There are many different financial assets and it is possible to trade a lot of these, although this will often depend on the accessibility of the asset and the use of it. Some assets will not be available for all traders and will only have use in very specific situations.

We can classify assets into a number of ‘asset classes’. An asset class is a group of assets / financial securities, which have similar characteristics.

In general, the most accessible and widely traded assets fall under one of the following main asset classes:

  • Equities – Also known as stocks or shares. These represent ownership of a company e.g. Apple, Tesco, Netflix.
  • Commodities – Basic goods that are interchangeable without much differentiation. Usually these are items that are used in production of other products such as gold, silver or oil.
  • Bonds – Fixed income debt instruments. Typically the bond issuer is borrowing capital, which is paid back to the bondholder. The bondholder receives a fixed interest payment in return, e.g. government bonds, corporate bonds.
  • Currencies – Also known a foreign exchange or forex. These are simply the currencies from different countries around the world, e.g. euro, US dollar, Japanese yen.

Although this is not a list of all the possible asset classes, these are the main ones you need to focus on for now.

Articles source: The Duomo Initiative