What Should I Trade? Stock Market, Foreign Exchange, Commodity, Indices or Cryptocurrency?

If you started trading just 15 years ago, the chances are you could only trade the stock market or commodity market (products like gold, oil and silver). However, only 10 years ago the foreign exchange market blew up onto the scene and became the go to market for many traders. Heck, only a year ago did cryptocurrencies blow up on the scene and change the game. Variety is great but can be overwhelming.

Cut the crap, which market is better to trade?

Is it the stock market, foreign exchange, commodities or cryptocurrencies? Each market has pros and cons which we detail below. The worst thing to do is to be stuck in your ways and not adapt, or explore, new opportunities or to find the 'holy grail'. Here at Trader Prophets we advocate trading on all markets but on higher timeframes as detailed in this article here. However, intra-day trading on all these markets will definitely not work. It's just too much to focus on.

Can you trade all of these markets?

Trading is popular now that all these markets are liquid enough to trade. That basically means so many people are trading them it's very easy to get in and out of trades quickly. All of these markets offer powerful leverage where we can control a bigger position with less money in our account to hold as collateral (otherwise called margin). There are many other pros and cons too.

Let's have a look at each one:


Stock Market Trading: The Pros & Cons


1. It's the playground of many of the world's billionaires - The stock market has made fortunes for many hedge fund managers and private investors. It is still the go to market today for fund managers and institutions. Clearly, you want to be trading in what the big dogs are right?

2. Trends can last for a long time - This is commonly overlooked. A trend can be your best friend in the market, if you stick with it. You won't get every trade right. But, if you stick to your winners and ride them as long as possible they'll cover a lot of your losers and still leave you with a nice tidy sum at the end.

3. Profit from companies you already know and use - Again, another advantage that is commonly overlooked. Most people know more about Apple products than an analyst who uses Samsung. They fail to realise they can use that to their advantage! Personally, I love trading on companies I use and believe in everyday like Amazon and Facebook. After all, I'm already in the know!

4. By trading stocks in the short term you can use the profits to invest in stocks long term and collect dividend payments to build a retirement portfolio.


1. The market is susceptible to gapping - The stock market closes overnight, therefore you are susceptible to market gaps where the opening price will differ to its previous day's closing price. Of course, if you are aware of this then you can adjust your risk and/or position accordingly. The reality is that if you are picking very strong trends, using stop losses and have a sound risk management strategy you have a very high chance of success in the long run.

2. There are a lot of markets to cover - More markets means more opportunities but also means having a stretched focus. However, this is easy to overcome as  we all use scanners to help us identify the best markets to trade without looking at everything every single day. Using our membership service will also help you know which stocks are hot to trade and which ones are not - thereby cutting down your research time massively.


We use the stock market for daily and weekly positions that we hold from 5+ days to a few months. We also use our analysis to identify longer term trends that we would invest into for our retirement accounts to collect dividends (a form of income from the company you are investing into). Essentially, we trade to invest!


Foreign Exchange Trading: The Pros & Cons


1. The forex market is open 24 hours a day, five days a week - This makes forex a truly global market. Wherever you are you have the potential to profit. Of course, some times are better than others like trading at the opening of the local market. However, the advantage of forex is the fact you can easily get in and out of positions as the market is open 24 hours a day, five days a week.

2. It has very deep liquidity - The foreign exchange market is absolutely huge. Currently, it trades around $7 trillion per day and it is growing. The deep liquidity has made this a playground of many algo traders and day traders. However, because so many participants are involved, you can often find outsized trends which are great for the independent trader.

3. The leverage available is huge - The leverage on foreign exchange trading is massive, sometimes as high as 400:1. This means that you can control a position worth $100,000 with just $250 in your account. Whilst you can make money quickly in high leverage you can lose it all even quicker. Of course, the power of this shouldn't make you afraid like it does many amateur traders. Professionals know how to take advantage and so should you!

4. You can use this market to hedge against currency exposure if you are trading stocks in a different country, with a different currency. You will feel like your very own hedge fund manager!


1. Highly sensitive to news flow - Every day there is some economic data release around the world. The foreign exchange market is highly sensitive to such releases. It could be a retail sales report or a central banker speaking. Because of the high liquidity and market participants there can be a lot noise around news announcements. But if you stick to the higher timeframes it will swallow up all the noise to give you an informed, bigger picture outlook.

