzed, then Forex or stocks can work better for you. 

Ultimately, finding the right asset to fit your needs is a trial-and-error process in your trading journey. But, as a starting point, you must find a market that offers enough liquidity, volatility, accessibility, and low trading costs. The best way to do that is to open a demo trading account and explore the different markets and instruments. 

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