2. People don't understand the market - There are far more amateur traders in the forex market than the stock market. It probably has something to do with the marketing campaigns of unregulated brokers promising them all sorts of riches. This makes traders uninformed about how the market actually works. The forex market is there to facilitate global transactions and for institutions to hedge their currency exposure in business. Once you understand the players involved, why they're involved and what they're doing, you will be in the 10% of traders who actually make money in this market.


Commodity Trading: The Pros & Cons


1. Commodities offer a great hedge to other assets - In times of stock market declines, investors often tend to flee to safe haven assets like gold and silver. Therefore, it's a great way to hedge any exposure of positions held within the stock market. It's exactly how the big players do it!

2. You can leverage the power of seasonality - Commodity markets are highly seasonal. In winter, the western hemisphere use a lot more gas and oil for heating. This change in demand affects the price and this is definitely tradeable! Other commodities like sugar, wheat, corn, cotton, platinum also exhibit seasonal patterns making it a very exciting market to trade.

3. Commodity market trading works very well with stocks - Imagine if coffee prices came crashing down due to adverse weather conditions in the country producing it? Clearly, that would massively affect the bottom line of Starbucks as coffee bean prices would shoot up due to limited supply. Big hedge funds use 'themes' like this to make outsized returns, just like independent traders can too.


1. Trends can reverse on unpredictable events like weather - Commodities are highly sensitive to the surroundings they are grown or made in. Weather events can destroy crops and cause huge changes in prices. However, whilst this volatility may scare some people it excites real traders. That's because any change trend will happen once but the move could be outsized as buyers or sellers take hold of it, thereby giving us an opportunity to get involved in.

2. Ideally suited for a larger account size - Because some of the commodities trade in such large quantities, when trading through your broker you may need a higher account to place a trade than the foreign exchange market, for example. However, there are some highly popular markets like gold, silver and oil which work well for smaller account. The other commodity markets are then something to aim for!



Stock Market Indices Trading: The Pros & Cons


1. You can profit from international markets easily - The range of stock market indices available to trade is huge. You are no longer confined to your home country's stock market. You can now easily trade US stock market indices like the Dow Jones 30 or S&P 500, European stock market indices like the FTSE 100 and German DAX. But, the real benefit comes from tapping into Asian and African growth by trading indices such as Japan's Nikkei 225, Hong Kong's Hang Seng index and many others.

2. Indices are great for hedging stock positions - What happens when you have a portfolio of stocks you want to hold for the long term whilst the market is temporarily falling? You don't want to close out your stock positions as you got in at a great price and are collecting dividend payments. Most professional money managers will go to the index market and 'short sell' the index to hedge against the fall in their stock portfolio. Easy as ABC!


1. You may miss out on bigger individual stock moves - An index gives us a broader look at what the market is doing by putting all its individual stocks (500 as in the case of the S&P 500) into one index. This means you may not get that big move on one of the individual stocks within the index. However, many people focusing on multiple markets tend to focus just on the indexes as they find looking at individual stocks time consuming. Clearly they haven't read our 4 Point Trading System to find explosive stocks in just 30 minutes a day!

2. You can't get sector specific - Let's say you want to get involved in energy stocks as you believe they are going to move up. Buying an index won't help you here as indexes are made up of companies from varying sectors. In this instance, you will have to go and find individual energy stocks to play. Of course, that's not a problem if you have the right systems and routines in place.


Cryptocurrency Trading: The Pros & Cons


1. It's the thing of the future - Cryptocurrency is the new kid on the block but it's also here to stay. Cryptocurrencies like bitcoin, the first ever invented, are gaining hugely in popularity. It could be the next best thing and so we believe, as new as it is, it cannot be ignored.


1. It's highly volatile and has lots of competition - Cryptocurrencies are hugely volatile as they are affected by limitations within their root technology called blockchain. Of course, volatility is good if we risk manage properly but volatility also comes from the fact there are lots cryptocurrencies popping up. Everyone is trying to get into the game. We only advocate trading the major cryptocurrencies like bitcoin and etherum as they will be the most liquid and cheapest to trade.



Whether you are trading the stock market, foreign exchange, commodities, indices or cryptocurrencies, every market has pros and cons. However, trading the higher timeframes on all of the markets can help you stay diversified and in the opportunity flow.

Now it's about picking out the right trades on each of these markets. How do you do that? A great starting point is to learn from traders who are already doing it, day in day out. Imagine having a team of traders behind you, covering all the markets so you can choose from the very best?

Well, wonder no more!

Say hi to the Trader Prophets Golden Playbook membership service.

*OFFER* - £7 trial for your first month of the Golden Playbook membership:

·         Receive trade ideas directly to your inbox

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